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Q.1 Explain the meaning of marketing and its importance in business. (10 marks) Answer : DEFINITION OF MARKETING.
Marketing is essentially about marshalling the resources of an organization so that they meet the changing needs of the customer on whom the organization depends Palmer.
It is a process by which -one identifies the needs and wants of the people. -one determines and creates a product/service to meet the needs and wants. [PRODUCT] -one determines a way of taking the product/service to the market place. [PLACE] -one determines the way of communicating the product to the market place. [PROMOTIONS] -one determines the value for the product.[PRICE]. -one determines the people, who have needs/ wants. [PEOPLE] and then creating a transaction for exchanging the product for a value. and thus creating a satisfaction to the buyer's needs/wants. TERMS to understand. 1.Product/Service means a product or service or idea to satisfy the people's needs / wants. 2.Needs mean when a person feels deprived of something. 3.Wants mean when a person's need is formed / shaped by personality, culture, and knowledge. 4.Value means the benefits that the customer gains from owning and using the product and the cost of the product. 5.Satisfaction means the extent to which a product's perceived performance matches a buyer's expectation. 6.Exchange means the act of obtaining a needed/ wanted object by offering something in return. 7.Transactions mean a trade off between a buyer / a seller that involves an exchange at agreed conditions.
Marketing is based on identifying, anticipating and satisfying customer needs effectively and profitably. It encompasses market research, pricing, promotion, distribution, customer care, your brand image and much more.
Originally, a “Market” was a public place in a town or village, where household provisions and other objects were available for sale. The definition of market has expanded in this globalized world. The traders may be spread over a whole town, or city or region or a country and yet form a market. For example, stock market, Oil & Oilseeds market, Steel or Metals market etc where people across the countries can participate in the business. The essentials of a market are (i) a commodity / item which is dealt with, (ii) the existence of buyers and sellers, (iii) a place; be it a certain region, a country or the entire world and (iv) interactions between buyers & sellers to facilitate transactions. In this era of rapid changes, it is marketing which keeps the business in close contact with its economic, political, social and technological environment and informs it of events and changes that can influence its activities. American Marketing Association (AMA) offers the following definition of Marketing. ( AMA 2004) Definition: Marketing is an organization function and a set of process for creating, communications and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stake holders
There are many definitions of marketing. The better definitions are focused upon customer orientation and satisfaction of customer needs. Marketing is the social process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others Kotler. Marketing is the management process that identifies, anticipates and satisfies customer requirements profitably The Chartered Institute of Marketing (CIM). The CIM definition (in common with Barwell's definition of the marketing concept) looks not only at identifying customer needs, but also satisfying them (short-term) and anticipating them in the future (long-term retention).
at the right time. and measure and account for marketing decisions. it responds to these changes by rectifying any drawbacks in its products or changing its competitive strategy. the famous management thinker in one of his classic articles has said “Marketing is everything”. in the right place. All other activities in the organization are support services to the marketing strategy that the company pursues.making and planning are not based . marketing is important because it acts as a change agent making people use latest products and improves the standard of living of the people. A marketing plan is key to establishing the dimensions of your market. encourages them to use them. Marketing is important not only to the company but to the consumers and society and to the economy. a definition of marketing insanity. get more out of marketing investments. Based on this reliable data. at worst. the main objective of marketing is to produce products and services for the society as per their needs and tastes. In short. thus leading to higher demand and sales. marketing is considered to be the most important activity. Marketing helps to identify the need for a product revitalization or reinvention. At best it is a flawed strategy. As we know. For the society as a whole. you must make changes. target new customers and determine the value of the product. if sales are slipping and competition is securing your former market share. "In a challenging economy. For a company in any business. It helps an organization to keep abreast of changes taking place in the market and consumer tastes and preferences through market research. If the product that is currently in production does not have a sustantial customer base of support. improved and better quality products are available and he is able to buy goods at convenient locations." Peter Drucker. a consumer is able to complain and expects his complaint to be attended in reasonable time. Thanks to much improved customer service. making a profit. at the right price Adcock.The right product. where you fit according to your product and identifying where a company should focus its marketing budget to achieve the best overall results. He can now buy with credit or debit card or cash or on installments. IMPORTANCE OF MARKETING IN BUSINESS: In a downturn. Thus the company’s decision. marketing becomes even more important to the company's bottom line. Doing the same things in an uncertain economic environment and expecting the same results is. you must find new ways to make marketing work more effectively. Consumer stands to benefit from marketing activities. This higher demand allows the company to achieve economies of scale in both production and distribution resulting in decrease in production and distribution costs which can be used to reduce prices to consumers. He has more alternatives to choose from. and while doing so it creates demand for these goods and services. marketing helps to identify new markets.
