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Marketing Concept Marketing Environment Marketing Mix MR MIS Consumer Behaviour Market Segmentation, Targeting and Positioning Designing a new product, Product Mix, Branding and packaging, labeling New product development and PLC Distribution, pricing and promotion

MARKET SEGMENTATION Market segmentation is the process of dividing a heterogeneous market into homogeneous sub-units. Consider the Indian market, which consists of 1 billion people. For a consumer product company making toiletries, this is a big number and hence a big market. However, not all the 1 billion people believe in the same product, not all people look for same features, not all people look for same brand and quality and not all are willing to pay the same amount. Some people may prefer expensive product where as some may prefer cheaper. Now the same firm may look at the census in detail. As per the record, there are 438 million men and 406 million women. 64% of the men, and 39% of women are literate. The firm may decide, should the firm make the products for both? In India, 74% population lives in rural area. Should the company make product for rural Indians? Or the company should consider only urban people? Thus, the census report indicates only the market size. This, however, does not indicate anything more. It is up to a company, to study the entire census, and then decide which market to be targeted. Bases for segmenting the market The market can be broadly classified into following segments. I. Geographic location of customers: this segmentation does help the firm in planning its marketing offer. The market divided on the basis of rural and urban is quite common. The assumption in using this segmentation is that people in a particular area have identical preferences and consumption pattern. Again, in both markets different marketing mix has to be applied. The same pricing strategy, distribution network and product quality may not work in urban as well as rural market. With the advent of new media the rural customer is far more aware and buys the same branded products which urban customer would prefer to buy. Ii. Demographic characteristics: The next basis for market segmentation is the demographic characteristics. Factors like age, education, income, occupation, sex, family size and marital status. A. Age: this factor can be divided into following sub segmentation Infant market (0-1 year) Child market (1-12 years) Teen market (12-19 years) Youth market (20-35 years) Middle aged market (36 - 50 years) Senior citizen market (50 years and above)



Population: 1,095,351,995 (July 2006 est.) Age structure: 0-14 years: 30.8% (male 173,478,760/female 163,852,827) 15-64 years: 64.3% (male 363,876,219/female 340,181,764) 65 years and over: 26,704,405) (2006 est.) 4.9% (male 27,258,020/female

B. Income: another factor to be considered while segmenting the market. It is believed that as consumer's income increases, his lifestyle / behavior also changes. With an increase in income, expenditure on other branded products, luxuries like holiday packages, expensive home appliances etc. Increases. The marketer here may consider either customer's income or his family income together. It highly depends here, how many earning members are there in the family. On the basis of income, the market can be segmented as being: I. Low income Ii low middle income Iii middle income Iv upper middle income V higher income Marketing to each of these segments require not just appropriate price but even customized products. The Indian market is price sensitive. So understanding the income concept is very important. (Give Bata e.g.) C. Gender: this concept is used to divide the male market from female market. Certain products can be served differently for both markets (cosmetics and toilettories) where as some items are used for both i.e. unisex. (Jeans) With changing time Indian women are becoming more aware about themselves. The working women trend is also increasing in Indian towns and urban. Educations are spreading very fast among them. D. Occupation: another important variable in market segmentation. A person is self-employed, or is doing job, working for full time / or part time, his position in organization also affects the consumption behavior. Depending upon their profession, marketer can segment the market. For e.g. in books market, the choice of professor is going to be different than the choice of a graduate who is working in an organization full time. E. Education: education level of customer reveals his choice and his level of awareness. As literacy increases and people get educated, they become more aware about the environment and different products. Based on

education, Indian market can be segmented as illiterates, literates, high school educated, and university educated individuals. F. Marital status: it is assumed that the consumption pattern of single and married people differs. Married couples are more prone to fast food and ready to eat packages. Also they are more likely to be spendthrifts or frugal in spending. At the same time they are the consumers of many expensive and luxuries as well as gift items. G. Iii Family size and structure: Psychographics segmentation:

In Psychographic segmentation, buyers are divided into different groups on the basis of their lifestyle and personality. Here, marketer may study the lifestyle / personality of the customers and decide to target the market on that basis. For e.g. a marketer may decide to manufacture his clothes differently matching different life styles of college-students (more fashionable), office goers (more sober) and so on. iv Behavioural segmentation: Here, the marketer divides the market into groups on the basis of their knowledge of, attitude towards, use of or response to a product. Certain behavioral factors such as occasion, benefits, Occasion: the buyer can be distinguished according to this variable. Occasion segmentation can help the marketer in expanding a product's usage. For e.g. simple card making company can decide various occasions like, mother's day, father's day, diwali etc and target that particular market in definite occasion. Benefit: the marketer can divide the market as per the benefits sought by the buyers. Take an e.g. of a company making toothpaste. How many different types are available in toothpaste, for freshness, for protection against cavity, for strong teeth, toothpaste-protecting gums. Tasks involved in segmentation Whatever be the base for segmentation, the tasks involved here are very important. These tasks are shown below: Checking differences between one customer group and another one in terms of their needs and their likely responses to the product and other marketing mix elements. Finding out by what descriptive characteristics can consumers of a particular habit be tagged on to a specified segment? Disaggregating the consumers into suitable segments based on (i) and (ii) above.

