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MARKETING MANAGEMENT Developed & Produced by EXCEL BOOKS PVT. Market Analysis and Selection: Marketing environment-Macro and Micro. as an Exchange Process, Marketing Management Process, Marketing Mix, Extended Mix for Services,. Developing .. publishers of encyclopedias, nonfiction books, and specialized magazines .. For ITC classmate, all MBA students are. MBA Semester – I. Th. C. 4. 4. (14E) MARKETING MANAGEMENT. The objective of the course is to have the basic concepts of Marketing which is one of .


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MARKETING MANAGEMENT UNIT 1 Modern Marketing Concept: Social Marketing concept – Approaches to the study of marketing – Marketing segmentation. Marketing Management (MKT). Anna Zarkada. BSc (AUEB), MSc (UMIST), PhD (QUT). Assistant Professor. Department of Business Administration. MBA (Marketing Management) Historical Development: Definition of Management, Science or Art, . Business Statistics by caite.infowaj, Excel Books.

The goods are expensive and purchased rarely. He may collect information through primary data, secondary data or both. Place stands for the various activities undertaken by the company to make the product accessible and available to target customers. Regarding retail pricing, the company may adopt two policies. Again out of this, a sizable part has to be reserved for meeting essential expenses and it is only the balance — the individual has the discretion to spend.

Product-Market Integration: Distribution channel policy — Choice of channel — Channel management — Conflict and cooperation in channels — Middlemen functions. Personal selling vs impersonal selling — Personal selling — Process — Steps in selling — Management of sales force — Recruitment and selection — Training — Compensation plans — Evaluation of performance — Advertising — Importance — Objectives — Media planning and selection — Factors influencing selection — Advertisement copy — Layout — Evaluation of advertising — Advertising budget — Sales promotion — Methods and practices.

Marketing has been deferent by different authors differently. This definition of marketing rests on the following concepts: Human wants are desires for specific satisfiers of these needs. For example, cloth is a needs but Raymonds suiting may be want. Demands are wants for specific products that are backed up by an ability and willingness to buy them. Wants become demands when backed up by purchasing power. Products Products are defined as anything that can be offered to some one to satisfy a need or want.

Value and Satisfaction Consumers choose among the products, a particular product that give them maximum value and satisfaction. Exchange and Transactions Exchange is the act of obtaining a desired product from someone by offering something in return.

A transaction involves at least two thing of value, conditions that are agreed to, a time of agreement and a place of agreement. Thus, all the above concepts finally brings us full circle to the concept of marketing. Marketing process brings goods and services to satisfy the needs and wants of the people.

It helps to bring new varieties and quality goods to consumers. By making goods available at al places, it brings equipment distribution. Marketing converts latent demand into effective demand.

It gives wide employment opportunities. It creates time, place and possession utilities to the products. Efficient marketing results in lower cost of marketing and ultimately lower prices to consumers. It is vital link between production and consumption and primarily responsible to keep the wheel of production and consumption constantly moving.

It creates to keep the standard of living of the society. Marketing manages have to carry marketing research, marketing planning, marketing implementation and marketing control. Within marketing planning, marketer must make decisions on target markets, market postphoning product development, pricing channels of distribution, physical distribution, communication and promotion. Thus, the marketing managers must acquire several skills to be effective in market place. The major emphasis was on the production process and control on the technical perfections while producing the goods.

The production concept holds that consumers will favour those products that are widely available and low in cost. Marketing is a native form in this orientation and it was assumed that a good product sells by itself. But, they do not the best of customer patronage.

Customers are in fact motivated by a variety of considerations in their purchase. As a result, the production concept fails to serve as the right marketing philosophy for the enterprise. Management in these product-oriented organizations focus their energy on making good products and improving them over time.

Yet, in many cases, these organizations fail in the market. They do not bother to study the market and the consumer in-depth. They get totally engrossed with the product and almost forget the consumer for whom the product is actually meant; they fail to find our what the consumers actually need and what they would accept.

Excessive attention to production or product or selling aspects at the cost of the customer and his actual needs, creates this myopia. The myopia even leads to a wrong or inadequate understanding of the very nature of the business in which a given organisation is engaged and thereby affects the future of the business. He further explained that while business keep changing with the times, there is some fundamental characteristic in each business that maintains itself through the changing times, which invariably relates to the basic human need which the business seeks to serve and satisfy through its products.

A wise marketer should understand this important fact and define his business in terms of this fundamental characteristic of the business rather than in terms of the products and services manufactured and marketed by him. For instance, the Airways should define their business as transportation the Movie makers should define their business as entertainment, etc.

The company has to consciously push its products. Aggressive advertising, high-power personal selling, large scale sales promotion, heavy price discounts and strong publicity and public relations are the normal tools used by organisation that rely on this concept. In actual practice, these organizations too do not enjoy the best of customer patronage. These industries have perfected various techniques to locate prospects and with great difficulty sell them as the benefits of their products.

Evidently, the sales concept too suffers from marketing myopia. But there is great of difference between the two. Selling focuses on the needs of the seller; marketing on the needs of the buyer.

Selling Marketing 1 Selling starts with the seller, Selling Marketing starts with the buyers. Marketing focuses with the needs of the seller. Buyer is Seller is the center of the business the centre of the business universe. Consumer determines price.

The concept puts the consumer both at the beginning and at the end of the business cycle. The marketing concept holds that the key to achieving organizational goals consists in determining the needs and wants of the target markets and delivering the desired satisfactions efficiently, than competitors. In other words, marketing concept is a integrated marketing effort aimed at generating customer satisfaction as the key to satisfying organizational goals.

It is obvious that the marketing concept represents a radically new approach to business and is the most advanced of all ideas on marketing that have emerged through the years. The salient features of the marketing concept are: Consumer Orientation The most distinguishing feature of the marketing concept is the importance assigned to the consumer.

The determination of what is to be produced should not be in the hands of the firms but in the hands of the consumers. The firms should produce what consumers want. All activities of the marketer such as identifying needs and wants, developing appropriate products and pricing, distributing and promoting then should be consumer oriented.

If these things are done effectively, products will be automatically bought by the consumers. Integrated Marketing The second feature of the marketing concept is integrated marketing i. Marketing can never be an isolated management function. Every activity on the marketing side will have some bearing on the other functional areas of management such as production, personnel or finance.

