Name: Bhagyashri Sawant 

Roll Number: 20-1013 

Registration No: 20-1013 
Specialization: Marketing
Batch: 2020-2022 
Institution: Balaji Institute of International Business (BIIB) 
Semester: 1 
Subject Name: Marketing Management 
Assignment Number: 1 
Submission Date: 2nd October 2020 
Total Number Of Pages Written: 21

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1. Distinguish between needs, wants, and demand with suitable examples.Is there any distinction
between marketing and sales? Justify.

Ans. A) Customer needs, wants, and demands are interrelated and arise on the basis of
requirements, willingness, and ability, and all these depend on the requirement, demographic
aspects, socio-cultural aspects and income levels.

Needs: Human needs are states of felt deprivation. Needs are the basic requirements of human
being, without these basic requirements like food, clothes and shelter no one can live life in this
world. The extended forms of need are health and education which for sure every on basic need in
today’s world but they come after food, clothes and shelter. Marketers play no role in creating
needs; they are natural default requirements of every human being. Organization already knows the
needs there is no requirement for any research work to develop product which covers the needs of
human beings.

Various kind of needs:

a) Physical needs: Include the basic human requirements such as air for breathing, food, water,
clothing, and shelter.
b) Social needs: Social needs are the requirement for belongings and affection from friends and
family.
c) Individual needs: Individual needs can be varied depending on each person’s
perception, knowledge, and environment.

Wants: Wants are the form human needs take as they are shaped by culture and individual
personality. Wants are marketed by marketers in such a way that everyone feel these wants should
be mandatory part of life. We can take the examples of telephone, Internet, different variety of
foods and clothing these all come under umbrella of human wants.
Example: An individual needs water to quench his thrist but he may want mineral water of Bisleri or
Coke.

Demands: Demand is want backed by buying power, human beings have unlimited wants but
resource are limited in the world. It’s not possible that each human being get the desire things in the
world. Wants are wishes of human, buying power will convert these wants to demand.
Example: Willingness to buy BMW is a want, but if you have the buying power then it becomes
demand.

Basic Necessity
Need Feel Deprived if this is absent Shoes

From a given set of choices, this Nike, Adidas, Puma,

Want is what an individual may prefer Asics or any local brand

Deman A want that is supported by a

d decision and capacity to buy Puma

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B) Marketing & Sales:

Sales and marketing are two business functions within an organization – they both impact lead
generation and revenue. There is not a big gap between sales and marketing, but there is difference
between sales and marketing.

 Marketing

Marketing can be viewed as an organizational function and a set of processes for creating, delivering,
and communicating value to customers, and managing customer relationships in ways that benefit the
organization and its shareholders. Marketing is the science of choosing target markets through market
analysis and market segmentation, as well as understanding consumer buying behavior and providing
superior customer value. Marketing includes increasing the awareness about your product and services
with the intention of growing business.

 Sales

Sales is a term used to describe the activities that lead to the selling of goods or services. Sales include
operations and activities involved in promoting and selling goods or services.

Is there a difference between Marketing & Sales?

Yes, there is a difference between Marketing & Sales. The aim of sales and marketing both is to grow the
business of the company. Although the approach differs from each other. In marketing, a creative
approach is adopted for the brand building which is done for increasing the business of the company. In
sales, a sales professional directly contacts the customer to close the deal. Here is the customer decision
very much influenced by brand-building exercise of that company. Although many times, sales and
marketing professionals have to co-ordinate with each other. A sales professional follows guidelines
provided by marketing professionals.

 Sales refer to directly approaching your target customers while marketing is telling about your
product and services by using different mediums.
 Sales is when you’re face-to-face with a customer, convincing a person to buy your product
while Marketing is the collection of decisions you make about the market that leads to
successful sales.
 Marketing is the planning part of sales. Marketing chooses the products to make, identifies who
to sell to, what customers want, and who competitors are. Then, marketing figures out how to
distinguish the product from the competition by choosing where the product is sold, it’s price,
packaging, advertising messages, and where the ads run.

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Relationship between Marketing & Sales

Marketing impacts sales in various ways. How you market your product also impacts your sales process.
Marketing informs and attracts leads and prospects to your company and product or service, making the
sales process smoother.

Salespeople are responsible for managing relationships with potential clients (prospects) and providing a
solution for prospects that eventually leads to a sale. Marketers use market research and analysis to
understand the interests of potential customers. Marketing departments are responsible for running
campaigns to attract people to the business’ brand, product, or service.

Increased marketing activity can create the perception of greater sales coverage and it can identify shifts
in buying behavior.

2. Explain the 4Ps, 7Ps, 4Cs, and 4Asof marketing and how these tools are relevant in today’s digital
economy with examples from multinational corporations (MNCs).

Ans. The marketing mix is the tactical or operational part of a marketing plan. The marketing mix is also
called the 4Ps and the 7Ps. The 4Ps are price, place, product and promotion. The services marketing mix
is also called the 7Ps and includes the addition of process, people and physical evidence.

