Study Material-Marketing Management

SCHOOL OF LAW
KIIT Deemed to be UNIVERSITY

BHUBANESWAR (ODISHA)
STUDY MATERIAL
SUBJECT: MARKETING MANAGEMENT

SUBJECT CODE: LW-1313
1
SCHOOL OF LAW
KIIT Deemed to be UNIVERSITY
BHUBANESWAR (ODISHA)
STUDY MATERIAL
COURSE: BBA,LLB, SEMESTER: 1ST
SUBJECT: MARKETING MANAGEMENT
SUBJECT CODE: LW-1313
PREPARED BY : DR. AMARENDRA PATTNAIK
Module No Module Name Page
MODULE-1 MARKET AND MARKETING 1-17
MODULE-2 BUSINESS STRATEGIES 18-41
MODULE-3 CONSUMER BEHAVIOUR 42-64
MODULE-4 MARKETING RESEARCH 65-82
MODULE-5 BUSINESS NEGOTIATION 83-90
MODULE-6 E-COMMERCE 91-104
Textbook
1.Principles of Marketing by Philip Kotler , Gary Armstrong , Prafulla Y Agnihotri , and

Ehsan Ul Haque..( Pearson Press)
Reference Books
1. Marketing Strategy by O C Ferrel & Michael D Hartline ( Thomson India Edition).
2.Services Marketing by K Douglas Hoffman and John E G Bateson (Thomson India
Edition).
3.Marketing Management by VS Ramaswamy and S Namakumari (McMillan Books)
4.e-Commerce by Parag Diwan and Sunil Sharma
5. Negotiation - The Art of Getting What You Want by Michael Schatzki.
News Paper: Reading of business news is essential part of learning this subject.
Students can read any newspaper , preferably The Economic Times or Business
Standard.
NB: Sample Questions and MCQs are available at end of each module.
1
MODULE-1: MARKET AND MARKETING
Module Objective
To make the students aware of the meaning of market , market structure and some
basic terminologies related to Marketing.
Module Outcome
1. Students will understand different types of market structure.

2. Students will understand the relevance of marketing as a domain.
Sub-Modules
1.1 . Market , Examples of Market and Types of Market

1.2 . Market Structures
1.3 . Products and Services , Exchange and Transaction
1.4 . Need , Want , Demand , Satisfaction and Utility
1.5 . Market Orientations
1.6 . Growing Importance of marketing
1.7 . Market Segmentation and Target Market.
1.8 . Rural Marketing
1.9 . Service Marketing
MARKET : The economic definition of a Market is “An actual or nominal place

where forces of demand and supply operate, and where buyers and sellers interact
(directly or through intermediaries) to trade goods, services, or contracts or
instruments, for money or barter”. Marketing definition of a market is “ It is the
demand for a product from the existing and potential customers”
MARKETING: There are various definitions of Marketing . But one of the best
definition was given by Marketing guru Phillip Kotler. He said, “ Marketing is
process of satisfying needs and wants through an exchange process.
NEEDS, WANTS & DEMAND :
Needs : They describe basic human requirements. They indicate a state of felt
deprivation. Marketing does not create needs. They exist in the individuals
automatically with the follow of time. Different people have different needs some of
them are as follows:
1
Physical Needs: This types of need is related to food, clothing and shelter.
Safety Needs: Under this need, people want protection from physical harm and
economic threat.
Social Needs: Under this need, they want love, friendship and belongingness
Esteem Needs: Under this need, they want status recognition and self-esteem.
Self Development Needs: They want knowledge, achievement and creativity.
Wants: They are specific satisfiers of needs. Specific products satisfy wants.
Marketing influences wants by offering various products. Wants are unlimited.
Demand: They are wants for specific products. They are backed by ability and
willingness to buy. Wants backed by money and willingness to spend the money
become demand.
Utility : Satisfaction is the ability of a product or service to meet expected needs of a

customer. Utility is a measure of satisfaction.
MARKET STRUCTURES
Market structure, in economics, refers to how different industries are classified and
differentiated based on their degree and nature of competition for goods and services.
It is based on the characteristics that influence the behavior and outcomes of
companies working in a specific market.
2