• Price your products and services competitively. This. Let's face it anyone that has a business has a desire to grow their business. How can you use marketing to acquire more customers? Spend time researching and create a strategic marketing plan. It results in the increased level of production. Marketing operations require the services of intermediaries such as wholesalers. These services provide employment in large numbers. Guide your product development to reach out to customers you aren't currently attracting. retailers. increases the national income. Let me encourage you to focus on the first which is to acquire more customers. The most effective way to grow and expand your business is by focusing on organic growth. in turn. Why? Because by acquiring more customers you increase your customer base and your revenues then come from a larger base. They include: Acquiring more customers Persuading each customer to buy more products Persuading each customer to buy more expensive products or up selling each customer • Persuading each customer to buy more profitable products • • • All four of these increase your revenue and profit. finance. Successful operation of marketing activities creates. transporters.on just hunches but on sound market information. The firm that follows such practices is sure to prosper under all conditions. which is beneficial to the economy. Marketing provides an effective channel of communication to the company with its consumers by way of advertising and sales promotion. and service provides for storage. • • In modern day business scenario marketing is inevitable. insurance and advertising. The essence of marketing is to understand your customers' needs and develop a plan that surrounds those needs. maintains and increases the demand for goods and services in the economy. Marketing thus brings revenue and earns goodwill for the company. • Develop your message and materials based on solution marketing. . You can increase organic growth in four different ways.
2 Explain the relevance of BCG matrix and GE matrix with examples (10 marks After setting mission and objectives. Portfolio analysis is the process by which company analyze its products and businesses. It may be brand. less or no investment. Business portfolio is the right mix of businesses that company operates and products that offers to customers.beauty care products to food brands it has expanded very vigorously in the Indian market. GE matrix ( General electric) . Strategic planning models used in assessing the existing businesses: 1. To make it clearer. HLL has its mission and objectives separately. Analyzing the existing business portfolio: The current business portfolio of the company is analyzed by the businesses in which it operates. These subsidiaries of organizations are called as Strategic business units (SBU) Strategic business unit: The unit of the company that has separate mission and objectives and that can be planned independently from other businesses. It is managed by separate executive team. It is having distinct mission and objectives. Characteristics of SBU. b. Analyze the existing business portfolio and decide which business should receive more. 1. BCG matrix ( Boston Consultancy Group) 2. 3. let me take an example EXAMPLE :HLL has got its product range from health. 2. Developing the new business portfolio for future to meet growth opportunities and eliminating the unprofitable portfolios.Q. management will develop its business portfolio. or a product line or separate division of the company. Company develops their business portfolio in two steps a.
The BCG Matrix is a great stepping stone for market research and has great possibilities. This scenario requires a low investment. The Stars is the scenario where there is the optimum situation of high growth and high share.BCG MATRIX :The Bcg matrix is based on the product life cycle theory that can be used to determine what priorities should be given in the product portfolio of a business unit. The limitation of this business theory is that it only works with high market share and this is not the only meter for success. The last part of the cycle is the Question mark which is high market growth but low shares. Also there are many situations in business where the Dogs can out earn the Cash Cows. this is one of the worst situations. but for today's companies it may need to be tweaked just a little. It is best to try and increase market share or get it to deliver cash. The Dogs method is the situation where the growth is low and the market share is low. The BCG grid may provide a the basis for a business development strategy for large business but what about the small business? It is possible to have a high market share and not have increased profits. This business model is a pretty decent model and if used in the right situation it can help a business to increase and monitor its market share and growth. . In this situation if the products are not delivering the cash then it is best to liquidate. the BCG Matrix is divided into four types of scenarios. but the growth is very slow. Cash Cows. If you prefer you may use BCG Matrix software. Also known as the Boston Box or Grid. A simple BCG Matrix diagram or template can be used to plan your Growth Market Share strategy and many samples can be found on the web. All business big or small should have some type of a business plan or model that they can base their business products on and by keeping an eye on the market and watching what consumers want they can increase their profit. the Stars. This business method bases its theory on the life cycle of products. The BCG Matrix is a business method that was created by the Boston Consulting Group in the 1970’s. or have a low market share and still be profitable. The Cash Cow cycle deals with low growth and high share. this method requires an increased investment due to the continuous growth. Dogs and Question Marks. In this situation there is a high demand but low returns.