1. Product

Kotler and Armstrong (2010) - Product means the goods-and-services combination the company offers to
the target market.

The term “product” is defined as anything, either tangible or intangible, offered by the firm; as a
solution to the needs and wants of the consumer; something that is profitable or potentially profitable;
and a goods or service that meets the requirements of the various governing offices or society.

Product exemplifies to the goods and services a business sells to its potential customer. In order to
peddle up the sale, one must furnish the proper and adequate information about their particular good
and service to the targeted customer. The product must be capable of resolving and fulfilling the
requirements of the customer. Component of selling the products comprises figuring out the potential
buyers in the market.

Intangible products are service-based, such as the tourism industry, the hotel industry, and the financial
industry. Tangible products are those that have an independent physical existence. Typical examples of
tangible products are automobiles, furniture etc.

Examples:
-Ford Motor Company’s product category is automobiles.

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-Enrich provides Salon services.
-Mc Donalds product category is fast food.
2. Price

Solomon et al (2009) - Price is the amount the consumer must exchange to receive the offering.

The price is the amount a customer pays for the product. The concept of price is in contrast to the
concept of value, which is the perceived utility a customer will receive from a product. Adjusting the
price has a profound impact on the marketing strategy, and depending on the price elasticity of the
product, often it will affect the demand and sales as well. The marketer should set a price that
complements the other elements of the marketing mix. A well-chosen price should:

(a) ensure survival

(b) increase profit
(c) generate sales
(d) gain market share
(e) establish an appropriate image.

From the marketer’s point of view, an efficient price is a price that is very close to the maximum that
customers are prepared to pay. In economic terms, it is a price that shifts most of the consumer surplus
to the producer.

The company’s goal in terms of price is really to reduce costs through improving manufacturing and
efficiency, and most importantly the marketer needs to increase the perceived value of the benefits of
its products and services to the buyer or consumer.

Price covers the actual amount the end user is expected to pay for a product. How a product is priced
will directly affect how it sells. This is linked to what the perceived value of the product is to the
customer rather than an objective costing of the product on offer. If a product is priced higher or lower
than its perceived value, then it will not sell.

Examples:
- Apple charges high prices for its its newer models of products in the market and the prices of old ones
generally drip.
- Tata Nano was launched at a very affordable price in the market,

3. Place

Kotler and Armstrong (2010)- Place includes company activities that make the product available to
target consumers.

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The way of distributing the product is considered as the third ‘P’ of marketing that is considered as a  
place. Analyzing the geographical areas where buyers look for the product and service. It refers to the
geographical location of the availability of products.

Place is also known as channel, distribution, or intermediary. It is the mechanism through which goods
and/or services are moved from the manufacturer/ service provider to the user or consumer.

Availability of the product to the customers at the right time, right place and in the right quantity are
some crucial decisions in placement of a product. Place or placement has to do with how the product
will be provided to or reach the customer.

Examples:
- Apple opened its first online store in India to serve its huge market in our country conveniently.
-Lenskart, an online giant for eyeglasses & sunglasses opened physical stores in Tier 1 & Tier 2 cities to
tap a huge segment of market.

4. Promotion

Solomon et al (2009)- Promotion includes all of the activities marketers undertake to inform consumers
about their products and to encourage potential customers to buy these products.

The element ‘promotion’ in the marketing mix comprises the advertising and events to support the
certain service and product. Various strategies are made to promote the product in the market. In order
to make the end users aware of the product marketers initiate different promotional strategies to
uphold their goods and services. 

The three basic objectives of promotion are:

1. To present product information to targeted consumers and business customers.
2. To increase demand among the target market.
3. To differentiate a product and create a brand identity.

The marketing communication strategies and techniques of an organization fall under the promotion.
These may include advertising, sales promotions, public relations, direct mail, personal selling and
internet promotion. A promotional plan can have a wide range of objectives, including: sales increases,
new product acceptance, creation of brand equity, positioning, competitive retaliations, or creation of a
corporate image.

Examples:
-Free Samples stuck in Sunday editions of Newspaper.
- Smart phone brand Vivo, which has replaced PepsiCo as the title sponsor for the Indian Premier League
(IPL) Season 9, has allocated a budget of Rs 200 crore to leverage its association with the event. The
brand which entered the Indian market in December 2014 has also roped in actor Ranveer Singh as the

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face of its high voltage campaign and he appears in a TVC which talks about the new phone Vivo V3 and
its association with IPL.

5. People

Zeithaml et al (2008) - All human actors who play a part in service delivery and thus influence the buyers’
perceptions; namely, the firm’s personnel, the customer, and other customers in the service
environment.

People are a defining factor in a service delivery process since a service is inseparable from the person
providing it. Thus, a hotel is known as much for its food as for the service provided by its staff. The same
is true of banks and department stores. Consequently, customer service training for staff has become a
top priority for many organizations today.

People are an essential ingredient in service provision; recruiting and training the right staff is required
to create a competitive advantage. Customers make judgments about service provision and delivery
based on the people representing your organisation. This is because people are one of the few elements
of the service that customers can see and interact with.