1. Perfect Competition
Perfect competition occurs when there is a large number of small companies

competing against each other. They sell similar products (homogeneous), lack price
influence over the commodities, and are free to enter or exit the market.
Consumers in this type of market have full knowledge of the goods being sold. They
are aware of the prices charged on them and the product branding. In the real world,
the pure form of this type of market structure rarely exists. However, it is useful when
comparing companies with similar features. This market is unrealistic as it faces some
significant criticisms described below.
 No incentive for innovation: In the real world, if competition exists and a

company holds a dominant market share, there is a tendency to increase
innovation to beat the competitors and maintain the status quo. However, in a
perfectly competitive market, the profit margin is fixed, and sellers cannot
increase prices, or they will lose their customers.
 There are very few barriers to entry: Any company can enter the market
and start selling the product. Therefore, incumbents must stay proactive to
maintain market share.
2. Monopolistic Competition
Monopolistic competition refers to an imperfectly competitive market with the traits

of both the monopoly and competitive market. Sellers compete among themselves and
can differentiate their goods in terms of quality and branding to look different. In this
type of competition, sellers consider the price charged by their competitors and ignore
the impact of their own prices on their competition.
When comparing monopolistic competition in the short term and long term, there are
two distinct aspects that are observed. In the short term, the monopolistic company
maximizes its profits and enjoys all the benefits as a monopoly.
The company initially produces many products as the demand is high. Therefore, its
Marginal Revenue (MR) corresponds to its Marginal Cost (MC). However, MR
diminishes over time as new companies enter the market with differentiated products
affecting demand, leading to less profit.
3. Oligopoly
An oligopoly market consists of a small number of large companies that sell

differentiated or identical products. Since there are few players in the market, their
competitive strategies are dependent on each other.
3
For example, if one of the actors decides to reduce the price of its products, the action
will trigger other actors to lower their prices, too. On the other hand, a price increase
may influence others not to take any action in the anticipation consumers will opt for
their products. Therefore, strategic planning by these types of players is a must.
In a situation where companies mutually compete, they may create agreements to

share the market by restricting production, leading to supernormal profits. This holds
if either party honors the Nash equilibrium state and neither is tempted to engage in
the prisoner’s dilemma. In such an agreement, they work like monopolies.
The collusion is referred to as cartels.
4. Monopoly
In a monopoly market, a single company represents the whole industry. It has no

competitor, and it is the sole seller of products in the entire market. This type of
market is characterized by factors such as the sole claim to ownership of resources,
patent and copyright, licenses issued by the government, or high initial setup costs.
All the above characteristics associated with monopoly restrict other companies from
entering the market. The company, therefore, remains a single seller because it has the
power to control the market and set prices for its goods.
STRATEGIC PLANNING & MARKETING STRATEGY