Analyzing whether it is possible to formulate separate marketing programme / mix for different segments. Finding out which segments will be particularly happy with the offerings of the firm and can be considered as the natural targets of the firm. Selecting those segments which offer higher potential and which will also be amenable to the offerings of the firm. MARKET TARGETING

Targeting is the second stage of the SEGMENT, target & POSITION process. After the market has been separated into its segments, the marketer will select a segment or series of segments and 'target' it/them. Resources and effort will be targeted at the segment. It's like looking at a dartboard or a shooting target. You see that it has areas with different scores - these are your segments. Aiming the dart or the bullet at a specific scoring area is 'targeting'. There are three main types of targeting. They are considered below.

The first is the single segment with a single product. In other word, the marketer targets a single product offering at a single segment in a market with many segments. For example, British Airway's Concorde is a high value product aimed specifically at business people and tourists willing to pay more for speed.

Secondly the marketer could ignore the differences in the segments, and choose to aim a single product at all segments i.e. the whole market. This is typical in 'mass marketing' or where differentiation is less important than cost. An example of this is the approach taken by budget airlines.

Finally there is a multi-segment approach. Here a marketer will target a variety of different segments with a series of differentiated products. This is typical in the motor industry. Evaluation of a segment: Is Is Is Is Is it it it it it sizeable? growing? profitable? accessible? compatible with the firms resources

POSITIONING The third and final part of the SEGMENT - TARGET - POSITION process is 'positioning.' Positioning is undoubtedly one of the simplest and most useful tools to marketers. After segmenting a market and then targeting a

consumer, you would proceed to position a product within that market. Positioning is all about 'perception'. The term 'positioning' refers to the consumer's perception of a product or service in relation to its competitors. You need to ask yourself, what is the position of the product in the mind of the consumer? A six-step question framework is suggested below for successful positioning: 1. What position do you currently own? 2. What position do you want to own? 3. Whom you have to defeat to own the position you want. 4. Do you have the resources to do it? 5. Can you persist until you get there? 6. Are your tactics supporting the positioning objective you set? CHPT DISTRIBUTION / PLACE MIX A channel of distribution comprises a set of institutions, which perform all of the activities utilised to move a product and its title from production to consumption. Bucklin - Theory of Distribution Channel Structure (1966) Another element of Neil H.Borden's Marketing Mix is Place. 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. There are six basic 'channel' decisions: 1. Do we use direct or indirect channels? (E.g. 'direct' to a consumer, 'indirect' via a wholesaler) 2. Single or multiple channels 3. Cumulative length of the multiple channels 4. Types of intermediary (see later) 5. Number of intermediaries at each level (e.g. how many retailers in Southern Mumbai.] Selection Consideration - how do we decide upon a distributor?

Market segment - the distributor must be familiar with your target consumer and segment.

Changes during the product life cycle - different channels can be exploited at different points in the PLC. E.G. Mobile phones (handsets and service providers) Producer - distributor fit - Is there a match between their polices, strategies, image, and yours? Qualification assessment - establishes the experience and track record of your intermediary. How much training and support will your distributor require?

Types of Channel Intermediaries There are many types of intermediaries such as wholesalers, agents, retailers, the Internet, overseas distributors, direct marketing (from manufacturer to user without an intermediary), and many others. The main modes of distribution will be looked at in more detail. 1. Channel Intermediaries - Wholesalers

They break down 'bulk' into smaller packages for resale by a retailer. They buy from producers and resell to retailers. They take ownership or 'title' to goods whereas agents do not. They provide storage facilities. For example, cheese manufacturers seldom wait for their product to mature. They sell on to a wholesaler that will store it and eventually resell to a retailer. Wholesalers offer reduce the physical contact cost between the producer and consumer e.g. customer service costs, or sales force costs. A wholesaler will often take on the some of the marketing responsibilities. Many produce their own brochures and use their own telesales operations.

2. Channel Intermediaries - Agents

Agents are mainly used in international markets. An agent will typically secure an order for a producer and will take a commission. They do not tend to take title to the goods. This means that capital is not tied up in goods. However, a 'stockist agent' will hold consignment stock (i.e. will store the stock, but the title will remain with the producer. This approach is used where goods need to get into a market soon after the order is placed e.g. foodstuffs). Agents can be very expensive to train. They are difficult to keep control of due to the physical distances involved. They are difficult to motivate.