Examples:
- The attitude of billing counter executives in shopping malls.

6. Process

Zeithaml et al (2008) - The actual procedures, mechanisms, and flow of activities by which the service is
delivered – this service delivery and operating systems.

This element of the marketing mix looks at the systems used to deliver the service. The process is an
integrated buying exposure. From the prime segment of contact, generally the network or website, to
distribution of the good or service. Nonetheless, the process doesn’t block there, because there’s the
post sales service, and creating decent relations with customers even after the purchasing process.

The process is an integrated buying exposure. From the prime segment of contact, generally the
network or website, to distribution of the good or service. Nonetheless, the process doesn’t block there,
because there’s the post sales service, and creating decent relations with customers even after the
purchasing process.

Example:
-  Banks that send out Credit Cards automatically when their customer’s old one has expired again
require an efficient process to identify expiry dates and renewal. 

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7. Physical Evidence

Zeithaml et al (2008)- The environment in which the service is delivered, and where the firm and
customer interact, and any tangible components that facilitate performance or communication of the
service.

Physical Evidence is the material part of a service. Strictly speaking there are no physical attributes to a
service, so a consumer tends to rely on material cues. There are many examples of physical evidence,
including some of the following buildings, equipment, signs and logos, annual accounts and business
reports, brochures, your website, and even your business cards.

Physical evidence is about where the service is being delivered from. It is particularly relevant to
retailers operating out of shops. This element of the marketing mix will distinguish a company from its
competitors. Physical evidence can be used to charge a premium price for a service and establish a
positive experience.  The physical evidence that is demonstrated by an organization should be able to
confirm the assertions of the customers. Although it might not be possible for the customers to
experience the service before they have purchased, the customers can talk to other customers with
experience.

Examples:
- Chandeliers & Perfumes in restaurants & hotels.
- The logo of McDonalds ‘M’ makes it easier

Example of 7 P’s- Starbucks

Starbucks Corporation is an American multinational chain of coffeehouses and roastery reserves

headquartered in Seattle, Washington. As the world's largest coffeehouse chain, Starbucks is seen to be
the main representation of the United States' second wave of coffee culture. As of early 2020, the
company operates over 30,000 locations worldwide in more than 70 countries. Starbucks locations serve
hot and cold drinks, whole-bean coffee, microground instant coffee known as VIA, espresso, caffe latte,
full- and loose-leaf teas including Teavana tea products, Evolution Fresh juices, Frappuccino beverages,
La Boulange pastries, and snacks including items such as chips and crackers; some offerings (including
their annual fall launch of the Pumpkin Spice Latte) are seasonal or specific to the locality of the store.

Product: Starbucks offers its customers a very good number of food and drink options. The main
categories of Starbucks products are breakfast, lunch, cakes & cookies, muffins, pastries & doughnuts,
fresh fruit, bottled soft drinks, tea, espresso beverages, filter Coffee, frappuccino blended beverages,
refresha, and cold brew. Starbucks is famous for its expertly roasted and richly brewed coffee. It is also
popular for a selection of premium teas.

Price: There are a number of pricing strategies available to organisations. Premium, cost-plus, loss
leader, and going-rate are some of the popular pricing strategies. Starbucks uses a premium pricing

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strategy. As mentioned above, the company is famous for its richly brewed coffee and a selection of
premium teas. Many customers often draw a conclusion that quality products come with a high price.
Starbucks has made use of this perception and set premium pricing as the company’s pricing strategy.

Place: Starbucks offers most of its products through Starbucks cafés. As of December 2019, the company
operates in 76 countries and has over 31,256 stores. Starbucks has introduced ‘Starbucks on the go’
which is a premium self-serve beverage solution providing a selection of great tasting hot drinks
(Starbucks Corporation, 2020). It also has developed Starbucks App for busy customers who would like
to walk in select stores and go straight to their coffee.

Promotion: Starbucks has a customer loyalty scheme called ‘Starbucks Rewards’. As members, people
can collect 2 stars for every $1 they spend in stores or online. Every 125 Stars they collect makes them
eligible for a reward which is redeemable for a drink or food item.
Corporate social responsibility is another powerful mechanism often used by Starbucks. In 2015, the
company announced that it raised more than $5 million for youth organizations in the U.S. and Canada
through its partnership with Oprah Winfrey. Oprah Winfrey is globally recognised as a media leader and
philanthropist.

People: Starbucks already has a massive workforce. In addition, it plans to recruit around 240,000 more
people worldwide including its home country (the USA) by 2021. It is an equal opportunity employer and
is committed to building a diverse workforce. Starbucks is also well-known for its investment in
employee training and development. It is a customer centric company where customers are the focal
point.

Process: Each Starbucks business function goes through a process. Starbucks is often a very busy place,
and employees need to serve customers as efficiently as possible. The interaction with the customers
begins with a greeting by a Starbucks employee. Customers will then place their food/drink order and
make the payment. This is then followed by the order being served and a farewell being given.

