Unit 1(6 hours)

 Introduction: Nature and scope of marketing,

 Various marketing orientations,
 Need, Want, Demand,
 Elements of Marketing mix,
 customer value and the value delivery process.
 Understanding Consumer Behavior: Buying motives,
 factors influencing buying behavior,
 buying habits, stages in consumer buying decision process,
 types of consumers buying decisions.

UNIT-1
https://www.enotesmba.com/2012/11/mba-notes-nature-and-scope-of-marketing.html

Introduction

In today's world of marketing, everywhere you go you are being marketed to in one form or another.
Marketing is with you each second of your walking life. From morning to night, you are exposed to
thousands of marketing messages every day. Marketing is something that affects you even though you
may not necessarily be conscious of it.

After reading this post you'll understand - What exactly the marketing is, to whom it is beneficial for, and
what are the nature and scope of marketing.

Definition of Marketing

According to American Marketing Association (2004) - "Marketing is an organizational function and

set of processes for creating, communicating and delivering value to customers and for managing
relationships in a way that benefits both the organization and the stakeholder."
AMA (1960) - "Marketing is the performance of business activities that direct the flow of goods and
services from producer to consumer or user."

According to Eldridge (1970) - "Marketing is the combination of activities designed to produce profit

through ascertaining, creating, stimulating, and satisfying the needs and/or wants of a selected segment
of the market."

According to Kotler (2000) - "A societal process by which individuals and groups obtain what they need
and want through creating, offering, and freely exchanging products and services of value with others."

Nature of Marketing

1. Marketing is an Economic Function

Marketing embraces all the business activities involved in getting goods and services, from the hands of
producers into the hands of final consumers. The business steps through which goods progress on their
way to final consumers is the concern of marketing.
2. Marketing is a Legal Process by which Ownership Transfers 
In the process of marketing the ownership of goods transfers from the seller to the purchaser or from
producer to the end-user.

3. Marketing is a System of Interacting Business Activities 

Marketing is that process through which a business enterprise, institution, or organization interacts with
the customers and stakeholders with the objective to earn a profit, satisfy customers, and manage
relationships. It is the performance of business activities that direct the flow of goods and services from
producer to consumer or user.

4. Marketing is a Managerial Function 

According to the managerial or systems approach - "Marketing is the combination of activities designed
to produce profit through ascertaining, creating, stimulating, and satisfying the needs and/or wants of a
selected segment of the market." 

According to this approach, the emphasis is on how the individual organization processes marketing and
develops the strategic dimensions of marketing activities. 

5. Marketing is a Social Process 

Marketing is the delivery of a standard of living to society. According to Cunningham and
Cunningham (1981) societal marketing performs three essential functions: -

1. Knowing and understanding the consumer's changing needs and wants;

2. Efficiently and effectively managing the supply and demand of products and services; and
3. Efficient provision of distribution and payment processing systems.

6. Marketing is a philosophy based on consumer orientation and satisfaction

7. Marketing had dual objectives - profit-making and consumer satisfaction

Scope of Marketing
1. Study of Consumer Wants and Needs
Goods are produced to satisfy consumer wants. Therefore, the study is done to identify consumer needs
and wants. These needs and wants motivate the consumer to purchase.

2. Study of Consumer Behaviour

Marketers perform a study of consumer behavior. Analysis of buyer behavior helps marketers in market
segmentation and targeting.

3. Production Planning and Development

Product planning and development starts with the generation of product ideas and ends with product
development and commercialization. Product planning includes everything from branding and packaging
to product line expansion and contraction.

4. Pricing Policies
The marketer has to determine pricing policies for their products. Pricing policies differ from product to
product. It depends on the level of competition, product life cycle, marketing goals, and objectives, etc.

5. Distribution
The study of distribution channels is important in marketing. For maximum sales and profit, goods are
required to be distributed to the maximum consumers at minimum cost.
6. Promotion
Promotion includes personal selling, sales promotion, and advertising. The right promotion mix is crucial
in the accomplishment of marketing goals.

7. Consumer Satisfaction
The product or service offered must satisfy the consumer. Consumer satisfaction is the major objective of
marketing.

https://traqq.com/blog/the-five-key-categories-of-marketing-orientation-approaches/

The Five Key Categories of Marketing Orientation Approaches

Until the 1950s, a majority of companies relied on the production orientation concept. This idea
assumed that as long as they produced high-quality products, businesses would remain profitable.
However, in today’s hypercompetitive global markets, where consumers have a proliferation of choices,
companies have to maintain a competitive edge to beat the competition. That’s where market
orientation concepts come in.

The marketing orientation concept has evolved, and for decades, it has been the model of choice for
businesses looking to establish brands that can compete for customer attention and loyalty. Businesses
have had to adapt to new marketing strategies to survive the current market, like the shift from
traditional to digital marketing .

“The customer is king” philosophy has become a guiding principle for many companies who focus their
strategies. They do this to ensure that client satisfaction, rather than industry profits, is prioritized. Each
company has a different approach to achieve this due to its unique structure, beliefs, and culture.  

We explore the different marketing orientation approaches that may affect an organization’s  marketing
strategy. Understanding these concepts is critical to helping you assess whether your approach is
bringing the desired results that meet your organization’s missions and goals.

Marketing Orientation Concepts

Marketing orientation can be categorized into five key groups. These are:
 Production orientation
 Product orientation
 Sales orientation
 Societal orientation
 Market orientation
We look at the impact of each concept on businesses, and their advantage and disadvantages.