3. Channel Intermediaries - Retailers

Retailers will have a much stronger personal relationship with the consumer.

The retailer will hold several other brands and products. A consumer will expect to be exposed to many products. Retailers will often offer credit to the customer. Products and services are promoted and merchandised by the retailer. The retailer will give the final selling price to the product. Retailers often have a strong 'brand' themselves.

4. Channel Intermediaries - Internet

The Internet has a geographically disperse market. The main benefit of the Internet is that niche products reach a wider audience. E.g. rediff mail offers. There are low barriers to entry as set up costs is low. Use e-commerce technology (for payment, shopping software, etc) There is a paradigm shift in commerce and consumption which benefits distribution via the Internet

CHPT - Pricing Decision In narrow sense price is amount of amount of money charged for a product or service. But in broad sense, price is the sum of all the values that customers exchange for the benefits of having or using the product or service. Price is the major factor affecting buyers choice. It is the only element in the marketing mix that produces revenue; all other elements represent costs. Unlike product features and channel commitments, price can be changed quickly. Price is also one of the most flexible elements of the marketing mix. Before deciding price for a product, a company should always consider internal factors & external factors as pricing decision of a company is highly affected by both these factors. Lets see both factors in detail: Internal factors Marketing objectives: this is the first and important factor of a company. It depends upon every company, what target market has been chosen and what is the product positioning. If any company is clear about these two factors then the price can be charged very easily. For e.g. If ABC Ltd. Decides to manufacture toilet soap to compete with HLLs pears soap, this suggests charging a higher price of Rs. 20/- against other branded soaps which are available for Rs. 10/- or 11/- in the market. Thus pricing strategy is largely determined by the positioning of the product in the market. Apart from the positioning, the company may seek other objectives. The decision of pricing, if taken on the basis of other marketing objectives, then it is very important to have these objectives to be very clearer. Clearer the objectives, easier for the company to decide price structure. E.g. Of objectives are survival, profit maximization, market share leadership, product quality leadership etc. any company troubled by too much of competition or changing consumer wants will prefer to keep survival as main objective. A co. Wanting to enjoy market share leadership, may keep lowest cost and highest longer-run profit. To become market share leader, companies set prices as low as possible. o A company may also charge a lower price, just to prevent competitors entering his market. Prices also can be set up as loyalty and support of reseller.

Marketing mix strategy: marketing mix should be considered while deciding the pricing factor. The cost of packaging, distribution, promotion also should be considered. For e.g. To sell a product nationwide, the company has to appoint distributors on larger scale, which will also amount to distributors margin. The company will have to bear higher cost for margin to distributor. In this case the company should charge such a price to the buyers, which ultimately covers this cost. Costs: cost is the base for the price that the company can charge for its products. A companys cost may be an important element in its pricing strategy. Companies with lower costs can set lower prices that result in greater sales & profits. o Types of costs: a companys cost mainly comprises of two different costs- i.e. fixed costs and variable costs. Fixed cost: which remains same irrespective of the level of production & sales. It includes cost of land & building, interest payable on loans taken, bills of electricity and telephone, salaries of staff members etc. Variable cost: which varies directly with the level of production and sales. It includes cost of raw material, wages, transportation of goods, commissions paid to various agents, etc. For e.g. Each computer produced by Compaq involves cost of computer chips, wires, plastic, packaging and other inputs. These costs vary with the number of units produced. Total cost: the sum of fixed cost and variable cost for any given level of production.

The company must watch total cost carefully. Whenever a product costs company more than its competitors to produce and sell its product, the company will have to charge higher price or make less profit, putting it at a competitive advantage. Organizational considerations: management also must decide, who in the organization will set the price. Not all organizations have the same structure nor all organizations are big in their sizes. In small organizations some times the price is set by the top management people rather than letting the sales people decide the price. Also it highly depends whether the organization manufactures the product or directly buys the product from local manufacturers. In big organizations, apart from top-level executives divisional or product line managers also handle the price. External factors affecting pricing decisions The market & demand: as cost sets lower limit of prices, market & demand sets the upper limit. Before setting the price, marketer must understand the relationship between price and demand for its product. The market can be monopolistic, or competitive.

Consumers perception of price & value: price should be decided after keeping consumer in center. Pricing must be buyers oriented. Competitors pricing policy: Bargaining power of major customers Pricing strategies


Skimming pricing: In this type of strategy, a new product is priced high, coupled with large promotion activities. The initial stage with these two factors (high price and large promotion activities) proves to be very successful. A market, which is not very price sensitive, is targeted. Following are the reasons: o This strategy helps to take the cream of the market thru high price. o The segment, which basically likes to own a product having high price, is targeted here, so efforts are not much required to convince them to buy high priced product. o This strategy helps the manufacturers to cover the manufacturing cost. o By skimming the cream of the market through a high price, the product is fetching big funds, which could be used for market development in the initial stage. o By starting at a high price it is always possible to come down on price, when the situation warrants.