Physical Evidence: Physical environment of Starbucks includes but not limited to its store designs, logo,
coffee cups, and napkins. Starbucks offers customers an inviting atmosphere. It has adopted a new
approach to store designs. The new approach requires Starbucks designers to look at each store
individually to ensure that it looks distinctively local.

4 C’s of Marketing

Consumer
According to the 4Cs of marketing, companies should only sell products that the consumer wants to buy.
Thus, you should research consumer wants and needs. The most effective way to do this is using Jobs to
be Done and outcome-driven customer research. Once this is clear, focus your efforts on attracting
consumers one-by-one with an irresistible offer.

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The product is at the core of any marketing effort. And if you work in a software company, it can
become the main marketing vehicle. Though, the reality is that it’s just one piece of the puzzle. The
product must solve a customer need or pain to be desirable, and to eliminate the competition it must be
unique.
Example: Feedback Forms/Surveys.

Cost
The price is only a small part of the total cost to satisfy a product that a consumer wants or needs. The
cost reflects the total cost of ownership, not just the price the consumer pays for the goods. Price
becomes just one of many elements within the total cost of satisfying the customer’s need.
Cost could be influenced by the time spent acquiring the product or service, the cost of conscience when
it comes to consuming the product and the cost of change or implementation. It could even include the
cost of the buyer not selecting a competitor’s product or service.

A focus on cost to satisfy the customer will ensure that more factors than just the purchase price are
being considered. It drives a relentless focus on the customers’ experience. This stacks value well
beyond the value your product delivers, and enables you to increase prices because value exchange
happens sooner.

Communication
Promotion suggests that the relationship is one-way, but with the rise of social media and the internet,
“communication” is a better description. It represents a much broader focus on the entire buying
experience. This is driven by the consumer of a product. It indicates that it’s a cooperative process that’s
led by the buyer.

The 4Cs of Marketing work towards establishing a dialogue with prospects. This is based on their needs
and challenges. Communications must be designed to build meaningful relationships because there’s
more give-and-take between the brand and the buyer. It includes any form of advertising, public
relations, viral marketing, or any other communication between the brand and its prospective buyer.
Example: Promotional messages, emails etc.

Convenience
Consumers aren’t limited to a just few places to satisfy their needs and wants. In a world where there’s
too much choice, brands must understand how the target market prefers to buy. Once understood, the
brand has to adapt.A customer is not bound to buying a product or service from a physical location.
Convenience focuses on the ease of buying the product. Brands must build buying experiences that
delight their ideal buyer.
Example: Online Ordering, Home Delivery.

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4 A’s of Marketing

1. Affordability: Here Affordability does not mean that cheaper products should be made and marketed,
the meaning is to reach the customer by satisfying their needs. The designing of the product should
match the needs of the customer. The Customer should not think that they cannot buy it, that means it
should be in their buying capacity. The income earned in rural markets is from different ways , so by
keeping this in mind most of the companies should design the product in such a way that it reaches the
customer.

2. Availability: The greatest problem in the rural market is to reach the customer or retailer. Its the
logistics way to make the product available there . Once it reaches the retailers shelf then there will not
be any problem. This is because there will be lesser number of brands available at market and the
Influence or image/ Relationship of the retailer makes the difference. The companies should work out to
reach the customer in time. Most of the products are promoted well but by the time it reaches the
customer it gets late. So reaching the market should be considered.

3. Awareness: The Awareness program should be in such a manner that it should reach the customers
mindset. The main way of reaching the customer is through the commercials on media like TV, Radio
and Outdoor . The awareness programs should be conducted at the area ( Junction) where the village
heads meet or in other way the meeting place at the villages. The awareness program should be in such
a way that it should contain some message to the audience, there should be some concern for them and
their place. The promotional activities should be good in the local language.

Apart from this there are some things which the company should think of, such as Colour of the product,
Packaging , logo and slogan so on. This should be in such a way that by looking at the product only the
customer should feel that they can go for that , and they should be in such a position to differentiate the
product form the copy cat one.

4. Acceptability: The most important theme of Marketing Mix is Acceptability. The customer should
think that they can buy the product by putting an extra money on that. They should feel that the
product is designed as per their needs and it should deliver a great solution to the customer. They
should think that the product gives some value to them , and it should serve the purpose what they are
planning to buy The product should be designed in a user-friendly manner such that it satisfies all the
needs of a consumer by deriving them some value. If the rural consumers are willing to put in extra
money for buying the product, it shows their acceptability towards the brand.

So, by these four components of Marketing mix the company can reach the rural market. The companies
which have worked it well they have done their best in the rural market. The companies like LG and HUL
have changed the dynamics.

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3. What are the causes of Marketing Myopia? Explain, with examples, how companies have overcome
short-sightedness in marketing of products and services.
Ans. Marketing myopia is a concept that says that companies focus on their needs & short term growth
strategies instead of taking care of the needs & wants of the consumer & therefore fail due to their
short-sightedness.
The firm is not able to adapt to the highly dynamic market where consumer needs & wants are changing
frequently. The company is not able to predict future & think on long terms.