Similarly any action in a particular area of operation in production on finance will certainly have an impact on marketing and ultimately in consumer. Therefore, in an integrated marketing set-up, the various functional areas of management get integrated with the marketing function. Integrated marketing presupposes a proper communication among the different management areas, with marketing influencing the corporate decision making process.

Thus, when the firms objective is to make profit — by providing consumer satisfaction, naturally it follows that the different departments of he company are fairly integrated with each other and their efforts are channelized through the principal marketing department towards the objectives of consumer satisfaction.

The marketing concept emphasizes that it is not enough if a firm ahs consumer orientation; it is essential that such an orientation leads to consumer satisfaction. For example, when a consumer buys a tin of coffee, he expects a purpose to be served, a need to be satisfied.

If the coffee does not provide him the expected fiavour, the taste and the refreshments his purchase has not served the purpose; or more precisely, the marketer who sold the coffee has failed to satisfy his consumer. Realization of Organizational Goals including Profit If a firm has succeeded in generating consumer satisfaction, is implies that the firm has given a quality product, offered competitive price and prompt service and has succeeded in creating good image.

It is quite obvious that for achieving these results, the firm would have tried its maximum to control costs and simultaneously ensure quality, optimize productivity and maintain a good organizational climate.

And in this process, the organizational goals including profit are automatically realized. The marketing concept never suggests that profit is unimportant to the firm.

The concept is against profiteering only, but not against profits. Benefits of Marketing Concept The concept benefits the organisation that practices it, the consumer at whom it is aimed and the society at the society at large. Benefits to the organisation: For example, the concept enable the organisation to keep abreast of changes.

It is quick to respond to changes in buyer behaviour, it rectifies any drawback in its these products, it gives great importance to planning, research and innovation. All these response, in the long run, prove extremely beneficial to the firm.

Another major benefits is that profits become more and certain, as it is no longer obtained at the cost of the consumer but only through satisfying him. The base of consumer satisfaction guarantees long — term financial success. Benefits to Consumers: The consumers are in fact the major beneficiary of the marketing concept. The attempts of various competing firms to satisfy the consumer put him an enviable position.

The concept prompts to produces to constantly improve their products and to launch new products. All these results in benefits to the consumer such as: The consumer can choose, he can bargain, he can complain and his complaint will also be attended to. He can even return the goods if not satisfied. In short, when organizations adopt marketing concept, as natural corollary, their business practices change in favour of the consumer. Benefits to the society: The benefit from the marketing concept is not limited to the individual consumer of products.

When more and more organizations resort to the marketing concept, the society in Toto benefits. It also creates entrepreneurs and managers in the given society.

In fact, the practice of consumer oriented marketing benefits society in yet another way by enabling business organizations to appreciate the societal content inherent in any business.

Societal Marketing concept Now the question is whether the marketing concept is an appropriate organizational goal in an age of environmental deterioration, resource shortages, explosive population growth etc. A-few magazines such as Kalki, Ananda Vikadan, do not accept any advertisements for Cigarettes or alcoholic liquors though it is loss of revenue for them.

This is a typical example of societal marketing concept. It has considerably helped to develop new insight into this exciting field of learning. In marketing, this term was originally coined by Kelly while discussing the issues of ethics and science of marketing. Kotler gave the broadened application of marketing nations to non-business organisations, persons, causes etc.

In broadening the concept of marketing, marketing was assigned a more comprehensive role. The examples of non-business marketing or meta-marketing may include Family Welfare Programmes and the idea of prohibition.

The demarketing concept espouses that management of excess demand is as much a marketing problem as that of excess supply and can be achieved by the use of similar marketing technology as used in the case of managing excess supply. It may be employed by a company to reduce the level of total demand without alienating loyal customers General Demarketing , to discourage the demand coming from certain segments of the market that are either unprofitable or possess the potential of injuring loyal buyers Selective Demarketing , to appear to want less demand for the sake of actually increasing it Ostensible Demarketing.

Whatever may be the objective, there is always a danger of damaging customer relations in any demarekting strategy. Therefore, to be creative, every company has to ensure that its long-run customer relations remain undamaged. Define marketing.

Bring out its importance 2. Briefly discuss the various concept of marketing. Discuss in detail the modern marketing concept. There are different approaches s to the study of marketing.

These approaches have immensely contributed to the evolution of the modern approach and the concept of marketing. To facilitate the study, these approaches may be broadly classified as follows: Functional Approach The second approach is the functional approach under which the study concentrates on the specialized functions or services performed by the marketers and the problems faced by them in performing those functions.

Such marketing functions include buying, selling, storage, standardizing, transport, finance, risk-bearing, market information etc. This approach certainly enables one to gain detailed knowledge on various functions of marketing.

Institutional Approach The third approach is the institutional approach under which the main interest centres around the institutions or agencies that perform marketing functions. Such agencies include wholesalers, retailers, mercantile agents and facilitating institutions like transport undertakings, banks, insurance companies etc.

This approach helps one to find out the operating methods adopted by these institutions and the various problems faced by them and to know how they work together in fulfilling their objectives. Managerial Approach In the managerial approach, the focus of marketing study is on the decision-making process involved in the performance of marketing functions at the level of a firm. The study encompasses discussion of the different underlying concepts, decision influencing factors; alternative strategies — their relative importance, strengths and weaknesses, ad techniques and methods of problem-solving.

Systems Approach Modern marketing is complex, vast and sophisticated and it influences the entire economy and standard of living of people. Under this approach, marketing itself is considered as a sub-system of economic, legal and competitive marketing system. The marketing system operates in an environment of both controllable and uncontrollable forces of the organisation.

The controllable forces include all aspects of products, price, physical distribution and promotion. The uncontrollable forces include economic, sociological, psychological and political forces.

The organisation has to develop a suitable marketing programme by taking into consideration both these controllable and uncontrollable forces to meet the changing demands of the society.

The systems approach, in fact, examines this aspect and also integrates commodity, functional institutional and managerial approaches. Thus, from the foregoing discussion, one could easily understand that the marketing could be studied in any of the above approach and the systems approach is considered to be the best approach as it provides a strong base for logical and orderly analysis and planning of marketing activities.