1.Production Orientation

This concept dominated the business landscape in the 1900s, where organizations focused heavily on
the mass production of products.
 Emphasis was on streamlining the production process and concentrating on improving
efficiencies, with little focus on consumers or anything else. 
 The assumption was that customers valued price. For this reason, this approach focused on
maximizing efficiency while lowering production costs to meet customers’ price needs.
 This business strategy dedicated its resources towards its products, and its marketing point was
the price.
Advantages of Production Orientation:
 Mass production
 Maximum efficiency at the lowest costs
 Distribution of products inexpensively
Disadvantages of Production Orientation
 This approach lacked the fundamental drive that controls the consumer market, that is, customer
needs.
 The emphasis on efficiency may affect the company’s ability to produce a product that meets the
customer’s high demands.

2.Product Orientation

 In a product orientation model, the primary concern of an organization is the quality of the
product.
 The business centers its approach on continually improving and refining its products.
 Assuming that as long as products are of high quality, consumers will buy and use them.
 Unlike in quantity-oriented organizations where the price was the focal point, product
orientation placed emphasis on quality.
 While all resources were directed towards the quality of a product (hence the production of
premium products), the approach didn’t focus on the needs of its target audience.

Advantages of Product Orientation

 Mass production of products at lower costs
 Focus on quality
 Improved sales due to the high quality of products
 Better market research
Disadvantages of Product Orientation
 Narrow branding. Customers identify with brands, and if you don’t develop a brand that
resonates with their needs, they may not be interested in what you’re selling.
 High risks of running out of business. Without a clear message explaining to customers the
benefits of using their products, a competitor with a better message can run you out of business.
 If you haven’t established your reputation in the marketplace, consumers may not trust you to
deliver.
 Your business solely depends on the strength of your product. Customers expect nothing but
top-notch quality.
 Making a profit on premium products may require you to set a higher price tag than the market
can accept.
 The costs of developing top-quality products are steep.

3.Sales Orientation:

 A sales-oriented business puts its energy and efforts into selling an already existing product.
 In a way, this concept prioritizes customers but not in the sense that stresses their needs and
desires. Instead, priority is on promoting its products with the sole purpose of increasing sales.
 A sales-oriented approach can be especially effective for a business competing for customers in
a saturated market.
 It can also be a valuable tool for a firm that holds dead stock and wants to reintroduce them to
the market.
 The extra effort that the sales and marketing team devotes towards selling a product may tip a
consumer’s buying decision.
Advantages of Sales Orientation
 It generates immediate short-term sales.
 If a company’s product or service is the best in the market, selling it should be easy.
  Aggressive selling tactics may influence a consumer’s purchasing power.
 Broad customer reach for unsought goods. Companies can introduce products or services that
customers don’t know about or don’t even need and use aggressive sales techniques to boost
sales.
Disadvantages of Sales Orientation
 Customer loyalty and confidence are at risk since they are pressured to buy what they don’t
want.
 High risk of ‘backlash’. Running a promotion campaign is costly, and it can lead to losses if
consumers resist the product or service.
 The approach is not sustainable in the long term.

4.Societal Orientation

 Due to the increase in environmental awareness, the new concept of “Societal Orientation” has
emerged.
 Organizations are formulating marketing strategies and production processes that recognize the
impact on the environment, within and without.
 Businesses that implement this idea incline towards the ethical approach in their wider
marketing and research strategies.
 A good example is the pharmaceutical industry  and life science sectors, which have come under
scrutiny for their unethical marketing strategies.
Advantages of Societal Orientation
 Promotes ethical practices
 Helps build a better image for the organization
 Increases a company’s sales and market share
 Economic resources are adequately utilized
 Raises the standard of living of people in society
Disadvantages of Societal Orientation
 The marketing message can be misleading
 Budget limitations

5.Market Orientation

 Market-oriented businesses focus on analyzing the target audience to determine their needs and
design a product to fit those needs.
 This business model centers everything around what the customer wants rather than on
promotions.
 Market orientation revolves around customer satisfaction and reacting to the demands of the
customer.
 Marketing oriented organizations approach their operations from a consumer perspective and
focus on the current and future needs of customer needs.
 The entire firm appreciates the significance of the customer and recognizes that the business
won’t exist without them.
The marketing orientation concept is built around three pillars:
 Customer focus – The customer is at the heart of corporate marketing strategies. They are
considered the most important stakeholders, and companies base their philosophies on serving
the customer to ensure his needs and wants are met.
 Coordinated marketing – The success of any company depends on coordinated team efforts.
It’s a company-wide responsibility, and everyone must work together to achieve a common
goal.
 Profitability – In a fiercely competitive global economy, businesses are constantly under
pressure to prove their financial standing every quarter. Within the framework of marketing
orientation, companies’ profits are driven by both financial (ROI and market share), and non-
financial (behavioral patterns, attitude, and awareness) measures.
Each company strives to develop an orientation towards one of these pillars, depending on its internal
structure and culture.
The widespread adoption of Internet technology has contributed to the shift toward marketing
orientation. Customers have grown increasingly discerning, and social media has become one of the
primary sources of customer outreach.
In a market orientation concept, companies don’t just introduce products or services to customers. It’s a
long process that starts with researching the demographics and demands of the target audience. It also
involves rigorous marketing efforts to convince potential customers to make a purchase decision.
Advantages of Market Orientation
 The consumer-centric approach helps an organization to know what the customers really want,
hence avoiding wasting resources.
 It builds a strong customer relationship. In turn, customers help the company grow and thrive.
 It increases customer satisfaction, confidence, and loyalty.
 It increases sales, which also leads to higher volume and market share of a business entity.
 Listening to the needs of the consumers helps a business create and develop a brand that
customers can identify with.
 Businesses using this concept are more resilient to change than their competitors.
 The customer-focused approach fosters product innovation.
 Customer satisfaction encourages buyer feedback, which in turn improves effectiveness and
efficiency.
Disadvantages of Market Orientation
 Businesses must learn to quickly change direction to keep up with the constantly changing
demands of their customers.
 It takes heavy investment in research to understand the ever-changing needs of consumers.
 This approach may not always be innovative since it’s more concerned about meeting the
desires of consumers than creating new products.