However, high initial price may also prevent quick sales. Skim the cream pricing strategy uses a very high introductory price to skim the cream of demand at the initial stage. Price continues to remain high till the competitor enters the market. The price is reduced gradually, once the competitor enters the market. A short range pricing object is implemented as soon as the competitors enter the market. By this scheme the marketer takes away the cream before the keen competition starts. Penetrating pricing: The skimming strategy cannot suit all new product contexts.

When a new product is price sensitive and when there is no particular market for the product, the option is to go in for penetration pricing. The intention of marketer is to penetrate a broad market thru low prices. The income is generated thru large sales spreaded over large markets. The main advantage here is that, due to spreaded markets, the unit cost of production is brought down. Thus when o The quantity of product that can be sold is highly sensitive to price, even in the early stage of production, o There is no segment willing to pay any price to possess the product, o When the product is encountering tough competition immediately after introduction, o Initially, large volume of sales is required to ensure economy in production and distribution. Penetration pricing strategy is selected. Other pricing strategies: Cost based pricing: o Under this category there are several methods. 1. Cost plus pricing: in this method, selling price of the product is fixed by adding a margin to the cost price. Selling price usually depends on the type of product. A reasonable margin is added to the cost. The price and the margin is adjusted by trial and error. Usually distributors who do not have any manufacturing of their own, prefer this pricing method. Absorption cost pricing: o Here, estimated unit cost of the product at the normal level of production and sales is found. o The variable and fixed cost involved in producing, selling and administering the product is calculated. o When the costs of these 3 operations are added, the total cost becomes available.

o To the total cost, required margin is added towards profit and selling price is calculated. As long as market can absorb the production at the determined price, the firm is assured of its profits without any risk whatsoever. Affordability-based pricing: o This method is relevant in respect of essential commodities, which meet the basic needs of all sections of people. o The price is set independent of the costs involved; often an element of state subsidy is involved; and the items are often distributed by the public distribution system. Product line pricing: major companies develop product lines rather than single product. In product line pricing, management must decide on the price steps to set between various products in a line. The price step should take into account cost differences between the products in the line, customer evaluations of their features, and competitors prices. By keeping different prices for different products in a line, marketers let customers associate low-, average-, and high standard. Market-minus (pricing below the market): the sale below the market price, particularly at the retail level, is profitable only to large chain stores, selfservice stores and discount houses. o The large retailers can sell well-known nationally advertised brands 10 to 30% below the suggested retail prices, list prices or fixed resale prices by the manufacturers. o Another reason to adapt this price is when your product quality is inferior. Psychological pricing: it is a popular practice of setting the prices at odd points. I.e. Rs. 99.99 or 120.99. This practice is followed usually in consumer goods industry, e.g. Bata Shoe Company has psychological pricing in shoe prices. Such a pricing strategy is based on the belief that a buyer is mentally prepared to pay a little less than the rounded figure, e.g. 99.99 instead of Rs. 100/- for a product. CHPT PROMOTION MIX Another one of the 4P's is 'promotion'. This includes all of the tools available to the marketer for 'marketing communication'. As with Neil H.Borden's marketing mix, marketing communications has its own 'promotions mix.' Think of it like a cake mix, the basic ingredients are always the same. However if you vary the amounts of one of the ingredients, the final outcome

is different. It is the same with promotions. You can 'integrate' different aspects of the promotions mix to deliver a unique campaign. The elements of the promotions mix are: 1. 2. 3. 4. 5. 6. 7. Personal Selling Sales Promotion Public Relations Direct Mail Trade Fairs and Exhibitions Advertising Sponsorship

The elements of the promotions mix are integrated to form a coherent campaign. As with all forms of communication. The message from the marketer follows the 'communications process' as illustrated above. For example, a radio advert is made for a car manufacturer. The car manufacturer (sender) pays for a specific advert with contains a message specific to a target audience (encoding). It is transmitted during a set of commercials from a radio station (Message / media). The message is decoded by a car radio (decoding) and the target consumer interprets the message (receiver). He or she might visit a dealership or seek further information from a web site (Response). The consumer might buy a car or express an interest or dislike (feedback). This information will inform future elements of an integrated promotional campaign. Perhaps a direct mail campaign would push the consumer to the point of purchase. Noise represents the thousand of marketing communications that a consumer is exposed to everyday, all competing for attention. The Promotions Mix