Discuss the various approaches to the study of marketing. On the one hand, the firm may choose to provide one product to all of its customer; on the other hand, it may determine that the market is so heterogeneous that it has no choice but to divide or segment potential users into submarkets. Segmentation is the key to the marketing strategy of many companies. The strategy involves the development of two or more different marketing programmes for a given product or service, with each marketing programme aiming at each segment.

This is a necessary condition for optimizing efficiency of marketing effort. Heterogeneous Markets: Market is heterogeneous both in the supply and demand side. On supply side, many factors like differences in production equipments, processing techniques, nature of resources or inputs available to different manufactures, unequal capacity among the competitors in terms of design and improvement and deliberate efforts to remain different from other account for the heterogeneity.

Similarly, the demand side, which constitute consumers — is also different due to differences in physical and psychological traits of consumer. To accommodate this heterogeneity, the seller must provide different products.

Varied Promotional Appeals: A strategy of market segmentation does not necessarily mean that the firm must produce different products for each market segment. If certain promotional appeals are likely to affect each market segment differently, the firm may decide to build flexibility into its promotional strategy rather than to expand its product line.

For example, many political candidates have tried to sell themselves to the electorate by emphasizing one message to labour, another to business, and a third to farmers. As another example, the Sheraton Hotel serves different district market segments, such as conventioneers, business people and tourists. Each segments has different reasons for using the hotel.

Consequently, Sheraton uses different media and different messages to communicate with the various segments. Consistency with the Marketing Concept A third reason for using market segmentation is that it is consistent with the marketing concept.

Market segmentation recognizes the existence of distinct market groups, each with a distinct set of needs. Through segmentation, the firm directs its product and promotional efforts at those markets that will benefit most from or that will get the greatest enjoyment from its merchandise. This is the heart of the marketing concept. Over the years, market segmentation has become an increasingly popular strategic technique as more and more firms have adopted the marketing concept.

Other historical forces being the rise of market segmentation include new economies of scale, increased education and affluence, greater competition, and the advent of new segmentation technology. Geographic basis a. Nations b. States c. Regions 2. Demographic basis a. Age b. Sex c. Income d. Social Class e.

Material Status f. Family Size g. Education h. Occupation 3. Psychographic basis a. Life style b. Personalities c. Benefits sought e. Usage rate volume segmentation f. Buyer readiness stages unaware, aware, informed, interested, desired, intend to buy g. Common methods used are: Geographical Segmentation When the market is divided into different geographical unit as region, continent, country, state, district, cities, urban and rural areas, it is called as geographical segmentation.

Even on the geographic needs and preference products could be made. Even through Tata Tea is sold on a national level, it is flavoured accordingly in different regions. The strength of the tea differs in each regions of the country.

Bajaj has sub-divided the entire country into two distinct markets. Owing to the better road conditions in the north, the super FE Sector is promoted better with small wheels; whereas in the case of south, Bajaj promotes Chetak FE with large wheels because of the bad road conditions. Demographic Segmentation Demographics is the most commonly used basis for market segmentation.

Information in several demographic categories is particularly useful to marketers. Demographic segmentation refers to dividing the market into groups on the basis of age, sex, family size cycle, income, education, occupation, religion, race, cast and nationality.

In better distinctions among the customer groups this segmentation helps. The above demographic variables are directly related with the consumer needs, wants and preferences.

Market segments based on age are also important to many organizations. Some aspects of age as a segmentation variable are quite obvious. For example, children constitute the primary market for toys and people 65 years and older are major users of medical services.

Age and life cycle are important factors. In appealing to teenagers, for example, the marketing executive must continually monitor their ever-changing beliefs, political and social attitudes, as wells as the entertainers and clothing that are most popular with young people at a particular time. Such factors are important in developing effective advertising copy and illustrations for a product directed to the youth market.

Sex segmentation is applied to clothing, cosmetics, magazines and hair dressing. Recently even a cigarette exclusively for women was brought out. Beauty Parlours are not synonyms for the ladies.

Income segmentation: It has long been considered a good variable for segmenting markets. In addition, income has been shown to be an excellent segmentation correlate for an even wider range of commodity purchased products, including household toiletries, paper and plastic items, furniture, etc.

Social Class segmentation: This is a significant market segment. For example, members of different social classes vary dramatically in their use of bank credit cards. People in lowe4r social classes tend to use bank credit cards as installment loans, while those in higher social classes use them for convenience purposes.

These differences in behaviour can be significant when segmenting a market and developing a marketing program to serve each segment. Psychographic Segmentation On the basis of the life style, personality characteristics, buyers are divided and this segmentation is known as psychographics segmentation.

Certain group of people reacts in a particular manner for an appeal projected in the advertisements and exhibit common behavioural patterns. Old spice promotes their after shave lotion for the people who are self confident and are very conscious of their dress code.

These advertisements focus mainly on the personality variables associated with the product. Behavioural Segmentation Buyer behavioural segmentation is slightly different from psychographic segmentation. Here buyers are divided into groups on the basis of their knowledge, attitude, use or response to a product.

Benefit segmentation: The assumption underlying the benefit segmentation is that markets can be defined on the basis of the benefits that people seek from the product. These differences can then be sued to segment markets. For example, the market for toothpaste can be segmented in terms of four distinct product benefits; flavour and product appearance, brightness of teeth, decay prevention and price. The major advantage of benefit segmentation is that it is designed to fit the precise needs of the market.

Rather than trying to create markets, the firm indentifies the benefit or set of benefits that prospective customers want from their purchases and then designs products and promotional strategies to meet those needs. A second and related advantage is that benefit segmentation helps the firm avoid cannibalizing its existing products when it introduces new ones.

Buyers can be divided based on their needs, to purchase product for an occasion. The number of times a product is used could be also considered as a segmentation possibility. A tooth paste manufacturer urges the people to brush the teeth twice a day for avoiding tooth decay and freshness.

Either a company can position in single benefit or double benefit which the product offers. The status of the buyers using the product and the number of times they use the product can also reveal that behavioural patterns of consumers vary on a large scale.

Individuals are analyzed in terms of i how they spend their time, ii what areas of interest they see as most important, iii their opinions on themselves and of the environment around them, and iv basic demographics such as income, social class and education. Unfortunately, there is no one best way to segment markets. The truth is that a variable such as social class may describe the types of people who shop in particular stores, but prove useless in defining the market for a particular product.