000/528. The BCG Matrix allows a multidivisional organization to manage its portfolio of businesses by examining the relative market share position and the industry growth rate of each division relative to all other divisions in the organization.3. For example.7 96 Ocean Spray 14. When a firm's divisions compete in different industries.9 Mistic 5. The BCG Matrix graphically portrays differences among divisions in terms of relative market share position and industry growth rate.9 Arizona 13. the relative market share of Ocean Spray premium non-carbonated beverage is 14.3 6.7/40.5 = 0.5 % 3. The Boston Consulting Group (BCG) Matrix and the Internal-External (IE) Matrix are designed specifically to enhance a multidivisional firm's efforts to formulate strategies.7 -0.9 Nantucket Nectars 1.36 and Sony's market share in the music industry is 16/27 = 0. and the new Hilton-Promus hotel company's market share is 290.7 -2. Relative market share position is defined as the ratio of a division's own market share in a particular industry to the market share held by the largest rival firm in that industry. a separate strategy often must be developed for each business.8 -1.Autonomous divisions (or profit centers) of an organization make up what is called a business portfolio.3 Lipton 10.55.59.0 .4 -0.1.7 -2.3 SoBe 9. in Table 6-4. . . TABLE 6-4 A. Market Share of Premium Non-carbonated Beverages BRAND MARKET SHARE IN 1999% CHANGE IN SHARE FROM 1998 Snapple 40.896 = 0.2 Nestea 4.
with SBU's for operating systems.GE MATRIX The General Electric Business Screen was originally developed to help marketing managers overcome the problems that are commonly associated with the Boston Matrix (BCG). It utilizes industry attractiveness as a more inclusive measure than BCG's market growth and substitutes competitive position for the original's market share. business software. which now includes a medium category. but are distinctive and individual. So weak companies do badly for the opposite reasons. The point is that successful SBU's will go and do well in attractive markets because they add value that customers will pay for. A loose example would refer to Microsoft. A large corporation may have many SBU's. Growth/share are replaced by competitive position and market attractiveness. you then consider a number of sub-criteria: . consumer software and mobile and Internet technologies. To help break down decision-making further. the fact that BCG deals primarily with commodities not brands or Strategic Business Units (SBU's). such as the problems with the lack of credible business information. So in come Strategic Business Units (SBU's). and that cashflow if often a more reliable indicator of position as opposed to market growth/share. which essentially operate under the same strategic umbrella. The GE Business Screen introduces a three by three matrix.
and low. R & D. Cost reduction. . • Five . Place (or distribution). Two . . Four . The nature of competition and its diversity. At this stage the marketing manager adapts the list above to the needs of his strategy. and energy efficiency. or SBU's. Quality of products and services. What makes this market so attractive? Three .For market attractiveness: • • • • • • Size of market. and for competitive position: • • • • • • • • Market share.Decide on the factors that position the business on the GE matrix.Determine the best ways to measure attractiveness and business position. Branding and promotions success.Identify your products. medium and high in relation to market attractiveness. Market rate of growth. Management profile. Environmental impact. Efficiency. experiences.Answer the question. brands. . Impact of technology. Profit margin.Finally rank each SBU as either low. solutions. medium or high for business strength. The GE matrix has 5 steps: • • • • One . . the law.
Yes the GE matrix is superior to the Boston Matrix since it uses several dimensions. However. brands. Scoring is personal and subjective. products. There is no hard and fast rule on how to weight elements. . • • • This approach does require extensive data gathering.Now follow the usual words of caution that go with all boxes. experiences or solutions is not taken into account. models and matrices. as opposed to BCG's two. • The GE matrix offers a broad strategy and does not indicate how best to implement it. • The interrelationships between SBU's. problems or limitations include: • There is no research to prove that there is a relationship between market attractiveness and business position.
The main responsibility for identifying significant changes in the market place falls on the marketing department. A well designed MIS serves as a company’s nerve centre. prompt and appropriate information to different levels of marketing decision makers. Academically. MIS has taken a step further to provide managers direct access to the databases.Q. Marketers classify and analyze this data from the database as needed. This system called Marketing Decision Support System (MDSS) links a decision maker to relevant databases and analysis tools. With the advent of Computer Technology. documents. it collects lot of data and stores in the form of a database which is maintained in an organized manner. They are able to do this by setting up systems and marketing related research methods to collect this valuable information which is ultimately used to help make marketing decisions. and procedures used by management accountants to solve business problems such as costing a product.3. equipment and procedures to gather. service or a business-wide strategy. Expert systems. Philip Kotler defines MIS as “a system that consists of people. Management information systems are regarded to be a subset of the overall internal controls procedures in a business. timely and accurate information to marketing decision makers. sort.g. A management information system (MIS) is a system or process that provides information needed to manage organizations effectively . Decision Support Systems. The Marketing Departments need to develop Marketing Information Systems that provide them information about buyer wants. In the process. . analyze and distribute accurate. e. Management information systems are distinct from regular information systems in that they are used to analyze other information systems applied in operational activities in the organization. What do you mean by MIS? Explain its benefits. analyze. behavior and also about competition. which cover the application of people. technologies. thereby allowing him to gain deep insights into needs and trends of customers with the help of sophisticated statistical analysis. They are better placed and have advantages in undertaking this task because they are regularly interacting with customers and observing competition. continuously monitoring the market environment both inside and outside the organization. (10 marks) Answer : Marketing environment is changing and presenting new opportunities and threats to an organization. evaluate and distribute needed. and Executive information systems. the term is commonly used to refer to the group of information management methods tied to the automation or support of human decision making. preferences. types and components. A Marketing Information System is a set of procedures to collect.