Causes of Marketing Myopia:

- Concentrating more on products and not on customers

Certain companies and brands focus more on the product and are constantly running behind pushing
the product in the market. Their main focus is selling. In this process, they often turn a blind eye to
customer expectations and requirements. Failure to understand what the customers actually need leads
to customers moving away. A company will presume that since they have been performing so well, they
can simply manufacture a large volume of products without tailoring them to the needs of the
consumers. There is a lesson to be learnt here – always solve problems first, then go for mass
production.

-  Failure to Consider Changing Consumer Lifestyle in the Digital Age

‘Change is the only constant.’ Another point to mention that catches many companies off guard is that
they seem to fail to predict how the future will be. They fail to notice the changing consumer lifestyle in
this digital age. They do not see the trends of the market, and this puts many companies in a precarious
situation, thinking it would be safe to not worry so much about the future and focus only on the present
situation of things.

- Companies suppose there are no competitive substitutes

This is a sort of functional fixedness– people think there’s only one way to do a certain thing. A product
may have unique capabilities, but that doesn’t mean something else can’t help customers achieve the
same end goal. Knowing who your competitors are, and what they are offering, can help you to make
your products, services and marketing stand out. It will enable you to set your prices competitively and
help you to respond to rival marketing campaigns with your own initiatives.

- Failing to consider the requirements of the consumer

Oftentimes, companies put a ton of effort, time, and money into their own products without considering
the needs and desires of their consumers. For any business, it should be clear that the end consumers
are always the most important assets and they must cater to what they want in order to stay relevant.
In modern marketing, you no longer pour your money and effort to advertise the product and wait for
the customers to come. Now is the time to make products with and for specific customers.

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Not only providing information to help customers evaluate the product, but the business also needs to
focus on delivering that information in the shortest amount of time to the most targeted customer
group at the right time, in the right place.

Example: Blackberry- Blackberry’s phones had a 50% market share in the US and 20% world in 2006.
When Smartphones were introduced in the market, blackberry’s market started declining. Today,
blackberry holds 0% of the market in the smartphone industry.

Nokia- Back in early 2000 to 2006; Nokia’s button pad phones were at the top of the market and Nokia
had the entire market share. Nokia didn’t change its product with the changing technology. In 2016,
exactly 10 years later, Nokia’s phones were nowhere to be found in the market. Samsung and iPhones
captured the whole market share which was once belonged to Nokia.

Example- Nike
In the mid-20th century, an American shoe manufacturer rose in prominence when they made track
running shoes for athletes in the 1960 Summer Olympics. Their target audience were sports
professionals and athletes who needed shoes for their sports. They started with running shoes but soon
created cleats and basketball shoes for football and basketball, respectively. They eventually started to
face stiff competition from Adidas, a major European shoe manufacturer. Nike could have either
continued to design only shoes or diversify their business. They chose the latter and they have reaped
the benefits since then.

Nike started to manufacture sports apparel (like jerseys, shorts, and t-shirts), as well as sports
equipment to appeal to a broader audience with a much wider range of products and accessories.
Adidas followed suit but it was a tad bit late as they have always played second fiddle to Nike. Nike has
been the market leader in sports apparel and gear for several years now, holding a sizeable market lead
over its competitors.

This example shows that when you diversify your products and understand what industry you are in,
then you will not be shortsighted by your competitors and fall victim. Nike realized that they were much
more than a shoe manufacturer; Nike realized they were a sports gear manufacturer. Diversification
leads to market expansion, thereby preventing marketing myopia. Nike learned to evolve and they are
still evolving to this day. The adapted to meet customers’ needs.

4. Explain the factors influencing consumer behaviour. Describe the five stage buying decision process
model with a suitable example.

Ans. Consumer behavior refers to the selection, purchase and consumption of goods and services for
the satisfaction of their wants. There are different processes involved in the consumer behavior. Initially
the consumer tries to find what commodities he would like to consume, then he selects only those

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commodities that promise greater utility. After selecting the commodities, the consumer makes an
estimate of the available money which he can spend. Lastly, the consumer analyzes the prevailing prices
of commodities and takes the decision about the commodities he should consume.

The factors influencing Consumer Behavior are:

 Cultural Factors
A group of people are associated with a set of values and ideologies that belong to a particular
community. When a person comes from a particular community, his/her behavior is highly
influenced by the culture relating to that particular community. Some of the cultural factors are:
i. Culture
Cultural Factors have strong influence on consumer buyer behavior.  Cultural Factors include the
basic values, needs, wants, preferences, perceptions, and behaviors that are observed and learned
by a consumer from their near family members and other important people around them.
Example: The choice of preferring vegetarian/non- vegetarian restaurants.
ii. Subculture
Within a cultural group, there exists many subcultures. These subcultural groups share the same set
of beliefs and values. Subcultures can consist of people from different religion, caste, geographies
and nationalities. These subcultures by itself form a customer segment.
Example: Metro cities have cafes and pubs while rural areas do not promote a party culture.
iii. Social Class
Each and every society across the globe has form of social class. The social class is not just
determined by the income, but also other factors such as the occupation, family background,
education and residence location. Social class is important to predict the consumer behavior.
Example: Upper class consumers want high-class goods to maintain their status in the society.