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Therefore, in using a segmentation criteria in order to identify those that will be most effective in defining their markets. Usually differentialted marketing creaters mreo sales than undifferentiated marketing, but the production costs, product modification and administrative costs, inventory costs, and product promotional budgets and costs would be very high.

The main aim of this type of marketing is the large volume turnover for a particular brand. Requirements for effective segmentations 1.

Measurability — the degree to which the size and purchasing power of the segments can be measured. Accessibility — the degree to which the segments can be effectively reached and served. Actionability — the degree to which effective programmes can be formulated for attracting and serving the segments.

The information gathered will be precise and definite. It helps for formulating effective marketing mix capable of attaining objectives. The marketer need not waste his marketing effort over the entire area. The product development is compatible with consumer needs, pricing matches consumer expectations and promotional programmes are in tune with consumer willingness to receive, assimilate and positively react to communications. Specifically, segmentation analysis helps the marketing manager.

However, the major limitation of market segmentation is the inability of a firm to take care of all segmentation bases and their innumerous variables. Still, the strengths of market segmentation outweigh its limits and offers considerable opportunities for market exploitation. The industrial users are those individuals and organizations who buy the industrial goods for use in their own business.

The segments for industrial goods include manufacturing, mining and quarrying, transportation, communication, agriculture, forestry, finance, insurance, real estate etc. These services may be labour services, personal services, professional services or institutional services.

The peculiar characteristics of services create challenges and opportunities to the service markets. These are given below: For example, health-care services are actions e. These services cannot actually be seen or touched by the patient may be able to seen and touch certain tangible, components of the services e. In fact, many services such as health care are difficult for the consumer to grasp even mentally.

Even after a diagnosis or surgery has been completed the patient may not fully comprehend the service performed. Thus the service provider — customer interaction is a special feature of services marketing. Unlike the tangible goods, services cannot be distributed using conventional channels.

This characteristics also limits the scale of operation of the service provider. For example, a doctor can give treatment to limited number of patients only in a day. This characteristic also emphasizes the importance of the quality of provider — client interaction in services.

This poses another management challenge to the service marketer. For example, an airline company may provide excellent flight service, but a discourteous onboard staff may keep off the customer permanently from that company.

There are exemptions also to the inseparability characteristic. We have already seen that services cannot be standardized. They are highly variable depending upon the provider and the time and place where they are provided.

A service provided on other occasions. Also the standard of quality perceived by different consumers may differ according to the order of preference given by them to the various attribute of service actuality.

For example, the treatments given by a hospital to different persons on different occasion cannot be of the same quality. Consumers of services are aware of this variability and by their interaction with other consumers they also esseneflunced or influence others in the selection of service provider.

This is in contract to goods that can be stored in inventory or resold another day, or even returned if the consumer is unhappy. Analyze characteristics and wants of potential customers The customers wants and needs are to be analyzed in terms of geographic location, demographics, psychographics and product related variable. Identify bases for segmenting the market From the profiles available identify those has strength adequate to a segment and reflection the wants to kjdfgkjsdfgjsdkgjsfdkgjsf 4.

Define and describe market segments As any one basis, say income is meaningless by itself, a combination of various bases has to be arrived as such that each segment is distinctly different from other segments in buying behaviour and wants.

Evaluate market segments The market segments have to be evaluated in terms of revenue potential and cost of the marketing effort. The former involves estimating the demand for the product while the latter is an estimate of costs involved in reaching each segment. Finalise the marketing mix This involves decisions on product, distribution, promotions and price. Product decisions will gkjsdf into account product attributed fdgkdjf wanted by consumers, choice of appropriate brand name and image will help in promoting the product to the chosen segment and pricing can be done keeping the purchase behaviour in mind.

Hence, it can be seen that targeted marketing consists of segmenting the market, choosing which segments to serve and designing the marketing mix in such a way that it is attractive to the chosen segments.

The uniqueness or differentiation may be tangible or intangible depending upon the physical attributes or the psychological attributes of the product.

Establishing and communicating these distinctive aspects is termed positioning.

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It is set of controllable marketing variables that the firm blends to produce the response it wants in the target market. Though there are many basic marketing variables, it is McCarthy, who popularized a four-factor classification called the four Ps: Product, Price, Place and Promotion. Each P consists of a list of particular marketing variables. The second P — Price consists of i Pricing policies and objectives; and ii Methods of setting prices.

The third P — Place consists of i Different types of marketing channels; ii Retailing and wholesaling institutions; and iii Management of physical distribution systems.

Decisions are also required in the areas such as quality, features, styles, brand name and packaging. Thus, a transport service, as it satisfiers human need is a product. Similarly, places like Kashmir and Kodaikanal, as they satisfy need to enjoy the cool climate are also products. The second aspect of product is product planning and development. It include- a Planning and developing a new product; b Modification of existing product lines; and c Elimination of unprofitable items. Product development encompasses the technical activities of product research, engineering and decision.

The third aspect of product is product mix policies and strategies. Product mix refers to the composite of products offered for sale by a company. For example Godrej company offers cosmetics, steel furnitures, office equipments, locks etc. The product mix is four dimensional. It has breadth, length, depth and consistency.

Yet another integral part of product is packaging. Price stands for the monetary value that customers pay to obtain the product. In pricing, the company must determine the right price for its products and then decide on strategies concerning retail and wholesale prices, discounts, allowances and credit terms.

The objectives may be set low initial price and raising it gradually or o set high initial price and reducing it gradually or fixing a target rate of return or setting prices to meet the competition etc. But the actual price setting is based on three factors namely cost of production, level of demand and competition.

Regarding retail pricing, the company may adopt two policies. One policy is that he may allow the retailers to fix any price without interfering in his right. Another policy is that he may want to exercise control over the products.

Discounts and allowances result in a deduction from the base price. Place stands for the various activities undertaken by the company to make the product accessible and available to target customers. There are four different level channels of distribution. The first is zero-level channel which means manufacture directly selling the goods to the consumers. The second is one-level channel which means supplying the goods to the consumer through the retailer.