Every organization has some mission and vision. Mission is a cherished aspiration
which is not quantifiable. The mission of a Eye Hospital could be “Eradicate
controllable blindness from the globe”. This is aspirational and perhaps can never be
achieved. Vision on the other hand is a quantifiable objective. The vision of the above
hospital could be “ To bring back the vision of one lakh vision impaired people in the
next five years time”. From this vision , goals are derived for specific time frames.It
could be two years , one year , a quarter or even a month.
SMART principle is followed to define goals. SMART is the acronym of SPECIFIC ,
MEASURABLE , ACHIEVABLE , REALISTIC AND TIME BOUND. One SMART
goal could be “ Operate 10000 number of patients with cataract problem during 2020-
2011”. For achieving any goal , we need strategy. A strategy is a broad level action
plan to achieve goals. A lot of thought goes into such an exercise. Board of Directors
and Top Management gets involved in such strategic planning. One of the key drivers
of strategic plan is optimum utilization of resources to seize business opportunities.
Strategic planning includes planning at the level of different departments
(Finance,HR,Marketing, Materials etc) or divisions (Businesses or Products) of the
organization. In case of business organizations , Marketing planning is very critical ,
primarily because an organization survives and thrives only by increasing its business.
When we refer to business , it could be market share , revenue , profit margin or other
such measures.
Businesses operate in hostile and increasingly complex environment. The ability of a
business to achieve profitable sales is impacted by dozens of environmental factors,
4
many of which are inter-connected. It makes sense to try to bring some order to this
chaos by understanding the commercial environment and bringing some strategic
sense to the process of marketing products and services.
MARKET ORIENTATIONS
Whilst marketers and marketing teams can usually dictate the marketing strategies it
adopts, it cannot always dictate the organisation's marketing orientation. An
organisation focus (and subsequently its marketing) is centred around five key
categories, classified into the following orientation groups:
1.Production Orientation, 2.Product Orientation, 3.Sales Orientation, 4.Market
Orientation, 5.Societal Orientation
These approaches dictate the priorities and processes existent within the organisation,
and perhaps more importantly, the manner in which the organisation takes its core
offering to market and how it empowers its marketing teams.
Production Orientation
A production orientated organisation commonly operates a mass production model
and streamlines this production process for its product offering. This orientation
approach assumes that its customers value price, and therefore, it focuses on lowering
production costs to meet such price needs of this customer base.
This price is believed to form the main value proposition of the production orientation
organisation’s key offering, focusing its resources towards operations and positioning
its key marketing communications on price-based messages.
This assumption that price is king, however, isn’t always indicative of the needs and
wants of the target audience as the approach does not require learning anything about
the customer base. It assumes that its customers want the cheapest product available
and will strive to realise this price.
Advantages: Economies of scale, efficiency, low cost to customers.
Disadvantages: Disregards customer needs, set-up costs are usually high.
Product Orientation
It is sometimes assumed that a product orientation approach is similar to a production
orientation approach. But it is exactly the opposite. This approach to business
concerns its products and continually improving and refining them so that the product
can always be superior to that of its competitors. So, as the previous orientation was
centred around price, product orientation is centred around quality, which often
increases the price.
Premium products fall into this category, but the approach does not always offer what
its target audience actually wants or considers the factors that the audience uses to
form its purchasing decision. See a previous post on how to launch a science product
for more of product marketing.
5
Quality – and therefore a product orientated organisation – often does not consider
external factors, and focuses on manufacturing a high-quality, premium product that
is superior within the market it operates and competes within.
Advantages: Focus on quality, innovation, skills development/outsourcing.
Disadvantages: Potential missed market opportunities, obsolescence.
Sales Orientation
A sales orientated organisation focuses the majority of its resources on selling its
products and services to its target audience. In a way, it does prioritise its customers
but not in a sense of listening to their needs and wants – it simply wants to sell to
them.
Existing products are usually given to the sales and marketing teams and they are
tasked to finding buyers to those products, wherever and whoever they may be. Many
organisations will feel they are not selling enough of their products and will,
therefore, adopt sales orientated techniques to focus the organisation on selling more
and building on its profit margins.
Disregarding customer needs in this way, and adopting aggressive outbound sales
techniques, is an approach that rarely works in the long term. This is especially the
case now that the general “customer” (regardless of industry) is more empowered than
ever and appreciates relationships within the sales processes, especially within the
B2B pharma sectors. That said, this isn't to say that organisations cannot be successful
with this approach. The inbound sales/marketing approach has emerged as attractive
in modern-day sales orientated organisations.
Advantages: Immediate short-term sales are generated.
Disadvantages: Risks customer confidence, costs, not always sustainable.
Societal Orientation
As people generally become more aware of their environments, the world and the
societies they live within, the societal orientation approach has emerged, giving
organisations a new organisational philosophy.
The societal orientation organisation, considering its product, process and its
marketing, to an extent, focuses on the impact its organisation and products has within
the societies it operates within, as well as the wider environment. Ethical
considerations in this manner have become highly popular within the pharmaceutical
and life science industries.
In competitive markets, however, this approach can be challenging to sustain –
especially for small to medium size organisations where profits and customer
satisfaction can affect how it can execute the environmental and societal orientation
approach.
Advantages: Image is enhanced, appeals to upcoming markets, ethical.
Disadvantages: Marketing message is sometimes distorted, limited budget.
6
Marketing Myopia
Marketing Myopia is a term coined by Theodore Levitt in 1960 in an article published
in Harvard Business Review. Theodore in the article suggest that the companies are
too focused on producing goods or services and do not spend enough time
understanding what customer want or need. Marketing Myopia is a short-sighted and
inward looking approach to marketing. It essentially addresses the immediate needs of
the business rather than the needs of consumers. In this, businesses have a limited
vision and take a narrow-minded approach to marketing.
(i) The Kodak Case
Kodak was unable to anticipate the changing market dynamics and failed. Kodak
failure is the classic example of Marketing Myopia. The company still holds an iconic
brand image for their dominance in market for photography, cameras and films.
Despite such terrific brand image, Kodak failed to follow the changing market flux.
Kodak invented digital camera in 1975 and instead of marketing this new technology,
the company kept engaging in its lucrative film business. Kodak decided to get in the
digital camera game a bit late. Despite Kodak’s own technology, Sony and Canon
took over the digital camera technology by storm.
(ii) Nokia Failure
Nokia was once a market leader in mobile-phone segment. Its failure is now a case
study to understand Marketing Myopia. The company was so self-occupied that the
company forgot to consider future needs of customers. Nokia remained myopic about
its position in the market and thought it to be in the growth stage of the business
cycle.
Nokia considered mobile phones will be limited to messages, calls and any time-
passing games. Meanwhile, the competitors like Samsung and Apple were working on
revolutionary technologies like GPS, internet and Media into cell phones. It was too
late for Nokia to realize the power of Android and IOS platforms.
(iii) Yahoo’s Mistake And Google‘s Mastery
Yahoo’s Bing and Google Search provides similar services to its users . Back in 2000,
Yahoo was worth $125 billion and in 2016 Verizon acquired Yahoo for $ 4.83 billion.
Whereas in 2020, Google had a net worth of $632 billion.
Google had a clear vision since its commencement i.e. to organize the world’s
information and make it universally accessible and useful. Yahoo lacked the proper
statement and vision for Bing. Google anticipated the future and worked for its brand
position with clear strategies and marketing plans. Yahoo, throughout its career
struggled for its brand position. Yahoo’s such vision-less approach reflects Marketing
Myopia.
There are plenty of examples around which reflects the myopic approaches of the
companies. Only those companies who are able to avoid such myopic vision can
actually move forward. Nokia has understood its myopic vision and it is trying
different approaches to hit back the cell-phone market. There are many other
7
examples which reflects marketing myopia. For instance, Uber hit Taxi company and
Lyft hit Uber business in U.S., Netflix shattered the business model of Blockbuster.
MARKET SEGMENTATION AND TARGET MARKET
market segmentation and the target market are important elements of the overall
market strategy of the business. In order to successfully develop a marketing strategy,
the company needs to identify who they are targeting. The way they establish their
target market is through market segmentation.
The difference between market segmentation and market segment is that the former is
the process, whereas the latter is the result. In order to create market segments, the
business needs to go through the process of market segmentation. The reason market
segmentation is so critical to business is because it is difficult to satisfy the needs of
all consumers with the same products and messaging. Consumers have different
interests, needs, goals, likes and dislikes, so businesses need to cater to groups of
consumers in different ways according to their traits.
While there are several ways to segment the market, they can be categorized into four
main groups:
Demographic: This is the most basic way to segment the market. Businesses can
group consumers based on age, gender, race, religion, nationality, occupation,
income, family status and social class. For example, a business can target women ages
19 to 35 who have children and work a full-time office job.
Geographic: Where a consumer lives affects their interests and purchasing habits.