Choosing the Marketing Orientation Approach That Best Fits Your Business Model

Throughout the years, we’ve seen organizations shift from one approach to another to conform to the
changes in consumer behaviour. Intel Corp shifted from a product orientation to a market orientation
approach in 2005 and introduced products that solve customer problems like computer crashes.

Amazon implements a market approach, and it has been consistently adding features that address
consumer desires and concerns like delivery fees. It introduced  Amazon Locker  to address the needs of
city dwellers who are worried about getting deliveries when they are not at home.

Coca-Cola’s market-oriented approach involves extensive research into identifying what tastes
customers prefer and then adding new flavours to their products. The company prides itself on its brand
and has expanded its reach by acquiring brands like Dasani, Minute Maid, and Smart Water.
Different approaches work differently for companies.

Choosing a marketing orientation approach should revolve around how an organization was established,
its culture, and its structure.

linkedin.com/pulse/understanding-needs-wants-demands-marketing-world-sumit-saurav/
 Understanding Needs, Wants and Demands in Marketing world

Needs

“Needs” is the basic human requirements like shelter, clothes, food, water, etc. which are essential for
human beings to survive. If we extend this further, other needs are education, healthcare or even a social
thing, for example, belonging to a certain society or self-expression.

One can say that the products which fall under the needs category of products do not require a push.
Instead, the customer buys it themselves. But it’s actually not true. in today’s world with thousands of
brands competing in the same categories with identical offerings satisfying the same needs, even the
“needs category product” has to be pushed in the consumers’ mind. Example of needs category products /
sectors – Agriculture sector, Real Estate, Healthcare etc.

We all know about Maslow’s hierarchy of needs which categorizes needs into 5 levels starting from
physiological needs at the bottom and going up to self-actualization needs. But what’s important as a
marketer to know which level of need is your brand targeted to. Let’s look at some of the examples of
brands which are targeting different levels of needs

1.     Physiological Needs – Food companies (Nestle, Pepsi, Coca Cola)

2.     Safety Needs – Insurance companies (ICICI Prudential, Tata AIG, HDFC Life)

3.     Social Needs – Social networking sites (Facebook, Twitter, Instagram)

4.     Esteem Needs – Luxury brands (iPhone, Mercedes, Estee Lauder)

5.     Self-actualization needs – Non-Profit organizations and NGOs (UNICEF, Teach for India)

In marketing, there is another way to categorize needs. There are basically five types of consumers’
needs:

1.     Stated Needs – As the name suggests, in this case, the consumer explicitly states what he wants. For
eg. “I need a phone”.

2.     Real needs – This is more specific. So when the consumer wants a phone to remain connected to his
friends, family and colleagues, the actual need be a phone with high battery backup and not high camera
resolution.

3.     Unstated needs – The consumer also expects warranty and other sorts of after sales service when
buying a phone which he might not say explicitly.  

4.     Delight needs – The consumer would like the phone manufacturer or the dealer to give him some
free gift or a promotional item (phone case, tempered glass, free SIM etc.), but he doesn’t clearly express
that he wants something with the phone.

5.     Secret Needs – These are the needs which the consumer feels reluctant to admit; for example the
consumer wants the phone for his status symbol but he feels uncomfortable to admit that status is
important to him.

In the above example, responding to only stated need ie., “I need a phone” doesn’t help in arriving at a
right product proposition. As a marketer, it is important to dig deeper and uncover not only the real, but
also his other needs: unstated need, delight need and secret needs.
Wants

"Wants" are a step ahead of needs Wants aren’t essential for humans to survive, but it’s associated with
needs Simply put, A want is a product desired by a customer that is not required for us to survive.

So, want is the complete opposite of need, which is essential for our survival. Wants aren’t permanent and
it regularly changes. As time passes, people and location change, wants change accordingly.

Wants are directed by our surrounding towards reaching certain needs. Therefore, human’s wants can be
varied depending on each individual’s perception, environment, culture, and society.

For example, an Indian needs food but he may want a Dosa or Paratha while an American may want
Burger or Sandwich. Example of wants category products / sectors – Hospitality industry,
Electronics, FMCG, Consumer Durables etc.

Demands

Wants turn to be Demands when a customer is willing and having the ability to buy that needs or
wants. 

The basic difference between wants and demands is desire. A customer may desire something but he may
not be able to fulfil his desire.

Consequently, for people, who can afford a desirable product are transforming their wants into demands. 

In other words, if a customer is willing and able to buy a need or a want, it means that they have a
demand for that need or a want. 

You might want a BMW for a car or an iPhone for a phone. But can you actually buy a BMW or an
iPhone? You can, provided you have the ability to buy them. Example of demands –Luxury cars, 5-star
hotels etc.

Many people want a BMW, but only a few can buy one. So, it’s very crucial that one must measure not
only how many people want their product, but also how many are willing and have the ability to buy it.

So, it’s not only important to discover different consumer needs, but also to figure out what consumer
actually wants and how much is he able to pay i.e. how much demand can be created for the product or
service.

Lastly, let’s try to answer “Can marketing create a need?”. I believe that marketers do not create
needs. They might promote some specific products or services, and make people want those products or
services for their needs. For example, Marketers might promote the idea that an insurance can satisfy a
person’s need for safety; they do not create the need for safety. 
 https://www.managementstudyguide.com/marketing-mix.htm

What is a Marketing Mix?

Marketing mix is a set of actions a business takes to build and market its product or service to its
customers.

It helps to make sure that you are able to offer your customers the right product, at the right time and at
the right place for the right price.

Whereas traditionally the marketing mix was executed through the 4 Ps of marketing, nowadays 3 more
additional tools have been added to the mix, making it the 7 Ps of marketing. Businesses use a blend of
these marketing mix elements to generate the response they want from their audience.