The third is two-level channel which means supplying the goods to the consumer through wholesaler and retailer. The fourth is three-level channel which means supplying goods to the consumers through wholesaler-jobber-retailer and consumer. There are large-scale institutions such as departmental stores, chain stores, mail order business, super-market etc. The company must chose to distribute their products through any of the above retailing institutions depending upon the nature of the products, area of the market, volume of scale and cost involved.

Promotion stands for the various activities undertaken by the company to communicate the merits of its products and to persuade target customers to buy them. Advertising, sales promotion and personal selling are the major promotional activities.

A perfect coordination among these three activities can secure maximum effectiveness of promotional strategy. For successful marketing, the marketing manager ahs to develop a best marketing mix for his product. What is market segmentation? The suppliers — company — marketing intermediaries — customers chain comprises the core marketing system of the company. Company management has to watch and plan for all these factors. For example Bakery Desotta must obtain sugar, wheat, cellophane paper and other materials to produce and package its breads.

Now the company must decide whether to purchase or make its own. When the company decides to buy some of the inputs, it must make certain specification call for tender etc.

Usually company choose the suppliers who offer the best mix of quality, delivery schedule credit, guarantee and low cost. Sometimes some of the inputs to the company might cost more and hence managers have continuously monitored the fluctuations in the suppliers side. Marketing manager is equally concerned with supply availability.

Sudden supply shortage labour strikes and other events can interfere with the fulfillment of delivery promise customers and lose sales in the short run and damage customer goodwill in long run.

Hence many companies prefer to buy from multiple sources to avoid overdependence on any one supplier. Some times even for the appendage services to marketing like marketing research, advertising, sales training etc. This dependency may also create some bottlenecks, at times, due to the behaviour of these agencies and consequently affect the marketing operations of the company. Finance department has to be consulted for the funds available for carrying out the marketing plan apart from others.

Manufacturing has to be coordinated based on the market demand and supply of the products. According has to measure revenues and costs to help marketing in achieving its objectives.

Usually marketing department has to face the bottlenecks put up by the sister departments while designing and implementing their marketing plans. They are the people who connect the company with the customers. There are number of middle men who operate in this cycle. Agent middle men like brokers and agents find customers and establish contacts, merchant middlemen are the wholesalers, retailers, who take title to and resell the merchandise.

Apart from these channel members, there are physical distribution firms who assist in stocking and moving goods from the original locations to their destinations. Warehouse firms store and protect goods before they move to the next destinations.

There are number of transporting firms consists of rail, road, truckers, ship, airline etc. Every company has to decide on the most cost — effective means of transport considering the costs, delivery, safety and speed. There are financial intermediaries like banks, insurance companies, who support the company by providing finance insurance cover etc. The behaviour and performance of all these intermediaries will affect the marketing operations of the company and the marketing executives have to prudently deal with them.

Coke has competitors in Pepsi. Maruti has competitions from Tata Indica, Santro etc. Not only that the competition comes from the branded segment but also from the generic market, where there are only few branded products of rice but there are numerous generic variety of rice according to the local tastes in each region the country. Sometimes competition comes from different forms.

Basically every company has to identify the competitor, monitor their activities and capture their moves and maintain customer loyalty. Hence every company comes out with their own marketing strategies. Kotler notes that there are different types of publics, Government publics, citizen action publics, local publics, general public and internal publics.

Since, the success of the company will be affected by how various publics view their activity, the companies have to monitor these publics, anticipate their moves dealing with them in constructive ways. The marketer has to face the following types of customers. Markets for personal consumption.

Goods and services that could become the part of a product in those industry. Institutions like schools, hospital, which buy in bulk. The organizations buy goods for reselling their products. They purchase the products to provide public services. Consists of Foreign buyers and Governments. The trends in each macro environment components and their implications on marketing are discussed below: The demographic environment is of major interest to marketers because it involves people the people make up markets.

The world population and the Indian population in particular is growing at an explosive rate. This has major implications for business. A growing population means growing human needs. Depending on purchasing powers, it may also mean growing market opportunities. On the other hand, decline in population is a threat so some industrial and the boon to others. The increased divorce rate shall also have the impact on marketing decisions. The higher divorce rate results in additional housing units, furniture, appliances and other house-hold appliances.

Similarly, when spouses work at two different places, that also results in additional requirement for housing, furniture, better clothing, and so on. Total purchasing power is functions of current income, prices, savings and credit availability. Marketers should be aware of four main trends in the economic environment. These developments had reduced disposable personal income; which is the amount people have left after taxes.

Further, many people have found their discretionary income reduced after meeting the expenditure for necessaries. Availability of discretionary income shall have the impact on purchasing behaviour of the people.

Inflation leads consumers to research for opportunities to save money, including buying cheaper brands, economy sizes, etc. The level of savings and borrowings among consumers affect the marketing. For instance, when family income rises, the percentage spent on food declines, the percentage spent on housing and house hold operations remain constant, and the percentage spent on other categories such as transportation and education increase. These changing consumer expenditure patterns has an impact on marketing and the marketing executives need to know such changes in economic environment for their marketing decisions.

Similarly there are finite non-renewable resources like oil coal and various minerals, which are also not short in supply. In such cases, the marketers have to find out some alternative resources. For instance, the marketers of wooden chairs, due to shortage and high cost of wood shifted to steel and later on fiber chairs. Similarly scientists all over the world are constantly trying to find out alternative sources of energy for oil due to dearth in supply. There has been increase in the pollution levels in the country due to certain chemicals.

In Mumbai-Surat-Ahemedabed area, are facing increased pollution due to the presence of different industries. Some of the main cultural characteristics and trends which are of interest to the marketers are: Marketers have more chances of changing secondary values but little chance of changing core values.

To the extent that sub-cultural groups exhibit different wants and consumption behaviour, marketers can choose sub-cultures as their target markets.

Secondary cultural values undergo changes over time. Marketers have a keen interest in anticipating cultural shifts in order to identify new marketing opportunities and threats. Open heart surgery, satellites all were marvels of technology, but hydrogen bomb was on the bitter side of technology. Technology is accelerating at a pace the many products seen yester-years have become obsolete now.

There could be a new range of products and systems due to the innovations in technology. This technology developments has tremendous impact on marketing and unless the marketing manager cope up with this development be cannot survive in the competitive market.