Let us look at the individual components of the promotions mix in more detail. Remember all of the elements are 'integrated' to form a specific communications campaign. 1. Personal Selling Personal Selling is an effective way to manage personal customer relationships. The sales person acts on behalf of the organization. They tend to be well trained in the approaches and techniques of personal selling. However sales people are very expensive and should only be used where there is a genuine return on investment. For example salesmen are often used to sell cars or home improvements where the margin is high. 2. Sales Promotion Sales promotion tends to be thought of as being all promotions apart from advertising, personal selling, and public relations. For example the BOGOF promotion, or Buy One Get One Free. Others include coupons, money-off promotions, competitions, free accessories (such as free blades with a new razor), introductory offers (such as buy digital TV and get free installation), and so on. Each sales promotion should be carefully costed and compared with the next best alternative. 3. Public Relations (PR) Public Relations is defined as 'the deliberate, planned and sustained effort to establish and maintain mutual understanding between an organization and its publics' (Institute of Public Relations). It is relatively cheap, but certainly not cheap. Successful strategies tend to be long-term and plan for all eventualities. All airlines exploit PR; just watch what happens when there is a disaster. The pre-planned PR machine clicks in very quickly with a very effective rehearsed plan. 4. Direct Mail Direct mail is very highly focussed upon targeting consumers based upon a database. As with all marketing, the potential consumer is 'defined' based upon a series of attributes and similarities. Creative agencies work with marketers to design a highly focussed communication in the form of a mailing. The mail is sent out to the potential consumers and responses are carefully monitored. For example, if you are marketing medical text books, you would use a database of doctors' surgeries as the basis of your mail shot. 5. Trade Fairs and Exhibitions Such approaches are very good for making new contacts and renewing old ones. Companies will seldom sell much at such events. The purpose is to

increase awareness and to encourage trial. They offer the opportunity for companies to meet with both the trade and the consumer. Expo has recently finish in Germany with the next one planned for Japan in 2005, despite a recent decline in interest in such events. 6. Advertising Advertising is a 'paid for' communication. It is used to develop attitudes, create awareness, and transmit information in order to gain a response from the target market. There are many advertising 'media' such as newspapers (local, national, free, trade), magazines and journals, television (local, national, terrestrial, satellite) cinema, outdoor advertising (such as posters, bus sides). 7. Sponsorship Sponsorship is where an organization pays to be associated with a particular event, cause or image. Companies will sponsor sports events such as the Olympics or Formula One. The attributes of the event are then associated with the sponsoring organization. The elements of the promotional mix are then integrated to form a unique, but coherent campaign. CHPT CONSUMER BEHAVIOUR Introduction: Consumer behaviour plays a decisive role in different marketing activities. Naturally, businessmen/business enterprises have to study the behaviour of consumers minutely and adjust their business/marketing policies and strategies accordingly. Marketer has to study buying behaviour to formulate the strategies of market segmentation and marketing mix, tailor-made for each target market. Consumer psychology needs special attention in the present highly competitive and consumer-oriented marketing system. Consumer is the cause and purpose of all production and marketing activities. He is the centre of all marketing activities as marketing is with the consumer and also for the satisfaction of his needs. Modern marketing is consumer-oriented and not profit oriented. Naturally, consumer behaviour, his motives behind purchasing goods and services (buying motives) and his psychology should be given due attention by the marketers. This is necessary for the expansion of marketing activities. Consumer behaviour is normally flexible and uncertain as it is based on various economic, social and cultural considerations. Before developing their marketing plans, marketers need to study consumer behaviour. Meaning of Consumer Behaviour:

Consumer is the most important person in business. His attitude, behaviour, needs and reactions play an important role in regard to marketing plans and policies of companies. Companies study the behaviour of consumers constantly for their benefits. Consumer behaviour is comparatively new area within the scope of business management. The purpose of study of consumer behaviour is to understand human actions and reactions in the best possible manner. Business enterprises have to study the behaviour of consumers in order to adjust marketing policies or marketing mix accordingly. This is necessary in order to win the confidence of consumers in the present consumer-oriented marketing system. Study of consumer behaviour is essential due to growing importance of consumers in buying (Buyers' markets), consumer legislation and consumerism. He is the focal point of all marketing activities. Naturally his behaviour (psychological, social and physical) needs to be noted clearly by the marketers. Moreover, the consumer buying behaviour is constantly improving and thereby forcing marketers to refine their marketing efforts. Buying Decision-making: Buying process is lengthy and involves many steps. A consumer (knowingly or unknowingly) passes through these stages of buying process. The typical buying process includes the following sequence of events: problem recognition, information search, evaluation of alternatives, purchase decision and post purchase behaviour. The marketer's job is to understand the buyer's behaviour at each stage and finding out the influences that are operating on his behaviour. Such study facilitates large scale selling with satisfaction to consumers. At the time of purchasing a new product, a consumer has to go through lengthy decision-making process. He arrives at the final purchase decision after completing a series of logical stages included in the buying process. Buying decision-making process may be defined as the series of logical stages a prospective purchaser goes through when faced with a buying problem." As a normal rule, a consumer has to take the following decisions while purchasing a product in the market: (1) Need recognition: A consumer has to take decision to purchase a product in order to satisfy a need, which is genuine and recognized. (2) Decision on involvement level: The consumer decides how much time and effort to invest in order to satisfy the need. (3) Identification of alternatives: The consumer collects information about products, brands, etc. available in the market. Information is the fuel that drives the buying decision process. Without adequate information, there would be no decisions. Information for buying decisions comes from commercial environment and social environment. Availability of alternative