 Personal Factors

Factors that are personal to the consumers influence their buying behavior. These personal factors
differ from person to person, thereby producing different perceptions and consumer behavior.
Some of the personal factors are:
i. Age
Age is a major factor that influences buying behavior. The buying choices of youth differ from that
of middle-aged people. Elderly people have a totally different buying behavior. Teenagers will be
more interested in buying colorful clothes and beauty products. Middle-aged are focused on house,
property and vehicle for the family.
Example: Youth prefer sports shoes and brands like Adidas or Nike while the elderly are not brand
conscious.
ii. Income
Income has the ability to influence the buying behavior of a person. Higher income gives higher
purchasing power to consumers. When a consumer has higher disposable income, it gives more

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 opportunity for the consumer to spend on luxurious products. Whereas low-income or middle-
income group consumers spend most of their income on basic needs such as groceries and clothes.
Example: High income groups prefer brands like Gucci & Rolex.
iii. Occupation
Occupation of a consumer influences the buying behavior. A person tends to buy things that are
appropriate to this/her profession.
Example: A doctor would buy clothes according to this profession while a professor will have
different buying pattern.
iv. Lifestyle
Lifestyle is an attitude, and a way in which an individual stay in the society. The buying behavior is
highly influenced by the lifestyle of a consumer.
Example: When a consumer leads a healthy lifestyle, then the products he buys will relate to
healthy alternatives to junk food.

 Societal Factors

Humans are social beings and they live around many people who influence their buying behavior.
Human try to imitate other humans and also wish to be socially accepted in the society. Hence their
buying behavior is influenced by other people around them. These factors are considered as social
factors. Some of the social factors are:

i. Family
Family plays a significant role in shaping the buying behavior of a person. A person develops
preferences from his childhood by watching family buy products and continues to buy the same
products even when they grow up.
Example: A family is most likely to buy a certain brand of tea over the years.

ii. Reference Groups

Reference group is a group of people with whom a person associates himself. Generally, all the
people in the reference group have common buying behavior and influence each other.
iii. Roles and status
A person is influenced by the role that he holds in the society. If a person is in a high position, his
buying behavior will be influenced largely by his status.
Example: A person who is a Chief Executive Officer in a company will buy according to his status
while a staff or an employee of the same company will have different buying pattern. 

 Psychological Factors

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Human psychology is a major determinant of consumer behavior. These factors are difficult to
measure but are powerful enough to influence a buying decision. Some of the important
psychological factors are:

i. Motivation
The level of motivation also affects the buying behavior of customers. Every person has different
needs such as physiological needs, biological needs, social needs etc. The nature of the needs is
that, some of them are most pressing while others are least pressing. Therefore a need becomes a
motive when it is more pressing to direct the person to seek satisfaction.
ii. Perception
Selecting, organizing and interpreting information in a way to produce a meaningful experience of
the world is called perception. Customer perception is a process where a customer collects
information about a product and interprets the information to make a meaningful image about a
particular product. When a customer sees advertisements, promotions, customer reviews, social
media feedback, etc. relating to a product, they develop an impression about the product. Hence
consumer perception becomes a great influence buying decision of consumers.
iii. Learning
When a person buys a product, he/she gets to learn something more about the product. Learning
comes over a period of time through experience. A consumer’s learning depends on skills and
knowledge. While a skill can be gained through practice, knowledge can be acquired only through
experience. In conditional learning the consumer is exposed to a situation repeatedly, thereby
making a consumer to develop a response towards it. Whereas in cognitive learning, the consumer
will apply his knowledge and skills to find satisfaction and a solution from the product that he buys.
iv. Beliefs and Attitudes
Customer possesses specific belief and attitude towards various products. Since such beliefs and
attitudes make up brand image and affect consumer buying behavior therefore marketers are
interested in them. Marketers can change the beliefs and attitudes of customers by launching
special campaigns in this regard.

5 Stage Buyer Decision Process

Evaluation Post
Need Information Purchase
of Purchase
Recognition Search Decision
Alternatives Behaviour

1. Problem/need recognition

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This is often identified as the first and most important step in the customer’s decision process. A
purchase cannot take place without the recognition of the need. The need may have been triggered
by internal stimuli (such as hunger or thirst) or external stimuli (such as advertising or word of
mouth).