The environment is made up of laws and government agencies that influence and constraint various organizations and individuals in society. Legislations affecting business has steadily increased over the years. The product the consumes and the society against unethical business behaviour and regulates the functioning of the business organizations.

Removal of restrictions to the existing capabilities, enlargement of the spheres open to MRTP and FEMA companies and broad banding of industrial licenses were some of the schemes evolved by the government. The legal enactments and rules and regulations exercise a specific impact on the marketing practices, systems and institutions in the country. The Packaged Commodities Regulative Order provides for clearly making the prices on all packaged goods sold in retail excluding certain items.

Similarly, when the government changes, the policy relating to commerce, trade, economy and finance also changes resulting in changes in business. Very often it becomes a political decisions. For instance, one Government introduce prohibition, and another government lifts the prohibition. Also, one Government adopts restrictive policy and another Government adopts liberal economic policies.

All these will have impact on business. Hence, the marketing executives needs a good working knowledge of the major laws affecting business and have to adapt themselves to changing legal and political decisions. All the above micro environmental actors and macro environmental forces affect the marketing systems individually and collectively. The marketing executives need to understand the opportunities and threats caused by these forces and accordingly they must be able to evolve appropriate marketing strategies.

Explain the impact of micro environmental actors on marketing management of a firm. Discuss how the macro environment forces affect the opportunities of a firm.

In order to understand consumer behaviour, it is essential to understand the buying process. Numerous models of consumer behaviour depicting the buying process were develop over the years. Among all these models the one given by Howard and Sheth is the most comprehensive and largely approved model. However, as the Howard-Sheth model is a very sophisticated model based on it a simplified is given below: A simple model of consumer decision-making given the figure reflects the notion of the cognate or problem-solving consumer.

This model has three components: Input, Process and Output. The input component of consumer decision-making model comprises of marketing- mix activities and socio-cultural influences.

This involves understanding of the influences of psychological factors on consumer behaviors. The process component of a consumer decision-making model consists of three stages: Need recognition, information search and evaluation of alternatives. The output component of the consumer decision-making model concerns two more stages of purchase process activity: Purchase behaviour and post-purchase behaviour.

The various stages of the buying process are: Need Recognition 2. Information Search 3. Evaluation of Alternatives 4. Purchase Behaviour 5. Post-Purchaser Evaluation 1. Need Recognition The recognition of need its likely to occur when a consumer is faced with a problem, and if the problem is not solved or need satisfied, the consumer builds up tension.

A need for a cooking gas for busy house wife. The marketers need is to identify the circumstance that trigger the particular need or interest in consumers. The marketers should reach consumers to find out what kinds of felt needs or problem arose, what brought them about how they led to this particular product.

Information Search The consumer will search for required information about the product to make a right choice.

How much search he undertakes depends upon the strength of his drive, the amount of information he initially has, the ease of obtaining additional information, the value he places on additional information and the satisfaction he gets from search.

Personal Sources: Family, friends, neighbours, past experience. Commercial Sources: Advertising, sales people, dealers, displays Public Sources: Mass media, consumer welfare organisation. If the brand fails to get into these sets, the company losses its opportunity to sell to the consumer.

As for the sources of the information used by the consumer, the marketer should identify them carefully and evaluate their respective importance as source of information. Evaluation of Alternatives When evaluating potential alternatives, consumers tend to use two types of information i a list of brands from which they plan to make their selection the evoke set and ii the criteria they will use to evaluate each brand. The evoke set is generally only a part — a subject of all the brands of which the consumer is awares.

The criteria used by the consumers in evaluating the brands are usually expressed in terms of product attributes that are important to them. The attributes of interest to buyers in some familiar products are: Fuel economy, pulling capacity, price Computers: Purchase Behaviour Consumers make two types of purchases trial purchases and repeat purchases.

If he product is found satisfactory during trial, consumers are likely to repeat the purchase. Repeat purchase behaviour is closely related to the concept of brand loyalty. For certain products such as washing machine or refrigerator, trial is not feasible and the consumer usually moves directly from evaluation to actual purchase.

A consumer who decides to purchase will make brand decision, quantity decision, dealer decision, timing decision and payment method decision. There are three possible outcomes of post-purchase evaluations by consumers in light of their experience with the product trial purchase.

If the product lives up to expectations of the consumers, they will probably buy it again. If the products performance is disappointing, the will search for more suitable alternative brand. Whether satisfied or dissatisfied with the product, the consumer will pass on their opinion on others. The marketers can send a letter congratualating the consumers for having selected a fine product. They can place advertisements showing satisfied owners. They can solicit customers suggestions for improvements.

At last, the marketers can also help the consumers to dispose of the used brand, for example, by Buy- back-method. An illustration: The decision process begins when the consumer experiences a need or desire for new car. This problem recognition phase may be initiated for any one of several reasons — because recent repair bills have been high, because the present car needs a new set of tires, because the present car has been in an accident, or because the neighbor has just brought a new car.

Whatever the stimulus, the individual perceives a differences or conflict, between the ideal and the actual sale of affairs. When he decided to go in for a new car, he starts searching for information. The consumer may collect information through various sources such as, automobile magazine, fiends, family members, automobile companies, automobile advertisements and so on.

After collecting the information about different automobiles, he evaluates the alternative brands and models of cars. At this point, the consumer must decide on the criteria that will govern the selection of the car.

During the purchase decision stage, the consumer actually makes the purchase decision — whether to buy or not to buy. If the consumer decides to buy the car, then additional decisions must be made regarding types or model of car, when the form whom the car should be purchased and how the car could be paid for.

Hopefully the outcome is positive and the consumer feels that the right decisions have been made. During the post-purchase stage, a satisfied customer is more likely to take about the joys of a new car purchase. On the other hand, problems may develop or the consumer may begin to feel a wrong decision has been made.

A dissatisfied consumer will probably attempt to dissuade friends and associates from buying a new car, or at least will caution them against making the same mistake. Explain the various steps involved in purchase process. How does an understanding of purchase process help the marketer to formulate marketing strategy?

Understand his concerns. His needs have to be focused and his respect has to be earned. He has to be closely followed — what he wants……. To achieve consumer satisfactions, the marketer should know, understand consumer behaviour — their characteristics, needs, attitudes and so on.