Previously. That area of study should not be confused with computer science. in a restrictive sense. The process of searching through information in data warehouse to identify meaningful patterns that guide decision making is called Data Mining. and field sales database and combine them to be stored in a huge database called Data Warehouse. creating entire management reports from the raw. the term is used broadly in a number of contexts and includes (but is not limited to): decision support systems. analyze. internal reporting was made manually and only periodically. storing and disseminating data in the form of information needed to carry out the functions of management. sort. data had to be separated individually by the people as per the requirement and necessity of the organization. often without much detail. MIS has also some differences with Enterprise Resource Planning (ERP) as ERP incorporates elements that are not necessarily focused on decision support. product database. important. An 'MIS' is a planned system of the collecting. ERP. In a way it is a documented report of the activities that were planned and executed. as information technology management. Early on. in businesses and other organizations. including . and other data that would help in managing the enterprise. and gave limited and delayed information on management performance. The term "MIS" arose to describe these kinds of applications. and accurate information to marketing decision makers. IT service management is a practitioner-focused discipline. Today. As more and more data was stored and linked man began to analyze this information into further detail. processing. as a by-product of the accounting system and with some additional statistic(s). The area of study called MIS is sometimes referred to. project management and database retrieval application. data was distinguished from information. BENEFITS OF MIS At the start. Later. which were developed to provide managers with information about sales. and instead of the collection of mass of data. resource and people management applications.Today companies organize the information in databases such as customer database. timely. and to the point data that is needed by the organization was stored. Over time these applications became more complex and began to store increasing amounts of information while also interlinking with previously separate information systems. SCM. stored data. business computers were mostly used for relatively simple operations such as tracking sales or payroll data. It must provide for reports based up performance analysis in areas critical to that plan. equipment. CRM. and distribute needed. inventories."  The terms MIS and information system are often confused. evaluate. According to Philip Kotler "A marketing information system consists of people. Information systems include systems that are not intended for decision making. Any successful MIS must support a businesses Five Year Plan or its equivalent. and procedures to gather. with feedback loops that allow for titivation of every aspect of the business.
and in virtual real-time. Management information systems consist of computer resources. It provides marketing intelligence to the firm and helps in early spotting of changing trends. and do so in such a way that indentifies individual accountability. and procedures used in the modern business enterprise. These reports would include performance relative to cost centers and projects that drive profit or loss. It helps the firm adapt its products and services to the needs and tastes of the customers. 5. Various benefits of having a MIS and resultant flow of marketing information are given below: 1. . MIS helps in improving the quality of decision making TYPES OF MIS Management information systems are those systems that allow managers to make decisions for the successful operation of businesses. Management information systems can be used as a support to managers to provide a competitive advantage. MIS must not only indicate how things are going. and the typical systems are identified as follows: Accounting management information systems: All accounting reports are shared by all levels of accounting managers. these professionals are responsible in some way for nearly all of the computers. The system must support the goals of the organization. from the largest mainframe to the desktop and portable PCs.recruitment and training regimens. people. MIS also refers to the organization that develops and maintains most or all of the computer systems in the enterprise so that managers can make decisions. Most organizations are structured along functional lines. In effect. 4. MIS professionals create and support the computer system throughout the company. The goal of the MIS organization is to deliver information systems to the various levels of corporate managers. planning implementation and control responsibilities more effectively. Trained and educated to work with corporate computer systems. By providing quality marketing information to the decision maker. 3. 2. It ensures effective tapping of marketing opportunities and enables the company to develop effective safeguard against emerging marketing threats. but why they are not going as well as planned where that is the case. It allows marketing managers to carry out their analysis. The term MIS stands for management information systems.