2. Information Search
The second stage of the purchasing process is searching for information. Once the need is
recognized, the consumer is aroused to seek more information and moves into the information
search stage.
The consumer may have heightened attention or may undertake an active search for information.
The amount of searching a consumer will depend on the strength of his drive, the amount of
information he starts with, the ease of obtaining more information, the value he places on
additional information and the satisfaction he gets from searching.
Consumers can get information about goods from different sources.
 Personal sources: This includes family, friends, neighbors, acquaintance, etc.
 Commercial source: This includes advertising, salespeople, dealers, packaging, display, etc.
 Public sources: This includes mass media, consumer rating organizations, etc.
 Experimental sources: This includes handling, examining, using, etc. Such information becomes
decisive.

3. Evaluation of alternatives
Individuals will evaluate different products or brands at this stage on the basis of alternative
product attributes – those which have the ability to deliver the benefits the customer is seeking. A
factor that heavily influences this stage is the customer’s attitude. Involvement is another factor
that influences the evaluation process.
For example, if the customer’s attitude is positive and involvement is high, then they will evaluate a
number of companies or brands; but if it is low, only one company or brand will be evaluated.

4. Purchase Decision/Purchase
At this point, customers have already explored multiple options. They are aware of the pricing and
payment options available. Here, consumers are deciding whether to buy that product or not. Even
at this stage they can still drop the purchase and walk away. Usually, the consumer will buy the
most preferred brand. But two factors might influence the purchase intention and the purchase
decision. The first factor is the attitudes of other people related to the consumer. The second factor
are unexpected situational factors. The consumer may form a purchase intention based on factors
such as expected price and expected product benefits.

5. Post-Purchase Evaluation
In the final stage of the buyer decision process, post-purchase-purchase behavior, the consumer
takes action based on satisfaction or dissatisfaction. After buying the product, customers compare
products with their expectations. There can be two outcomes:  Either satisfied or

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 dissatisfied.  Consumers will be happy after buying the product if it has satisfied their needs. A
dissatisfied customer might feel as though he took an incorrect decision. However, even when a
customer is satisfied, there is no guarantee that the customer might be a repeat
customer. Customers, either satisfied or dissatisfied, can take actions tot distribute their experience
in the form of customer reviews. This may be done through reviews on customer forums, website,
social media conversations or word of mouth.

Example:

Buying a new smart cellphone.

The first stage is likely to be that when we have a need for communication or access to the
Internet, or problem because we cannot interact with friends using social media. The value added
by products such as Android, iPhone or Windows phone and others should satisfy the need or solve
the problem.
So the second stage is where we speak to our friends and surf the Internet looking at alternatives,
which represent stage two – or our information search. As a buyer we might visit a local cellphone
store and speak to the sales staff to help us complete stage three, i.e. our evaluation of
alternatives. Stage four is the selection of product and we go and make your final decision and buy
the shortlisted smartphone from a local store or using an e-commerce website. Stage five involves
0our post-purchase evaluation whereby we use the phone and have a positive, negative or
mediocre experience of the product. If it doesn’t satisfy our needs you take action and more
importantly tell others of our problems. If we’re pleased with the product, we can tell our friends
and this will influence stage two (their information search) when they decide to buy a cellphone.

5. How a marketer can execute situation analysis while designing a marketing plan? State the
impact of environmental factors while explaining the tool(s)for situational analysis.

Ans. Situation analysis is basically the process of critically evaluating the internal and external
conditions that affect an organization, which is done prior to a new initiative or project.
It provides the knowledge to identify the current opportunities and challenges to your organization,
service or product. This in turn helps with devising a strategy to move forward from your current
situation to your desired situation.

A marketer can execute situation analysis by conducting the following steps.

 Conduct a Customer Analysis

This should be the first step in a market situation analysis. By doing thorough research on the target
market to understand the demographics, locations, trends, interests, challenges etc. A customer profile
can help in organizing the information properly.

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An in-depth customer analysis will help in understanding market trends, customer behavior and needs
and device effective strategies to reach them effectively.

 Analyze the Competitive Advantage

In order to determine competitive advantage, there is a need to identify the core competitors, their
product positioning, their strengths and weaknesses.

 Scan Your Environment

Investigate how internal factors such as available resources, skills of employees etc. and external factors
such as economic and political trends, can affect the performance of the organization.
The SWOT analysis as well as the analysis of Micro and Macro Environment can serve as useful
environmental scanning tools.

SWOT Analysis

STRENGHTS WEAKNESS

OPPORTUNITIES THREATS

SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of planning
and helps marketers to focus on key issues. SWOT stands for strengths, weaknesses, opportunities, and
threats. Strengths and weaknesses are internal factors. Opportunities and threats are external factors. A
strength is a positive internal factor. A weakness is a negative internal factor. An opportunity is a
positive external factor. A threat is a negative external factor.

Strenghts- Strengths describe what an organization excels at and what separates it from the
competition: a strong brand, loyal customer base, a strong balance sheet, unique technology, and so on.
For example, a hedge fund may have developed a proprietary trading strategy that returns market-
beating results. It must then decide how to use those results to attract new investors.
Weakness- Weaknesses stop an organization from performing at its optimum level. They are areas
where the business needs to improve to remain competitive: a weak brand, higher-than-average
turnover, high levels of debt, an inadequate supply chain, or lack of capital.
Opportunities- Opportunities refer to favorable external factors that could give an organization a
competitive advantage. For example, if a country cuts tariffs, a car manufacturer can export its cars into
a new market, increasing sales and market share.