But, the study of consumers behaviour is not an easy task as to involves complex system of interaction of various factors namely sociological, cultural, economical and psychological.

The internal influences comprise of motivation, perception, learning and attitudes — all concepts drawn from the field of psychology. The environmental influences include cultural, social and economical. Experts in these areas attempts to explain why people behave as they do as buyers. It encompasses set of values, ideas, customs, traditions and any other capabilities and habits acquired by an individual as a member of the society. Each culture contains smaller groups of subcultures such as national culture, religious culture and social class culture that provides more specific identification and socialization for its members.

A subculture is a distinct cultural group existing as an identifiable segment within a larger culture. The members of a subculture tend to adhere too many of the cultural mores of the overall society, yet they also profess beliefs, values and customers which set them apart.

An understanding of subculture is important to marketing managers because the members of each subculture tend to show different purchase behaviour patterns. Thus, the Japanese culture provides for certain manners of dressing while the Indian culture provides for different patterns. For instance, Hindus consider white and black colours inauspicious for brides during marriage; whereas for Christians white is a auspicious bridal dress and black is auspicious for Muslims.

Social class may be brought of as a rather permanent and homogenous group of individuals who have similar behaviour, interests and life-styles. Since people normally choose their friends and associate on the basis of commonality of interests, social classes have a tendency to restrict interactions, especially with regard to social functions.

In addition, social classes are hierarchical in nature; thus people usually position their social functions. In addition, social classes are hierarchical in nature; thus people usually position their social group either above or below other groups. Usually social classes are divided into six — upper, lower-upper, upper-middle, lower-middle, upper-lower and lower-lower.

Several research studies have pointed out that differences in consumer behaviour are largely an function of social class. The differences in behaviours can be traces in communication skills, shopping behaviours, leisure activities, saving and spending habits. Each culture evolves unique pattern of social conduct.

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The prudent marketer has to analyze these patterns to understand their behaviour to evolve a suitable marketing programme. Sociological Factors The sociological factors are another group of factors that affect the behaviour of the buyers. These include reference groups, family and the role and status of the buyers. These groups include peer group, friends and opinion leaders.

Similarly, Cine stars and Sports heroes are also acting as reference groups to influence buyers. While Cine stars are used to advertise toilet soaps, soft drinks etc. Also the physicians are used as referees for influencing the consumers of toothpaste. The person will have certain position in his family, that is called a status and has a duty assigned — that is role and this status and role also determine buying behaviour. For instance, while buying T. For example, while buying clothing materials, children may influence parents and parents may influence children.

The marketers, therefore, aim their marketing efforts to reach reference groups and through them reach the potential buyers. The marketer needs to determine which member of a family has the greater influence on the purchase of a particular product and should try to reach to the customer to market his product. For example, if the target market is kids, their food and other requirements will certainly be different from aged people.

For example, factory workers and other defence people require footwear of mainly durable type that could withstand serve strain, whereas people with white color jobs require footwear of light and fashionable type. Hence, marketers should by to identify the occupational groups that have interest in their products and services.

An organisatoin can even specialize in manufacturing products needed by a particular occupational group. Again out of this, a sizable part has to be reserved for meeting essential expenses and it is only the balance — the individual has the discretion to spend.

An intelligent marketer has to watch the income — saving trend of his consumer and basing on that evolve a marketing programme. Each person has a distinct personality that will influence his buying behaviour. Personality can be a useful variable in analyzing consumer behaviour.

Psychological Factors Psychological characteristics play the largest and most enduring rile in influencing the buyer behaviour. Motivation may be conscious or subconscious — a force that underlines a behaviour. It is the complex network of psychological and physiological mechanism. Motives can be instinctive or learned; conscious or unconscious, rational or irrational.

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Maslow has classified human needs into five types in the order of importance — basic, safety, social, esteem and self actualization needs. The most urgent motive is acted upon first. If this is fulfilled, the individual proceeds to fulfill the next higher need.

It is important for the marketer to understand the motives that lead consumers to make purchases and he must be able to explain the prospective buyers how best his product can satisfy a particular need.

But he must be sure that the target consumers have already fulfilled the previous need. He asserts that people are not leaky to be conscious of the real motive guiding their behaviour because these motives are often repressed from their own consciousness.

The most important implication of he Freudian model of marketing is that human beings the motivated by symbolic as well as by economic and functional concerns. At times, the marketing analyst must look beyond the apparent reason why an individual purchased a product in order to find the real reason.

Only through special methods of probing such as in-depth interviews, projective techniques their motives can really be discovered and understood. The marketer should be aware of the role of visual and tactile elements in triggering deeper emotions that can stimulate or inhibit purchase. Frederick Herzberg developed a two theory of motivation which distinguishes between dissatisfiers and satisfies. The implication of this theory is that the marketers should do their best to prevent dissatifiers from affecting the buyers and then he should carefully identify the major satisfiers or motivators of purchase.

Perception is the process by which individuals become aware of though any of the five senses and give meaning to their environment. Several technical factors affect the way an object is perceived. Research studies, for example, have indicated that a large and multicoloured advertisement is perceived more quickly and remembered longer than a small black-and-white advertisement.

For example, a consumer may continue to purchase a particular brand even after the consumer knows that a better product can be bought at a lower price. Generally speaking, people have a limited attention span. That is, human beings only comprehend a limited number of objects or messages in a given amount of time. These aspects of perception suggest the importance of keeping commercials simple and brief.

Social and cultural factors also shape perception. As already mentioned, culture and social class have a significant effect on how and what consumers purchase. Persons interested in climbing the social ladders will perceive certain products as inferior if they feel the members of the upper class do not purchase those products. Past experience is a fourth factor influencing perception.

To illustrate, a person may perceive a brand of toothpaste of high quality simply because of past favourable experience with the product. Finally, the mood of the individual is an important determinant of perception; a person who is unhappy or depressed may find it difficult to see the positive side of a product. Perception has three basic characteristics: It is subjective because no two individuals perceive the same object in the same way.

People tend to see what they want to seen and to hear what they want to hear. We receive between 1, and 2, advertising signals per day through exposure to billboards, store signs. And other forms of mass media. Since it is not possible to deal mentally with so many messages, our minds eliminate most of them from conscious awareness.