products facilitates selection of appropriate product for purchasing. (4) Evaluation of alternatives: The consumer studies the pros and cons of the alternatives identified. He finds out the most suitable product to meet his needs. (5) Buying decision: The consumer decides to buy a specific product, which is most suitable to him. (6) Post-purchase behaviour: The consumer attempts to resolve anxieties about the choice made. It may be pointed out that the buying behaviour of a consumer will be reflected during these stages in the buying process. Definitions and Features of Consumer Behaviour: (1) According to Walters and Paul, "Consumer behaviour is the process whereby individuals decide what, when, where, how and from whom to purchase goods and services." (2) According to Webster, "Buyer behaviour is all psychological, social and' physical behaviour of potential customers as they become aware of, evaluate, purchase, consume, and tell others about the products and services." These definitions suggest the following features of consumers / buyer behaviour: (1) Consumer behaviour involves individual aspect as well as social aspect. (2) It is reflected through satisfaction or non-satisfaction on the part of consumers after actual purchase of product. (3) Consumer behaviour is the result of interaction of consumer with the environmental forces. (4) Consumer behaviour is the net result of various external environmental factors. Such factors are mainly social and psychological in character. (5) Consumer behaviour includes behaviour of consumers/ buyers of consumer goods, consumer durables and industrial products. (6) Consumer behaviour is always uncertain, as the thinking process in human mind is uncertain. Consumer behaviour is very complex and dynamic. It is constantly changing. Determinants of Consumer (Buyer) Behaviour/Factors influencing Buyer Behaviour:

Purchase decision is the final result of buyer's behaviour. There are a number of factors that influence the behaviour of a buyer, which are stated as follows: Factors influencing buyer (consumer) behaviour are as noted below: (1) (2) (3) (4) (5) (6) Social Factors Economic Factors Cultural Factors Personal Factors Physiological Factors Psychological Factors

Let us, now, consider the details of the factors influencing buyer behaviour: (1) 1. Social Factors: Buyer behaviour is influenced considerably by social factors, which include family, social class, status symbols and so on. Practically all buyer behaviour is influenced other people i.e. members of the family, friends and members of the community. Social influences act in two directions. Firstly, they provide information and secondly, the standards of behaviour against which alternative buying behaviors are measured. A buyer is now exposed to a veritable flood of information. He gets information on new products, services and so on. The buyer gets information from family members, friends, relatives, etc. The impact of such information on buyer behaviour is substantial. Even social status and location affect the buyer behaviour considerably. 2. Economic Factors: Economic factors such as income and purchasing power affect buyer behaviour. A rich buyer may not be very alert about the price and may purchase a product with high price. A person from low-income group will be very sensitive/alert about the price and may not purchase the product even with limited price rise. The middle class buyers prefer to collect information on prices from different sources and take appropriate buying decision. Buyer behaviour is affected due to high or low purchasing power. 3. Cultural Factors: Cultural factors include values, beliefs, faith and traditions accepted willingly by buyers or specific class of buyers. Culture is the social heritage. It relates to social values, attitudes towards work, beliefs, morals, language and so on. Cultural influences are so pervasive that they are hard to identify and analyze. Cultural influences act as basis for market segmentation, product development and advertising. The Gujaratis, Maharashtrians, Tamilians and people from V.P. have diverse cultural background and need different products/utensils/clothing for their daily life. Cultural factors exert deepest influence on consumer behaviour. A marketer needs to be aware of these cultural influences on buyer behaviour. He has to adjust his marketing activities as per the cultural background of his customers. Cultural factors are varied in a country like India where people with different cultural background stay together in cities like Mumbai and Kolkata.