Recurrent Information is the data that MIS supplies periodically at a weekly. manufacturing operations have changed. sales call reports. for example. These sources include competition and customers. Monitoring Information is the data obtained from regular scanning of certain sources such as trade journals and other publications. More than any other functional area. and monitors and controls the use of funds over time using the information developed by the MIS department. marketing systems rely on external sources of data. training. Problem related or customized information is developed in response to some specific requirement related to a marketing problem or any particular data requested by a manager.Financial management information systems: The financial management information system provides financial information to all financial managers within an organization including the chief financial officer. This includes data such as sales. and job assignments. work-force analysis and planning. monthly. the human resources management information system plays a valuable role in ensuring organizational success. inventories are provided just in time so that great amounts of money are not spent for warehousing huge inventories. distribution. promotional effectiveness. Because the personnel function relates to all other areas in business. As a result. or annual interval. Market Share. The chief financial officer analyzes historical and current financial activity. which are made available regularly. For instance. quarterly. Activities performed by the human resources management information systems include. Some of these data can be purchased at a price from commercial sources such as Market Research agencies or from Government sources. Information on customer awareness of company’s brands. payables. hiring. Manufacturing management information systems: More than any functional area. 2. managers. raw materials are even processed on railroad cars waiting to be sent directly to the factory. Primary Data or Secondary Data (or both) are collected through survey . A Marketing Information System supplies three types of information. Data about competitors can also be part of this category. 3. pricing decisions. and sales forecasting. Human resources management information systems: Human resources management information systems are concerned with activities related to workers. advertising campaigns and similar data on close competitors can also be provided. Thus there is no need for warehousing. inventory levels. operations have been impacted by great advances in technology. and other individuals employed by the organization. 1. and receivables etc. Marketing management information systems: A marketing management information system supports managerial activity in the area of product development. projects future financial needs. Here relevant data from external environment is captured to monitor changes and trends related to marketing situation. In some instances.
Marketing Intelligence System 3. Marketing Research System 4. Which are? 1.Research in response to specific need. Order to payment cycle has a system which records. the timing and size of orders placed by consumers. and the findings obtained are used to help decide whether the product is accepted and can be launched COMPONENTS OF MIS The following diagram shows a typical Marketing Information System with its components. Analytical Marketing System The Marketing Information System Internal Records System This includes information on (i) Order to payment cycle and (ii) sales information systems. the marketing manager may want to find out the opinion of the target customers before launching the product in the market. For example. Such data is generated by conducting a market research study with adequate sample size. if the company has developed a new product. Internal Records System 2. the payment cycle followed by consumers and the time taken to .
Marketing managers collect data from published sources like books. besides their own. markets.fulfill the orders. All the data which is generated through the other three systems described above are stored in a data base. Sales Information Systems record everything in the sales Department. magazines and journals. systems. Competitor information can also be obtained by buying their product. Some companies appoint specialists to gather consumer and competitor information. in the shortest possible time. Senior managers can access the data base and continually and monitor sales. tools and techniques with supporting software and hardware by which an organization gathers and interprets relevant information from business and environment and turns it into a basis for marketing action. .. Marketing Research provides information to marketing manager when he/she encounters marketing problems. advertising expenditures etc. These surveys may be conducted by the marketing department itself or a it can hire services of an external marketing research agency. This system supplies ‘happenings’ data unlike Internal Records System which supplies ‘results’ data. Marketing Intelligence System This is a set of procedures and sources used by managers to obtain everyday information about developments in the marketing environment. this is a co-ordinate collection of data. Marketing Research System This is the third component of MIS. trade shows and reading their annual reports. The storage and retrieval capability of decision support system allows the collection and use of a wide variety of data throughout the company. attending their press conferences. who does mystery shopping to monitor the performance of their own or competitor’s dealers. ORG – MARG to obtain competitive data on their sales. Analytical Marketing Systems Also known as Marketing Decision Support systems (MDSS). intermediaries and sales personnel. This may involve conducting Marketing Research survey by collecting primary data. Companies purchase commercial information from outside suppliers and market research agencies like IMRB. inventory and accounts receivable schedule and also logistics and distribution management schedules. A proper record system pertaining to order – to – payment cycle management helps mangers to decide on production and dispatch schedule. by talking to customers. performance of the sales people and other marketing systems as well. starting from Sales Call Reports to prospects history to Sales territory and quota information for better sales planning and forecasting purpose. Customers place order through sales people and companies dispatch the goods and receive payments directly or through bank.
we can move onto developing our own approach. establishing a budget. Whether to collect the data from primary source i. Identifying and defining your problem The basic problem is to study the purchase and use of toothpaste in locality xyz Step 2. Developing your approach should consist of an honest assessment of your team’s market research skills. Research design The next step would be to make a research design.Suppose you need to conduct a small marketing research in your neighborhood regarding the purchase and use of toothpastes. the approach should be developed almost exclusively around a defined set of objectives. what will be your approach in the process? (10 marks) Answer : We need to follow the following process for conducting Marketing research Step 1. understanding your environment and its influencing factors.e actual field work or whether to go for secondary source would be matter of choice . Developing your approach As the problem is better defined.4.Q. Clearer objectives developed in Step 1 will lend themselves to better approach development. and formulating hypotheses Step 3.I would prefer a mix of primary source . It would include step by step planning of each element of the research Step 4. Generally speaking. The research design is nothing but a skeleton of the research process. Collecting the data The most important process or stage in the research would be actual collection of data. developing an analysis model.