Because of selective perception, advertising managers must carefully choose their media and the timing and placement of advertise4ments in order to maximize exposure. In addition, if the advertisement is cluttered with many messages, prospective buyers will probably not be able to remember any of them. Perception is summative in the sense that the reception and recognition of a signal is frequently a function of the cumulative effect of multiple signals.

The more often a signal is received, the greater the chance that it will be understood. Also, t he probability that a receiver will correctly interpret a signal is enhanced if the signal is sent through two or more channels. These two points suggest why television advertisers repeat their commercials frequently.

Also the sales person who wants to ensure that a message is understood may send the customer a direct-mail promotion and then visit the customer personally to demonstrate the product. Learning is produced through the interplay of drives, stimuli, cues, responses and reinforcement.

Cues are minor stimuli the determine when, where and how the person responds. Advertisements frequently serve as cues. If a person is thirty drive , a soft drink advertisement may encourage the viewer to reduce the dive by taking a soft drink either from the fridge, or visiting nearby cool-drink bar. These cues can influence response, and if the response if positive, the consumer learns about the product and buys it, which means his response is reinforced.

Stimulus-Response Theory: Stimulus response theory had its beginning with the Russian psychologist Pavlov. In his famous experiment, Pavlov range a bell immediately before feeding a dog.

Eventually, the dog, associating the sound of the bell with the arrival of dinner, learned to salivate when the bell was rung regardless of whether food was supplied. As result, Pavlov concluded that learning was largely an associative process. The stimulus-response model has two important implications for marketing. First, when a new product is introduced, the firm should realize that if may have to extinguish brand habits and preferences before attempting to form new buying habits.

In this light, the firm will wish to seriously consider the strength of its cues. Therefore, it is often necessary to repeat at advertisement a number of times. Cognitive Theory: Cognitive theorists believe that habits are acquired by insight, thinking and problem solving as well as through a stimulus-response mechanism. From this perspective, the central nervous system and the brain become very important intermediatries in the learning process. Cognitive theory has several implications for marketing.

For example, when the firm is designing a sales strategy, it cannot assume that the consumer is going to buy the product simply because of previous satisfaction with the firm. If the consumer has had successful transactions in the past. The practical importance of learning theory for marketers is that they can build up demand for a product by associating it with strong, drives, using motivating cues and providing positive reinforcement.

A brief is a descriptive thought that a person hgksdj fjghdkf something. These beliefs may be based on knowledge, fghj fghddgd dfgdfgdf dgdfgd very much interested in the beliefs of people about their frgdgdf fgd service because they influence their buying behaviour.

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I some of the fgdfgdf are wrong and inhibit purchase, the marketer should launch a campaign to correct these beliefs. Attitudes put them into a frame of mind of liking and disliking an object, moving toward or away from it.

This leads people to behave in fairly consistent way towards similar objects. Hence, the marketer should try to fir his product into existing attitudes rather than to try to change people attitudes.

From the above discussions, it becomes obvious that consumer behaviour is influenced by economic, sociological and psychological factors. The fact is that at a point of time and in a given set of situations, it is influenced by a sum total of these diverse yet interrelated factors. When a consumer is in the process of taking a purchase decision, all these factors are prove to work simultaneously and influence his choice.

But it is possible that the relative importance of these factors vary in a given situation. It is the intelligence of the marketer to find out the nature and intensity of the influence exerted by these factors and to formulate appropriate marketing programme.

Bring out the important of studying consumer behaviour. Discuss the influence of socio-cultural factors in determining consumer behaviour. What are the psychological factors that influence buyers behaviour? To carry out marketing analysis, planning, implementation and control, the marketing manager needs to monitor and analyze the behaviour of customers, competitors, dealers and their own sales and cost data. In order to pursue market opportunities as well as anticipate marketing problems, they need to collect comprehensive and reliable information.

Marion Harper put it this way: Marketing Information Systems is defined as follows: But managers do not always need all the information they ask for and they may not ask for all they really need.

Internal records information consists of information gathered from sources within the company to evaluate marketing performance and to detect marketing problems and opportunities. The marketing intelligence system determines what intelligence is needed, collects it by searching the environment and delivers it to marketing managers who need it. Marketing intelligence can be gathered from company executives, dealers, sales force, competitors, the accounts and annual reports of other organizations etc.

This include use of advanced statistical analysis. Each model represents some real system, process, or outcome. These models can help answer the questions of what, if and which is best. Most companies have centralized marketing information systems that provide managers with regular performance reports, intelligence updates, and reports of research studies.

Mangers need these routine reports for making regular planning, implementation, and control decisions. Developments in information technology have caused a revolution in information distribution. With recent advances in computers, software and telecommunication, most companies are decentralizing their marketing information systems.

In many companies marketing managers have direct access to the information network through personal computers and other means. From any location, they can obtain information from internal records or outside information services, analyze the information using statistical packages and models, prepare reports on a work processor or desk-top publishing system, and communicate with orders in the network through electronic communications.

Such systems offers exciting prospects. They allow the managers to get the information they needed directly and quickly and to tailor it to their own needs.

Marketing research plays a key role in this process. It also helps the formulation of right marketing mix, which include decisions on product, price, place and promotion.

The conduct of marketing research has become so complex due to increasing complexity of marketing and hence requires specialized skills and sophisticated techniques.

Marketing research has been variously defined by marketing researches. An analysis of above definitions clearly highlights the salient features of marketing research: None of the definitions is explicit about the managerial purposes of marketing research, except saying that data are required for solving marketing problem.

On the other hand the scope of marketing research is to wide that it includes all functional areas of marketing including market. Marketing research should help identify and solve the problems of middlemen and distribution. Marketing research enables to anticipate and meet any such changes. In short, marketing research enables the management to identify and solve any problem in the area of marketing and help better marketing decisions. It comprises of research relating to consumer, products, sales, distribution, advertising, pricing and sales forecasting.

A clear view of the scope of marketing research may be obtained by the following classification of marketing research activity. Market Research The purpose of market research is to gather facts about markets and the forces operating therein.

The areas of market research broadly include: The broad areas of consumer research are: The board areas include: Narang Kalyani Publications Paperback English. Management of Organizational Behavior: Leading Human Resources Hersey P. Rishi says 11 months ago.

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