The patterns of buyer behaviour need careful considerationwhile marketing/ promoting/advertising different products. 4. Personal Factors: Personal factors include age, occupation, life style, social and economic status, personal likes and dislikes, cultural and family background, beliefs and attitudes. All these factors (individually and collectively) influence buyer behaviour. Personal likes and dislikes depend on education, economic status, cultural family background and so on. People with sound economic background prefer costly / luxury articles and their behaviour is not price sensitive but quality sensitive. Middle class buyers give preference to decency. Thus, buyer behaviour is very much influenced by personal factors. 5. Physiological Factors: Physiological factors include sex, age and physiognomy. Here, age is one important factor. Buyers and their behaviour are related to maturity, experience and requirements and these aspects are related to age. 6. Psychological Factors: Psychological factors are many. They include perceptions, motivation, attitudes and beliefs, personality, life style and learning. These factors influence buyer behaviour in different ways. The psychological factors dominate other factors, as they are closer to the mind of the buyer. His personality, attitudes, beliefs and life style affect his behaviour relating to products, marketing process and so on. The forces noted above are external forces but they influence consumer behaviour considerably. The marketer has to consider his product and the satisfaction it offers to consumers. In addition, he has to see that his product is as per modern culture and life style. The marketer has to consider the social and cultural influences on consumers while designing his marketing strategy. Steps in Selling/Buying Process: Selling process is the system in which goods are actually sold out to the customers. This process starts with the entry of the customer in the shop and comes to an end with customer purchases goods, pays money and moves out of the shop along with the goods purchased. This process may be completed within 10 to 15 minutes. Selling process and buying process are rather identical in nature. This is because seller (salesman) and buyer (customer) are the two parties to a trade transaction and both have to take certain steps in order to complete a sales/trade transaction. In this process, the role of a salesman is more active and hence the term selling process is used extensively in salesmanship. The following six stages are involved in the selling process: (1) Prospecting: The selling process starts with prospecting. A prospect is a likely customer or a potential buyer. The seller must try to find out who are his probable customers. The selling activities will be adjusted accordingly. Prospecting is finding out likely buyer. A retail salesman is not concerned with this step as a customer comes to his counter and asks for certain

products as per his need and desire to purchase. (2) Pre-approach: After finding out the potential buyers, the salesman should try to collect additional information about his would be customers. This information should be regarding their income group, status, size of family requirements, tests, standard of living, habits, likes and dislikes. Actual salesmanship starts with the next stage. This is also called 'sizing of the customer'. (3) Attention: It is the starting point of selling process. Here, the attention of the customer will be attracted to various goods. This is possible through window display, posters and internal advertising. No one will like to purchase goods unless his attention is diverted towards them. This will be followed by approach by the salesman. The salesman will establish direct contact with the customer by asking him about his requirement. This approach is a constructive and bridge-building step in selling. The next step is to create interest in the products available in the shop / store. (4) Interest: The salesman can create interest in certain goods by showing the article and giving all the information regarding the same to his customer. Sales talk or demonstration is useful for creating interest. Telling the customer the advantages and specialties of the product creates interest. (5) Desire: In this fifth stage, the salesman has to convert the interest into desire to purchase an article. This is possible through persuasion. The salesman should try to create a keen desire to purchase a specific article. He can use selling points for this purpose. He should also clear the doubts, objections, etc. of the customer at this stage. This facilitates quick decision and action on the part of buyer / customer. (6) Action: This is the final and the most important stage in selling process. Action is actually decision to purchase. The customer takes action when he gives order to prepare cash memo and pack the article. A salesman has to bring the customer to this point in a tactful manner. His success depends on this last action of the customer. After booking the order, the salesman should execute the order as per the normal sales routine. He should thank the customer and assure him early delivery and after sale service, if required. This completes the selling/buying procedure. The stages noted above normally exist in every trade transaction. All the stages are equally important. The success of a salesman depends on his performance in all these stages. Buying Motives of Consumers/Customers: Buying motives are the thoughts and emotions, which arouse in the mind of the customer a desire to buy. Buying motive is a complex urge which creates desire to buy a specific article/ product. A salesman has to understand the buying motive of his customer and adjust his sales talk accordingly. He has to understand the psychology of his customer and adjust his sales strategy to suit the buying motive of customer.

Main buying motives are as noted below: (1) Fear (2) Profit/Gain (3) Pride (4) Fashion (5) Love and Affection (6) Health (7) Comfort and Convenience (8) Curiosity (9) Admiration (10) Jealousy (11) Patronage. The buying motives influence the buying behaviour of customers. In fact, buying motives and buying behaviour are closely related. The buying behaviour is based on buying motives. This aspect needs careful consideration by manufacturers as well as by salesmen at the selling counters: Importance of Buying Motives in Salesmanship: The study of buying motives is important and essential for every salesman. Such study offers the following advantages: (1) A salesman understands the mind of the customer clearly and precisely. (2) A salesman can discuss only those features of a product (selling points) which satisfy the buying motives of the customer. (3) A salesman can talk with confidence and make his sales talk impressive and result-oriented. (4) A salesman can anticipate the possible objections from the customer and deal with them properly. (5) A salesman can give proper guidance to the customer in his shopping activity. (6) A salesman can remove possible resistance of the buyer. (7) A salesman can increase the sale of goods. CHAPTER MARKETING INFORMATION SYSTEM THE COMPONENTS OF A MODERN MIS