method and secondary source data as my neighbourbood comprises of a cooperative society where there are around 100 families The best method would be a distribute a questionnaire pertaining to the research product. This is a small questionnaire designed to understand your needs about dental care better Please provide short and to the point answers The answers should be short and to the point Name of the Head of family : ___________________________________ Flat no and wing Number of adults ___________________________________ ______________children _____________________ Which toothpaste do you like to purchase and use and why (adults and children ) _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ _______________________________________________________________________ ____________________________________________________________ Thank you for taking time out to answer the question The questionnaire collected would give me the data about the people’s preferences for a toothpaste and the reasons associated with the same. Step 5. Reporting and presentation Then the data will be compiled and presented . Performing data analysis The next step I would d would be to conduct a data analysis of the data collected Why do people prefer a particular brand will become the outcome of the research Step 6.
In the new product such options don’t exist. (10 marks) Buyer decision process for new products. According to Philip Kotler Adoption is ‘The mental process through which an individual passes from first hearing about an innovation to final adoption’ . Therefore we should understand how consumer comes to know about the product. New Product :A good. Kotler defined this process as adoption process.Sr no A wing B wing C wing total COLGATE 25 21 22 68 PEPSODENT 20 21 28 69 DABUR 15 12 13 40 OTHERS 15 12 20 47 A wing COLGATE PEPSODENT DABUR OTHERS Q. Give examples. You already seen in the existing product buying decision process consumers have the option to search for the information and evaluate them. services or idea that is perceived by some potential customers as new The buyer’s decision for existing products and new products varies. 5 Explain the consumer buying decision process with respect to new products.
Evaluation 4. Evaluation :. . This model suggests that the new products marketer should think about how to help consumer move through these stages.The consumer tries the new product on a small scale to improve his or her estimate of its value. 03. Adoption :. 1. Awareness :. Interest :. Trial 5.Adoption Process :The mental process through which an individual Passes from first hearing about an innovation to final adoption. Consumer go through five stages in the process of adopting new product. 05.The consumer becomes aware of the product but lacks information about it. 04.Consumer consider whether trying the new product makes sense. Trail :. 02. Adoption 01. Awareness 2.The consumer seeks information about the new product. Interest 3.Consumer decides to makes full and regular use of the new product.
. 4. This group consist 34% of customers. 3. 13. Marketer should highlight how the new product will bring the esteem to the consumer. These consumers are status conscious people. 1. This group contains 34% of the total customers. These group customers are attracted towards the benefits of the product. In this categories customer observed the advantage of the new product and the moment the price of the product falls into the affordable category they buy the product.5% of the customers fall into the early adopter categories. 2. The next group is the biggest one in the adoption process. The group looks for the quality product at the affordable prices 5. They make sure that there are no technical or general problems associated with the product. They often take lot of time to adoption of the product. These are traditional and price conscious people.5% of the consumers adopt any new product that enters to the market. 2.Adoption rate: The adoption of new product varies from individual to individual. The final group is called as laggards.
. preferences and behaviors through a process of socialization involving the family and other key institution . Whereas lower creatures are governed by instinct. stratification takes the form of social classes .Q.More frequently. Social Class: Virtually all human societies exhibit social stratification. Subculture: Each culture contain smaller group of subculture that provide more specific identification and socialization for its members. and youthfulness. and Puerto Ricans are found with in large communities and exhibits distinct ethnic tastes and Jews represent subculture with specific culture preference and taboos. For the most part. and social class. humanitarianism. subculture. (10 marks) Answer : Major Factors Influencing Consumer Behavior Consumers do not make their decisions in a vacuum. Four types of subculture can be distinguished . Their purchases are highly influenced by cultural social. human behavior is largely learned. Cultural Factors In a diversified country like India cultural factors exert the broadest and deepest influence on consumer behavior. progress. We want to examine the influence of each factor on a buyer’s behavior. they are “non controllable” by the marketer but must be taken in to account. we will look at the role played by the buyer’s culture. and psychological factors. Explain the different consumer behaviour models. freedom. Stratification sometimes takes the form of a caste system where the member of different caste are reared for certain roles and cannot change their caste membership . polish. The child growing up in a society leans a basic set of values. Italians.Nationality groups such as the Irish. personal. material comfort. external comfort. activity . Culture: Culture is the most fundamental determinant of a person’s wants and behavior. perceptions.Thus a child growing up in America is exposed to the following values: Achievement and success. 6. efficiency and practicality. individualism.