Importance of Marketing Mix

There are several benefits of the marketing mix that makes it important to businesses;

 Helps understand what your product or service can offer to your customers
 Helps plan a successful product offering
 Helps with planning, developing and executing effective marketing strategies
 Helps businesses make use of their strengths and avoid unnecessary costs
 Helps be proactive in the face of risks
 Help determine whether your product or service is suitable for your customers
 Helps identify and understand the requirements of customers
 Helps learn when and how to promote your product or service to your customers

What are the Elements of Marketing Mix

Developing the correct marketing mix for your product or service starts with understanding the Ps of
Marketing.
Elements of Marketing Mix

The elements of marketing mix are often called the four P’s of marketing.

1. Product

Goods manufactured by organizations for the end-users are called products.

Products can be of two types - Tangible Product and Intangible Product (Services)

An individual can see, touch and feel tangible products as compared to intangible products.

A product in a market place is something which a seller sells to the buyers in exchange of money.

2. Price

The money which a buyer pays for a product is called as price of the product. The price of a
product is indirectly proportional to its availability in the market. Lesser its availability, more
would be its price and vice a versa.

Retail stores which stock unique products (not available at any other store) quote a higher price
from the buyers.

3. Place

Place refers to the location where the products are available and can be sold or purchased. Buyers
can purchase products either from physical markets or from virtual markets. In a physical market,
buyers and sellers can physically meet and interact with each other whereas in a virtual market
buyers and sellers meet through internet.

4. Promotion

Promotion refers to the various strategies and ideas implemented by the marketers to make the end
- users aware of their brand. Promotion includes various techniques employed to promote and
make a brand popular amongst the masses.

Promotion can be through any of the following ways:

 Advertising

Print media, Television, radio are effective ways to entice customers and make them aware
of the brand’s existence.

Billboards, hoardings, banners installed intelligently at strategic locations like heavy traffic
areas, crossings, railway stations, bus stands attract the passing individuals towards a
particular brand.

Taglines also increase the recall value of the brand amongst the customers.

 Word of mouth

One satisfied customer brings ten more customers along with him whereas one dis-
satisfied customer takes away ten more customers. That’s the importance of word of
mouth. Positive word of mouth goes a long way in promoting brands amongst the
customers.
 https://www.google.com/search?
q=customer+value+and+the+value+delivery+process.&oq=customer+value+and+the+value+delivery+process.&aq
s=chrome..69i57j0i30j0i390l2.7086j0j7&sourceid=chrome&ie=UTF-8

Value Delivery Process

“A satisfied customer is the best business strategy of all.”

Michael LeBoeuf,

 Every successful business actually delivers what it promises to its customers. There’s a term for a
person who takes other people’s money without delivering equivalent value.
 Value-Delivery involves everything necessary to ensure every paying customer is a happy
customer: order processing, inventory management, delivery/fulfilment, troubleshooting, customer
support, etc. Without Value-Delivery, you don’t have a business.
 The best businesses in the world deliver the value they’ve promised to their customers in a way
that surpasses the customer’s expectations. Customers like to get the benefits of their purchases
quickly, reliably, and consistently.
 The happier customers a business creates, the more likely it is that those customers will purchase
from the company again. Happy customers also increase the likelihood that they’ll others about
what you do, improving your Reputation and bringing in even more potential customers.
 Successful businesses satisfy their customers most of the time in the midst of a changing
environment. Unsuccessful businesses fail to make their customers happy, lose them, and
eventually fail.

What Is A ‘Value Stream’?

A Value Stream is the set of all steps from the start of your value creation until the delivery of the end
result to your customer.

The Value Stream is basically the combination of your Value Creation and Value Delivery processes.

It’s best to try to make your Value Stream as small and efficient as possible.

Josh Kaufman Explains The ‘Value Stream’

When I worked at Procter & Gamble, one of the most fascinating things about my job was understanding
how products were created and delivered. Here’s a quick look at how a bottle of Dawn dishwashing
detergent is made:

1. Raw materials are delivered to the factory.

2. The materials are combined to create dishwashing liquid, which is stored in large vats.

3. Plastic bottles are blown into shape using molds, then filled with the liquid and capped.

4. Adhesive labels are applied to each bottle.

5. Each bottle is inspected, boxed, then loaded onto a pallet.

It’s a textbook example of a Value-Creation process, which begins with raw materials and ends with
finished product, ready to be shipped.

A Value Stream is the set of all steps and all processes from the start of your value creation process all
the way through the delivery of the end result to your customer. Understanding what your offer’s value
stream looks like is critically important if you want to be able to deliver value to your customers quickly,
reliably, and consistently.

You can think of the Value Stream as a combination of your Value-Creation and Value-

Delivery processes. Very often, your offer moves directly from the first into the second. Even though the
purposes of these core processes are very different, treating them as one big process can help you improve
your ability to deliver the value you create.

The Toyota Production System (TPS) was the first large-scale manufacturing system to examine its
entire value stream on a regular basis. Analysing the production system in great detail paved the way for
an ongoing series of small, incremental improvements: Toyota engineers make over 1 million
improvements to the TPS each year.

As a result, the company consistently reaps huge rewards in speed, consistency, and reliability, which
greatly improved Toyota’s Reputation as a company with very high-quality products.

In general, try to make your Value Stream as small and efficient as possible. The longer your process, the
greater the risk of things going wrong. The shorter and more streamlined your Value Stream, the easier it
is to manage, and the more effectively you’ll be able to deliver value.

What Is ‘Expectation Effect’?

A customer’s perception of quality relies on expectations and performance. After a purchase is made, the
performance of the offering must surpass the expectations for the customer to be satisfied.
If performance is better than expectations, the perception of the offering will be high. Do whatever you
can to provide something that unexpectedly delights your customers.