Some firms have developed marketing information systems that provide management with rapid and incredible detail about buyer wants, preferences, and behavior. For example, the Coca-Cola Company knows that the customers put 3.2 ice cubes in a glass, see 69 of its commercials every year, and prefer cans to pop out of vending machines at a temperature of 35 degrees. Marketers also have extensive information about consumption patterns in other countries. On a per capita basis within Western Europe, for example, the Swiss consume the most chocolate, the Greeks eat the most cheese, the Irish drink the most tea, and the Austrians smoke the most cigarettes.3 Nevertheless, many business firms lack information sophistication. Many lack a marketing research department. Others have departments that limit work to routine forecasting, sales analysis, and occasional surveys. In addition, many managers complain about not knowing

where critical information is located in the company; getting too much information that they cannot use and too little that they really need; getting important information too late; and doubting the information's accuracy. In today's information-based society, companies with superior information enjoy a competitive advantage. The company can choose its markets better, develop better offerings, and execute better marketing planning. Every firm must organize and distribute a continuous flow of information to its marketing managers. Companies study their managers' information needs and design marketing information systems (MIS) to meet these needs.

A marketing information system (MIS) consists of people, equipment, and procedures to gather, sort, analyse, evaluate, and distribute needed, timely, and accurate information to marketing decision makers.
1. What decisions do you regularly make? 2. What information do you need to make these decisions? 3. What information do you regularly get? 4. What information would you want that you are not getting now? 5. What information would you want daily? Weekly? Monthly? Yearly?

An internal MIS committee can interview a cross-section of marketing managers to discover their information needs. Some useful questions are:

6. What magazines and trade reports would you like to see on a regular basis? 7. What topics would you like to be kept informed of? 8. What are the four most helpful improvements that could be made in the present marketing information system?

A marketing information system is developed from a. Internal company records, b. Marketing Intelligence activities, and c. Marketing research a. Internal record system:

Marketing managers rely on internal reports on orders, sales, prices, costs, inventory levels, receivables, payables, and so on. By analyzing this information, they can spot important opportunities and problems. The order-to-payment cycle The heart of the internal records system is the order-to-payment

cycle. Sales representatives, dealers, and customers dispatch orders to the firm. The sales department invoices and transmits copies to various departments. Out-of-stock item are ordered. Shipped items are accompanied by shipping and billing documents are then sent to various departments. Sales Information systems Marketing managers need timely and accurate reports on current sales. McDonalds for example, knows the sales of each franchise product by franchise store and total each evening. Companies must carefully interpret the sales data so as not to get the wrong. Databases, Data Warehouses, and Data-Mining Today companies organize their information in databases-customer databases, product databases, salesperson databases, and so forthand then combines data from the different databases. For example, the customer database will contain every customer's name, address, past transactions, and even -demographics and psychographics (activities, interests, and opinions) in some instances. Instead of a company sending a mass "carpet bombing" mailing of a new offer to every customer in its database, it will score the different customers according to their purchase preference, frequency, and monetary value. It will send the offer only to the highest scoring customers. Thus, Companies warehouse these data and make them easily accessible to decision makers. b. Marketing Intelligence System Whereas the internal records system supplies results data, the marketing intelligence system supplies happenings data. A marketing inte1ligence system is a set of procedures and sources used by managers to obtain everyday information about developments in the marketing environment. Marketing managers collect marketing intelligence by reading books, newspapers, and trade publications; talking to customers, suppliers, and distributors; and meeting with other company managers. A company can take several steps to improve the quality of its marketing intelligence. First, it can train and motivate the sales force to spot and report new developments. Sales representatives are positioned to pick up information missed by other means. Yet they are very busy and often fail to pass on that information. For instance, the Prentice Hall sales representatives who sell this textbook let their editors know what is going on in each discipline, who is doing exciting research, and who plans to write cutting edge textbooks.

Second, the company can motivate distributors, retailers, and other intermediaries to pass along important intelligence. 3rd, companies can collect competitive intelligence by purchasing competitors products, attending open houses and trade shows, reading competitors published reports, talking to employees, dealers, distributors, suppliers, and so on Fourth, a company can set up a customer advisory panel made up of representative customers or the company's largest customers or its most outspoken or sophisticated customers. For example, Hitachi Data Systems holds a three-day meeting with its customer panel of 20 members every 9 months. They discuss service issues, new technologies, and customers' strategic requirements. The discussion is free-flowing, and both parties gain: The company gains valuable information about customer needs, and the customers feel more bonded to a company that listens closely to their comments. c. Marketing Research system

Marketing managers often commission formal marketing studies of specific problems and opportunities. They may request a market survey, a product-preference test, a sales forecast by region, or an advertising evaluation. It is the job of the marketing researcher to produce customer insight into the problem. We define marketing research as the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing the company.