Second. and value orientation. outside entertainment. The general economy of India was also researched on. or they have equal influence . friends. Indians are generally prone to be rough and tough . Their technology had to be adjusted and suited to such an extent that their car is adaptable to Indian conditions. persons are perceived as occupying inferior or superior positions according to their social class. carpeting. Reebok. education . and economics and a sense of personal ambitions. The following products and services fall under such: Husband – dominant: life insurance. Suzuki. Housing. and social roles and statuses. their influence can be substantial. The market needs to determine which member normally has the greater influence in the purchase of a particular products or services. Before establishing their base in India. Their researches were made on the Indian people’s social life. In case of expensive products and services. How did they establish their own individual market in a country like India which is prone to diverse cultures? Let’s take the example of Ford. the parents influence on the unconscious behavior of the buyer can be significant. such as the consumer’s reference group. husband and wives engage in more joint decision making. Even if the buyer no longer interacts very much with his or her parents. family. and co-workers. Third. television Wife – dominant: washing machines. and love. non –living – room furniture. Group having a direct influence on a person are called membership group. The social and economic conditions were analyzed. Coke. Ford. self –worth. Primary group tend to be informal. The family of orientation consists of one’s parents. wealth. such as family. and trade unions. Social Factors: A consumer’s behavior is also influenced by social factors. First. Some are primary groups. way of life. income. has made a market for themselves in India. These are group to which the person belongs and interacts. which tend to be more formal and where there is less continuous interaction: they include religious organizations.Social Classes have several characteristics. personal tastes and preferences. such as occupation. rather than by any single variable . we can distinguish between two families in the buyer’s life . With which there is fairly continuous interaction. they engaged in a lot of researches. fourth. Chevrolet. Mercedes etc. Family Group: Members of the buyer’s family can exercise a strong influence on the buyer’s behavior. The person also belong to secondary group. politics. kitchenware Equal: Living – room furniture. The Extent of this mobility varies according to the rigidity of social stratification a given society. From parents a persons acquires an orientation towards religious. In countries where parents continue to live with their children. PepsiCo and major automobile giants like Toyota.A persons reference group are those groups that have a direct (face to face) or indirect influence on the person’s attitudes or behavior. Person with in each social class tend to behave more alike than persons from two different social classes. either the husband or the wife .. neighbors. professional associations. Reference Group : A person’s behavior is strongly influenced by many group . How to succeed: Companies like Nokia. how they identify an effective product and what makes them get attracted towards a product. automobiles. They had modified their product to suit the Indian conditions. individuals are able to move from one social class to another up or down during their lifetime. vacation. a person’s social class is indicated by a number of variables.
they include the economic model.customers and especially taking into account the road conditions and other social factors they designed the product in such a way that it’s best suited to the conditions and it’s received by the target customers. Broadly. This theory may be traced to Pavlov and his experiments on salivating dogs. The S. People are changing from time to time. R. A customer’s want has to be identified and his expectations must be matched with the other economic and social factors so that their product is receptive. . Bond) on account of the conditioning of behavior and formation of habits. he will allocate the amount over the set of products in a very rational manner with the intention of maximizing the utility or benefits. stimuli and responses of the buyer. This can be related to any product. This also means that customers are open to new and different products from time to time. the buyer is a rational man and his buying decisions are totally governed by the concept of utility. a set of needs to be met and a set of products to choose from. 1) The Economic Model: According to the economic model of buyer behavior. a bell was rung every time food was served to a dog. Models of CONSUMER BEHAVIOR Buyer behavior models. The influence of social sciences on buyer behavior has prompted marketing experts to propound certain models for explaining buyer behavior.R. If an automobile company from a different country can make wonders why cannot our own manufacturers adapt to these techniques. How did they achieve this? Adapting to social conditions play the most important role in establishing your brand in the market. The stimulus response learning theory states that there develops a bond between behavior producing stimulus and a behavior response (S. Today Ford is enjoying a huge market in India. buyer behavior can be influenced by manipulating the drives. the learning model. forgetting and discriminating. the dog started salivating each time upon hearing the bell though no food was served. The model rests on man’s ability at learning. Reebok today is enjoying a huge market in India even though they have hired a company which is phoenix to manufacture shoes and operate under Reebok. the psychoanalytical model and the sociological model. 2) The Learning Model: According to the learning model which takes its cue from the Pavlovian stimulus response theory. The dog’s behavior is conditioned. Pavlov’s experiments brought out associations by conditioning. it is related to behavior-producing stimulus (bell ringing) and behavior response (salivation). an advertisement would be a stimulus whereas purchase would be a response. Eventually. In his well known research with dogs. bond so established causes a set pattern of behavior learnt by the object – dog. Identifying those is the first step towards achieving success and the rest depends on the performance of the product. In terms of consumer behavior. It’s just that they want the product to be flexible and adaptable to their needs and preferences. so do their tastes and preferences. If he has a certain amount of purchasing power.