A customer’s perception of quality relies on two criteria: expectations and performance. You can
characterize this relationship in the form of a quasi-equation, which I call the Expectation Effect:

Quality = Performance - Expectations

Customer expectations have to be high enough for a customer to purchase from you in the first place.
After the purchase is made, however, the performance of the offering must surpass the customer’s
expectations in order for them to be satisfied.

If performance is better than expectations, the customer’s perception of quality will be high. If
performance is lower than expectations, the perception of quality will be low—no matter how good the
offer is in absolute terms.

Apple’s first-generation iPhone was a massive success—customers expected something good, and they
received a device that delivered benefits beyond their expectations. Apple’s second-generation iPhone,
the 3G, wasn’t as well-received — pre-launch expectations were so high that there was almost no way the
company could surpass them, and a few glitches in the roll-out process quickly took center stage.

The iPhone 3G was a better phone in the absolute—it was faster, had several new features, more memory,
and a lower price. To many customers, however, it didn’t feel better — Apple failed to deliver on their
expectations, and the company’s reputation suffered.

The best way to consistently surpass expectations is to give your customers an unexpected bonus in
addition to the value they expect. The purpose of the Value-Delivery process is to ensure your customers
are happy and satisfied, and the best way to ensure customer satisfaction is to at least meets the
customer’s expectations, surpassing them whenever you possibly can.

Do whatever you can do to provide something that unexpectedly delights your customers. Zappos’ free
upgraded shipping is more valuable as a surprise — if it were part of the deal, it would lose its emotional
punch.

When you perform well above your customers’ expectations, they’ll be satisfied with the experience.
What Is ‘Predictability’?

Predictability means providing exactly what the customer expects. Unexpected surprises are only good as
long as you provide what the customer is looking for. Predictability increases the perceived quality of
your offering.

There are three primary factors that influence the predictability of an offer: uniformity, consistency,
and reliability.

Uniformity

Uniformity means delivering the same characteristics every time. Coca-Cola was one of the first large
companies to combine solid marketing with product uniformity. No one wants their favorite soda to taste
different every time they drink it.

Product uniformity in the beverage industry is an astounding feat: creating, bottling, and distributing soda
is an incredibly complex logistical process. A little too much sugar or flavoring, slightly more air, or an
introduction of unintended bacteria can drastically alter the final product.

When you open a can of Coke, you expect exactly the same product as you had the last time, no matter
where you are. If even 1% of the cans of Coca-Cola sold were flat, people would quickly learn and stop
buying.

Consistency

Consistency means delivering the same value over time. One of the reason’s “New Coke” failed in the
mid-1980s is that customers expected Coke to taste a certain way, and the company delivered something
completely new under the same name. Violating consistency lead to a swift decline in sales, followed by a
swift increase when the Coca-Cola Company restored the original formula.

Violating the expectations of loyal customers is not the way to success—if you’re offering something
completely different, present it as something new.

Reliability
Reliability means being about to count on delivery of the value without error or delay. Ask Microsoft
Windows users what they hate most about their computers, and they’ll always tell you “system crashes.”
Unreliability is a huge frustration for a user, particularly when predictability is at a premium. How would
you feel if you’re building a house and a contractor doesn’t show up on time?

Improving predictability has major reputation and value-perception benefits. The more predictable your
standard offering is, the more you’ll be able to increase the perceived quality of the products and the
services that you offer.

What Is ‘Quality’?

 Quality is “fitness for purpose.”

 There are eight common dimensions of Quality you can use to improve your offer.

In 1987, David A. Garvin, a professor at Harvard Business School, proposed a practical framework
managers and executives can use to define, measure, and improve Quality. I like to think through
Garvin’s eight factors in terms of questions:

1. Performance—how well does it serve the intended purpose?

2. Features—how many useful or valuable benefits does it offer?

3. Reliability—what is the probability it will break, malfunction, or fail when used?

4. Conformance—how well does it meet established standards? Are defects common? Are
acceptable replacements available if I need them?

5. Durability—how long will it work?

6. Serviceability—if something goes wrong, is it easy to fix?

7. Aesthetics—is the subjective experience of using it pleasurable, attractive, or reassuring?

8. Perception—does it have a good Reputation and deliver better results than anticipated, to avoid
the Expectation Effect?

The nice thing about this Deconstruction is that it can serve as a Checklist of how to improve your offer
over time. Nothing is perfect: there is always something you can do to improve the Quality of your offer.

“Strive for perfection in everything. Take the best that exists and make it better. If it doesn’t exist, create
it. Accept nothing nearly right or good enough.”
Henry Royce, engineer and cofounder of Rolls-Royce
https://gfgc.kar.nic.in/kundapura/FileHandler/211-c95ce783-5f59-4755-9d04-04aeeff189ae.pdf

Understanding Consumer Behavior:

Buying motives
Buying Motives of Consumers:
Every human activity has a motive behind it. So also, the buying activity of every buyer has a motive
behind it. A buyer does not simply purchase something. He takes a decision to purchase something only
when a motive (i.e., inner feeling or urge) make him to buy it. Buying motives of a buyer refers to the
influences or motivations forces which determine his buying.

In other words, a buying motive is the inner feelings, urge, instinct, drive, desire, stimulus, thoughts, or
emotion that makes a buyer buy a certain product or service to satisfy his needs.