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Threats- Threats refer to factors that have the potential to harm an organization. For example, a
drought is a threat to a wheat-producing company, as it may destroy or reduce the crop yield. Other
common threats include things like rising costs for materials, increasing competition, tight labor supply
and so on.

Micro & Macro Environment and its impact:

Micro Environment
The micro environment is the operating environment of the firm. This is because the functioning of the
micro environment has a direct and immediate bearing on the company.

1. Customers
The main purpose for the existence of most organizations is to satisfy the needs and wants of
the customers. The enterprise aims to please the customer and earn a profit in return.So the
ultimate aim is to provide the best products/services to the customer at the best prices. Failure
to do so may result in failure of the business. This is why it has become increasingly important to
listen to customers and value their feedback. This is why customer consumer surveys have
increasing importance in today’s markets.

2. Competitors
There are no pure monopolies in the world. Every organization, whether big or small, has
competition and competitors. So the company has to keep a constant check on their
competitors. The company must ensure that their products have a USP that makes them
different and unique in the market. The products offered must also be better and cheaper than
those of the competition.

3. Employees
Employees or labor is one of the most important factor of production for a company. Human
resources are a significant factor in the success (or failure) of a firm. Hence employing the
correct people, best suited to your firm is of vital importance.And training and development of
these employees is also essential. If care is not taken in this matter the organization can never
succeed, because employees are the back bone of every organization.

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 4. Shareholders
Shareholders invest in the company, but they are not merely investors. They own shares of the
company, so they are actually owners of the company in a way. This means they get a say in the
running of a company. Shareholders will also demand a return on their investment. So it is the
company’s duty to earn profits and pass on these benefits to the shareholders. They have to
create wealth for these shareholders.

5. Suppliers
Suppliers provide the firm with the materials and factors of production they need to run the
business. The relation between the company and the suppliers is a power equation. Both
depend on each other for their survival. So it is necessary for the company to have healthy and
amenable relations with their suppliers. This is essential to the smooth running of the
organization. For example if the company has a falling out with one raw material supplier it
could delay their whole production process by days.

6. Media
Every company is going to need media to promote their brand and market their products. So it is
necessary that the company maintain their relationship and their status quo with the media.Any
negative coverage in the media can lead to huge losses for the company. This is why companies
hire PR managers to help them use the media to a positive effect.

Macro Environment
Macro environment is the remote environment of the firm, i.e the external environment in which it
exists. As a rule this environment is not controllable by the firm, it is to huge and too unpredictable to
control. Hence the success of the company, to a large extent will depend on the company’s ability to
adapt and react to the changes in the macro environment. Primarily the company has to closely monitor
the various elements of macro environment. This will help them understand the dynamic nature of the
macro environment. It also helps them adapt to the constant changes in the environment.

1. Socio-Cultural Environment

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The social values and culture of an environment play a huge role in the functioning of the company. So
when the social environment changes it can have a direct or indirect effect on the company. Cultural
forces also have a significant impact on the success of a company in the long run. Especially in a country
like India where the cultural influences are strong and complicated.
For example in recent time society has seen a shift, and people no longer retire at 60. They work five to
ten years more after sixty. So this has had a huge impact on companies.

2. Technological Environment
In the times we live in, technology is constantly changing it is important that the business can keep up
with the changes. Technology does not only confine to computers and IT services. It includes products,
manufacturing processes, techniques etc. The technological developments can be a huge advantage for
a firm. But at the same time of the technology used by the firm becomes obsolete due to such
developments, then it can also be a threat to the firm.

3. Economic Conditions of the Market

The economic conditions of the economy and the performance of a business have a very close
relationship. A business depends on the economy for all its inputs and factors of production. It also sells
its products and services in the same market. A market is never in one stable condition. It is always in a
flux. If there is a boom in the market then all businesses will benefit from the favorable conditions. The
income will be higher, rate of interests will be low, new capital will be available etc. Also, the opposite is
also true in case of a bust.

4. Ecology and Physical Environment

Ecology and physical environment play a huge part in the performance of any business. This is especially
true for manufacturing/production companies. Let us take the example for global warming.
This change in our physical environment has started affecting the rainfall in certain regions. This in turn
may affect the crops and cause a shortage in raw materials such as jute, cotton, rubber etc.Weather
conditions, topographical elements, geographical location, climate changes and other ecological factors
are a very important element in the macro environment of a business.

5. Political and Legal Factors

The political environment of a country is the combination of three branches of the government –
legislature, executive and the judiciary. The political environment of a country will mainly depend on the
political beliefs and ideologies of the party in power at the state and central levels. The legal
environment refers to the rules, laws, regulations, and judgments etc. that affect the functioning of a
business. And this will also include the taxation laws and the Budget for the given year. So stable legal
and political government is really important if the business and the economy as a whole has to succeed.

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