They are not innate and are derived from the primary drives. According . His buying action can be influenced by appealing to these desires and longings. familiarity. It arouses an individual and keeps him prepared to respond. Cue: Cue or stimulus may be defined as any object in the environment perceived by the individual. 3) The Psychoanalytical Model: The psychoanalytical model draws from Freudian Psychology. The aim of the marketing man is to find out or create the cue of sufficient importance that it becomes the drive stimulus or elicits other responses appropriate to his objective. suppressed desires and totally subjective longings. Here attempt to get water is a response to the primary drive of thirst.” Thus. According to this model. is called learning. It has been defined as “environmental events exhibiting the property of increasing the probability of occurrence of responses they accompany. When a man feels thirsty. etc. pain avoidance. the objective is to find out those conditions under which a stimulus will enhance the chances of eliciting a particular kind of response. Each succeeding time that product or brand brings satisfaction. If at some later date the same needs are aroused. Drive: Drive may be defined as any strong stimulus that impels action. further reinforcement takes place. and sex. Discriminatory response refers to the selective response to similar stimuli.” Responses may be generalized or discriminatory. cue (stimulus). These include the desire for money. Freud introduced personality as a motivating force in human behavior. This type of behavioral change. pride. reinforcement increases the rapidity and vigor of learning. the individual consumer has a complex set of deepseated motives which drive him towards certain buying decisions. he attempts to get water at any cost. increasing possibility that an act will be repeated. “Response also includes attitudes. the same product or brand will be bought. thus. The buyer has a private world with all his hidden fears. Primary drives are based upon innate physiological needs such as thirst. Reinforcement: Reinforcement or reward means reduction in drive and stimulus. perception and other complex phenomena. The secondary drives are based upon learning. rivalry. the individual will tend to repeat the process of selecting and getting the same product or brand of product. Response: Response is an answer to a given drive or cue. when consumption of a product or a brand of product leads to satisfaction of the initiating need (drive/stimulus) there is reinforcement. learning is dependent on drive. further increasing the possibility that in future also. fear. response and reinforcement. Generalized response refers to a uniform response to similar though not identical stimuli. Here.Learning Process: According to the stimulus-response theory. The drives may be classified as primary drives and secondary drives. hunger. The psychoanalytical theory is attributed to the work of eminent psychologist Sigmund Freud. Undifferentiated products such as cigarettes and detergents normally elicit generalized consumer responses but by huge advertising outlays companies try to induce consumers to perceive differences in brands and to make discriminatory responses.
4. The Sociological Model: According to the sociological model. The model tries to establish the linkages between a firm and its consumer – how the activities of the firm influence the consumer and result in his decision to buy. and this becomes the input for Field Two. a certain attribute may develop. pleasure-seeking element. some efforts have been made by marketing scholars to build buyer behavior models totally from the marketing man’s standpoint. If these steps have a positive impact on him. An advertising message from the firm reaches the consumer’s attributes. 3. the individual buyer is influenced by society or intimate groups as well as social classes. the conscience. It is the reservoir of the instinctive impulses that a man is born with and whose processes are entirely subconscious. namely. Field one has two sub-fields the firm’s attributes and the consumer’s attributes. It develops out of the id. an expert in consumer motivation and behavior put forward his model of buyer behavior in 1966. Depending on the situation. Field Two is the area of search and evaluation of the advertised product and other alternatives. The basic theme of the theory is the belief that a person is unable to satisfy all his needs within the bounds of society. destructive and sexual impulses of man. It is modified by the influence of the outside world. he has a desire to emulate. His buying decisions are not totally governed by utility. If this process results in a motivation to buy. where the human being is analyzed as a system with stimuli as the input to the system and behavior as the output of the system. dominates the ego and represents the inhibitions of instinct which is characteristic of man. The Nicosia model and the Howard and Sheth model are two important models in this category. It is the most superficial portion of the id. This is the sum and substance of the ‘activity explanations’ in the Nicosia Model. Both of them belong to the category called the systems model. he develops a certain attitude towards the product.The Nicosia Model: In recent years. 1. it becomes . It represents the moral and ethical elements. 2. follow and fit in with his immediate environment. It may lead to a search for the product or an evaluation of the product. Such repressed tension is always said to exist in the sub-conscious and continues to influence consumer behavior. The ego or the control device that maintains a balance between the id and the superego. The superego or the internal filter that presents to the individual the behavioral expectations of society. Depending on the way the message is received by the consumer. it may result in a decision to buy. Consequently. The messages from the firm first influence the pre-disposition of the consumer towards the product. Its processes are entirely conscious because it is concerned with the perception of the outside world. The Nicosia Model groups these activities into four basic fields.to this theory. such unsatisfied needs create tension within an individual which have to be repressed. 5. It includes the aggressive. Francesco Nicosia. The id or the instinctive. the mental framework of a human being is composed of three elements.
.the input for Field Three. And Field Four consists of the use of the purchased item. Field Three consists of the act of purchase.
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