Classification of buying motives or Types of Buying Motives:

Buying motives can be classified as follows:
1. Product Buying Motives:
Product buying motives refer to those influences and reasons which prompt (i.e., induce) a buyer to
choose a particular product in preference to other products. Product buying motives may be sub-divided
into two groups, viz., emotional product buying motive, and rational buying motive.
Emotional Product Buying Motives:
When a buyer decides to purchases a product without thinking over the matter logically and carefully, he
or she is said to have been influenced by emotional product buying motives. Emotional product buying
motives include the following
a) Pride or Prestige: Many buyers are proud of possessing some product (i.e., they feel that the
possession of the product increases their social prestige or status). In fact, many products are sold by the
sellers by appealing to the pride or prestige of the buyers.
b) Emulation or imitation: emulation i.e., the desire to imitate others, is one of the important emotional
buying motives. For instance, a housewife may like to have a silk saree for the simple reason that all the
neighbouring housewives have silk sarees.
c) Affection: many goods are purchased by the buyers because of their affection or love for others. For
instance, a father may buy a costly watch for his son or daughter out of his affection or love
d) Comfort or desire for Comfort: many products are bought because of the desire for comfort. For
instance, fans refrigerators washing machine, cushion beds, etc. are bought by the people because of their
desire for comfort.
e) Sex appeal or sex attraction: buyers buy and use certain things, as they want to be attractive to the
members of the opposite sex. Men and women by cosmetics, costly dresses, etc. because of this emotional
motive.
f) Ambition: ambition refers to the desire to achieve a definite goal. It is because of this buying motive
that, sometimes, customers buy certain things. For instance, it is the ambition that makes many people,
who do not have the facilities.
g) Desire for distinctiveness or individuality: Customers buy certain things because they want to be in
possession of things which are not possessed by others. Purchasing and wearing a particular type of dress
by some people is because of their desire for distinctiveness or individuality.
h) Desire for recreation or pleasure: desire for recreation or pleasure is also one of the emotional
buying motives. For instance, radios, musical instruments, etc., are bought by people because of their
desire for recreation.
i) Hunger and thirst: Hunger and thirst are also one of the important emotional buying motives.
foodstuffs, drinks, etc., are bought by the people because of their motive.

Rational Product Buying Motives:

When a buyer decides to buy a certain thing after careful consideration, he is said to have been influenced
by rational product buying motives. Rational product buying motives include the following:
1. Safety and Security: Desire for safety or security is an important rational buying motives influencing
many purchases. For instance, iron safes or safety lockers are bought by the people because of this
motive. Similarly, vitamin tablets, tonics, medicines, etc. are bought by the people because of this motive,
i.e., they want to safeguard their health and protect themselves against diseases.
2. Economy: Economy, i.e., saving in operating costs, is one of the important rational buying motives.
For instance, maruti Suzuki cars are preferred by the people because of the economy or saving in the
operating costs.
3. Relatively low price: most of the buyers compare the prices of competing products and buy things
which are relatively cheaper.
4. Suitability: intelligent buyers consider the suitability of the products before buying them. For instance,
a buyer who has a small dining room, naturally, goes in for a small dining table that is suitable
5. Utility or versatility: versatility or the utility of a product refers to that quality of the product which
makes it suitable for a variety of uses. People, often purchase things which have utility.
6. Durability of the Product: Durability of the product is one of the most important rational buying
motives. Many products are bought by the people only on the basis of their durability.
7. Convenience of the product: many products are bought by the people because they are more
convenient to them.
Patronage Buying Motives:
Patronage buying motives refers to those considerations or reasons which prompt a buyer to buy the
product wanted by him from a particular shop in preference to other shops. Patronage buying motives also
may be sub-divided into two groups. They are:

a) Emotional patronage buying motives.

b) Rational patronage buying motives.
Emotional Patronage buying motives: When a buyer patronizes a shop without applying his mind or
without reasoning, he is said to have been influenced by emotional patronage buying motives. Emotional
patronage buying motives include the following:
1) Appearance of the shop: some people make their purchases from a particular shop because of the
good or attractive appearance of the shop.
2) Display of goods in the shop: Attractive display of goods in the shop also makes the buying patronize
a particular shop.
3) Recommendation of others: some people purchase their requirements from a particular shop because
that shop has been recommended to them by others.
4) Imitation: people make their purchases from a particular shop just because other people make their
purchases from that shop.
5) Prestige: Prestige is one of the emotional patronage buying motives of the buyers. For instance, some
people consider it a prestige to take coffee from a five-star hotel.
6) Habit: some people make their purchases from a particular shop for the simple reason that they have
been habitually making their purchases from that shop.
Rational Patronage Buying Motives:
When a buyer patronizes a shop after careful consideration, he is said to have been influenced by rational
patronage buying motives. Rational patronage buying motives include the following:
1) Convenience: convenient location or proximity of a shop is one of the considerations influencing the
purchases of many buyers from a particular shop. Many buyers, usually, buy their requirements from a
nearby shop, as it is convenient to them to make their purchases.
2) Low price charged by the shop: if the price charged by a shop for a particular product is relatively
cheaper, naturally, many people will make their purchases from that shop.
3) Credit facilities offered: people who do not have enough money to make cash purchases every time
prefer to make their purchases from a shop which offers credit facilities.
4) Service Offered: the various sales and after-sale services, such as, acceptance of order through phone,
home delivery of goods, repair services etc. offered by a shop also induce the buyers to buy their
requirements from that shop
5) Wide Choice: People, generally, prefer to make purchases from a shop which offers wide choice.
6) Treatment: people would like to purchase their requirements from a shop where they get courteous
treatment.
7) Reputation of the shop: people would like to make their purchases from a store having reputation for
fair dealings.

https://www.clootrack.com/knowledge_base/major-factors-influencing-consumer-behavior
What are the Factors Affecting Consumer Behaviour

What is Consumer Behaviour?

Consumer behaviour is the study of how individual customers, groups or organizations select, buy, use,
and dispose ideas, goods, and services to satisfy their needs and wants. It refers to the actions of the
consumers in the marketplace and the underlying motives for those actions.
Engel, Blackwell, and Mansard define consumer behaviour as “…the actions and decision processes of
people who purchase goods and services for personal consumption.”

Major Factors Influencing Consumer Behaviour

1. Psychological Factors
2. Social Factors
3. Cultural Factors
4. Personal Factors
5. Economic Factors

Consumer behaviour is influenced by many different factors. A marketer should try to understand the
factors that influence consumer behaviour. Here are 5 major factors that influence consumer behaviour: 

1. Psychological Factors:
Human psychology is a major determinant of consumer behaviour. These factors are difficult to measure
but are powerful enough to influence a buying decision.

Some of the important psychological factors are:

i. Motivation
When a person is motivated enough, it influences the buying behaviour of the person. A person has many
needs such as social needs, basic needs, security needs, esteem needs, and self-actualization needs. Out of
all these needs, the basic needs and security needs take a position above all other needs. Hence basic
needs and security needs have the power to motivate a consumer to buy products and services.
ii. Perception
Consumer perception is a major factor that influences consumer behaviour. Customer perception is a
process where a customer collects information about a product and interprets the information to make a
meaningful image of 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 on the 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
skill can be gained through practice, knowledge can be acquired only through experience.

Learning can be either conditional or cognitive. 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. Attitudes and Beliefs

Consumers have certain attitudes and beliefs which influence the buying decisions of a consumer. Based
on this attitude, the consumer behaves in a particular way towards a product. This attitude plays a
significant role in defining the brand image of a product. Hence, marketers try hard to understand the
attitude of a consumer to design their marketing campaigns.

2. Social Factors
Humans are social beings and they live around many people who influence their buying behavior.
Humans 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.

ii. Reference Groups

A 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. 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. 

3. Cultural factors
A group of people is 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 a strong influence on consumer buying 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.
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.
iii. Social Class
Each and every society across the globe has the 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.

4. Personal Factors
Factors that are personal to the consumers influence their buying behaviour. These personal factors differ
from person to person, thereby producing different perceptions and consumer behaviour.
Some of the personal factors are:

i. Age
Age is a major factor that influences buying behaviour. The buying choices of youth differ from that of
middle-aged people. Elderly people have a totally different buying behaviour. Teenagers will be more
interested in buying colourful clothes and beauty products. Middle-aged are focused on house, property
and vehicle for the family.

ii. Income
Income has the ability to influence the buying behaviour of a person. Higher income gives higher
purchasing power to consumers. When a consumer has higher disposable income, it gives more
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.

iii. Occupation

Occupation of a consumer influences the buying behaviour. A person tends to buy things that are
appropriate to this/her profession. For 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 behaviour is
highly influenced by the lifestyle of a consumer. For example, when a consumer leads a healthy lifestyle,
then the products he buys will relate to healthy alternatives to junk food.

5. Economic Factors:

The consumer buying habits and decisions greatly depend on the economic situation of a country or a
market. When a nation is prosperous, the economy is strong, which leads to the greater money supply in
the market and higher purchasing power for consumers. When consumers experience a positive economic
environment, they are more confident to spend on buying products.

Whereas, a weak economy reflects a struggling market that is impacted by unemployment and lower
purchasing power.

Economic factors bear a significant influence on the buying decision of a consumer. Some of the
important economic factors are:

i. Personal Income
When a person has a higher disposable income, the purchasing power increases simultaneously.
Disposable income refers to the money that is left after spending towards the basic needs of a person.
When there is an increase in disposable income, it leads to higher expenditure on various items. But when
the disposable income reduces, parallelly the spending on multiple items also reduced.

ii. Family Income

Family income is the total income from all the members of a family. When more people are earning in the
family, there is more income available for shopping basic needs and luxuries. Higher family income
influences the people in the family to buy more. When there is a surplus income available for the family,
the tendency is to buy more luxury items which otherwise a person might not have been able to buy.

iii. Consumer Credit

When a consumer is offered easy credit to purchase goods, it promotes higher spending. Sellers are
making it easy for the consumers to avail credit in the form of credit cards, easy instalments, bank loans,
hire purchase, and many such other credit options. When there is higher credit available to consumers, the
purchase of comfort and luxury items increases.

iv. Savings
A consumer is highly influenced by the amount of savings he/she wishes to set aside from his income. If a
consumer decided to save more, then his expenditure on buying reduces. Whereas if a consumer is
interested in saving more, then most of his income will go towards buying products.

https://www.lucidchart.com/blog/consumer-decision-making-process

Consumer decision-making process

What is the consumer decision making process

The consumer decision-making process involves five basic steps. This is the process by which consumers
evaluate making a purchasing decision. The 5 steps are problem recognition, information search,
alternatives evaluation, purchase decision and post-purchase evaluation.

5 steps of the consumer decision making process

1. Problem recognition: Recognizes the need for a service or product

2. Information search: Gathers information
3. Alternatives evaluation: Weighs choices against comparable alternatives
4. Purchase decision: Makes actual purchase
5. Post-purchase evaluation: Reflects on the purchase they made

The consumer decision-making process can seem mysterious, but all consumers go through basic steps
when making a purchase to determine what products and services will best fit their needs. 

Think about your own thought process when buying something—especially when it’s something big, like
a car. You consider what you need, research, and compare your options before making the decision to
buy. Afterward, you often wonder if you made the right call. 

If you work in sales or marketing, make more of an impact by putting yourself in the customer’s shoes
and reviewing the steps in the consumer decision-making process.

Steps in the consumer decision process

Generally speaking, the consumer decision-making process involves five basic steps.

1. Problem recognition
The first step of the consumer decision-making process is recognizing the need for a service or product.
Need recognition, whether prompted internally or externally, results in the same response: a want. Once
consumers recognize a want, they need to gather information to understand how they can fulfill that want,
which leads to step two.

But how can you influence consumers at this stage? Since internal stimulus comes from within and
includes basic impulses like hunger or a change in lifestyle, focus your sales and marketing efforts on
external stimulus. 

Develop a comprehensive brand campaign to build brand awareness and recognition––you want
consumers to know you and trust you. Most importantly, you want them to feel like they have a problem
only you can solve.

Example: Winter is coming. This particular customer has several light jackets, but she’ll need a heavy-
duty winter coat if she’s going to survive the snow and lower temperatures.

2. Information search

When researching their options, consumers again rely on internal and external factors, as well as past
interactions with a product or brand, both positive and negative. In the information stage, they may
browse through options at a physical location or consult online resources, such as Google or customer
reviews.

Your job as a brand is to give the potential customer access to the information they want, with the hopes
that they decide to purchase your product or service. Create a funnel and plan out the types of content that
people will need. Present yourself as a trustworthy source of knowledge and information. 

Another important strategy is word of mouth—since consumers trust each other more than they do
businesses, make sure to include consumer-generated content, like customer reviews or video
testimonials, on your website.

Example: The customer searches “women’s winter coats” on Google to see what options are out there.
When she sees someone with a cute coat, she asks them where they bought it and what they think of that
brand.

3. Alternatives evaluation

At this point in the consumer decision-making process, prospective buyers have developed criteria for
what they want in a product. Now they weigh their prospective choices against comparable alternatives.

Alternatives may present themselves in the form of lower prices, additional product benefits, product
availability, or something as personal as color or style options. Your marketing material should be geared
towards convincing consumers that your product is superior to other alternatives. Be ready to overcome
objections—e.g., in sales calls, know your competitors so you can answer questions and compare
benefits.

Example: The customer compares a few brands that she likes. She knows that she wants a brightly
colored coat that will complement the rest of her wardrobe, and though she would rather spend less
money, she also wants to find a coat made from sustainable materials.

4. Purchase decision
This is the moment the consumer has been waiting for: the purchase. Once they have gathered all the
facts, including feedback from previous customers, consumers should arrive at a logical conclusion on the
product or service to purchase.

If you’ve done your job correctly, the consumer will recognize that your product is the best option and
decide to purchase it.

Example: The customer finds a pink winter coat that’s on sale for 20% off. After confirming that the
brand uses sustainable materials and asking friends for their feedback, she orders the coat online.

5. Post-purchase evaluation

This part of the consumer decision-making process involves reflection from both the consumer and the
seller. As a seller, you should try to gauge the following:

 Did the purchase meet the need the consumer identified?

 Is the customer happy with the purchase?
 How can you continue to engage with this customer?

Remember, it’s your job to ensure your customer continues to have a positive experience with your
product. Post-purchase engagement could include follow-up emails, discount coupons, and newsletters to
entice the customer to make an additional purchase. You want to gain life-long customers, and in an age
where anyone can leave an online review, it’s more important than ever to keep customers happy.

Understanding the consumer decision-making process is key if you want to attract more customers and
get them to make that crucial purchase. Use this process and the tools above to tune in to consumers and
genuinely understand how to reach them.

Types of consumer behaviour

There are four main types of consumer behavior:

1. Complex buying behavior

This type of behaviour is encountered when consumers are buying an expensive, infrequently bought
product. They are highly involved in the purchase process and consumers’ research before committing to
a high-value investment. Imagine buying a house or a car; these are an example of a complex buying
behaviour.

2. Dissonance-reducing buying behaviour

The consumer is highly involved in the purchase process but has difficulties determining the differences
between brands. ‘Dissonance’ can occur when the consumer worries that they will regret their choice.

Imagine you are buying a lawnmower. You will choose one based on price and convenience, but after the
purchase, you will seek confirmation that you’ve made the right choice.
4. Variety seeking behaviour

In this situation, a consumer purchases a different product not because they weren’t satisfied with the
previous one, but because they seek variety. Like when you are trying out new shower gel scents.

What affects consumer behaviour?

Many things can affect consumer behaviour, but the most frequent factors influencing consumer
behaviour are:

1. Marketing campaigns

Marketing campaigns influence purchasing decisions a lot. If done right and regularly, with the right
marketing message, they can even persuade consumers to change brands or opt for more expensive
alternatives.

Marketing campaigns, such as Facebook ads for eCommerce, can even be used as reminders for
products/services that need to be bought regularly but are not necessarily on customers’ top of mind (like
an insurance for example). A good marketing message can influence impulse purchases.

2. Economic conditions

For expensive products especially (like houses or cars), economic conditions play a big part. A positive
economic environment is known to make consumers more confident and willing to indulge in purchases
irrespective of their financial liabilities.

The consumer’s decision-making process is longer for expensive purchases and it can be influenced by
more personal factors at the same time. 

3. Personal preferences

Consumer behaviour can also be influenced by personal factors: likes, dislikes, priorities, morals, and
values. In industries like fashion or food, personal opinions are especially powerful.

Of course, advertisements can influence behaviour but, at the end of the day, consumers’ choices are
greatly influenced by their preferences. If you’re vegan, it doesn’t matter how many burger joint ads you
see, you’re not gonna start eating meat because of that.

4. Group influence

Peer pressure also influences consumer behaviour. What our family members, classmates, immediate
relatives, neighbours, and acquaintances think or do can play a significant role in our decisions.

Social psychology impacts consumer behaviour. Choosing fast food over home-cooked meals, for
example, is just one of such situations. Education levels and social factors can have an impact.
5. Purchasing power

Last but not least, our purchasing power plays a significant role in influencing our behaviour. Unless you
are a billionaire, you will consider your budget before making a purchase decision.

The product might be excellent, the marketing could be on point, but if you don’t have the money for it,
you won’t buy it.

Segmenting consumers based on their buying capacity will help marketers determine eligible consumers
and achieve better results.

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