When segmenting geographically, businesses group by location, climate, population
density and size of region. For example, a business can target people who live in
warm climates in highly dense cities, or people who live in Toronto, Canada.
Behavioral: This segmentation type involves understanding the way people behave

towards products and services. It is affected by what benefits consumers are looking
for, whether they are loyal to a brand, how often they plan to use the product, how
ready they are to buy and whether they have already purchased from the company
before. For example, a business can target loyal customers who have purchased the
product at least twice before.
Psychographic: The kind of lifestyle a consumer lives is an important part of market

segmentation. A consumer’s hobbies, opinions, attitudes, values and interests are how
a business can segment their market. For example, a business can target consumers
who value family and community and enjoy group sports activities with their loved
ones.
After a business has evaluated its potential market segments and established their
target market, it’s important to develop a customer persona. This is a vital marketing
8
document that outlines all of the important traits of an ideal customer within the target
market that affect the way they purchase and look at products.
The customer persona should be detailed and include information on all four
segmentation categories: demographic, geographic, behavioral and psychographic.
This helps the business to build a comprehensive picture of who they are selling to. It
also provides a quick reference point so that anyone who is working on marketing or
product messaging can quickly understand the consumers' needs, wants and goals.
Niche Marketing
A niche market is a focused, targetable portion of a broader market in which

specialized products or services can be sold. Establishing a niche market helps
businesses gain competitive advantages.
There are several benefits to targeting a niche market:
Reduced competition
Focused business efforts
Providing expertise
Establishing brand loyalty
The more specialized the products or services you offer, the less competition there
will be, which gives businesses a chance to take advantage of a larger market share
and less price competition. Targeting a narrower audience also allows businesses to
focus their efforts on catering to specific customer needs.
If you sell backpacks, for instance, there are countless types you could offer, and if
you try to offer them all, it's going to be virtually impossible to please all customer
types. However, suppose you focus on backpacks designed for avid hikers who go on
multiday trips and camp outside. In that case, it becomes much easier to concentrate
your efforts on making the best possible product for that consumer.
RURAL MARKETING
Rural marketing is marketing of all kinds of products in rural market which includes
products that are mostly needed in rural areas like seeds , fertilizer , pesticides and
agri-equipments. Reural marketing also means marketing of products
produced/manufactured in rural area in cities and urban areas. Some of these items are
handicrafts , vegetables , food grains , fruits , cottage industry items , items produced
by Self Help Groups(SHGs) etc. Rural market has good potential but there are many
challenges because of which only a limited number of companies operate in rural
markets. Some of them are as follows:
Standard of Living : A large part of the population in rural areas lies below poverty
line. Thus the rural market is also underdeveloped and the marketing strategies have
to be different from the strategies used in urban marketing.
9
Low literacy levels :The low literacy levels in rural areas leads to problem in
communication with the market and the print media has less utility as compared to the
other media of communication.
Low Per Capita Income: In rural market, agriculture is the main source of income
and hence expense capacity depends upon the agricultural produce. Demand may or
may not be stable.
Transportation and Warehousing: Transportation and supply chain management

are the biggest challenges in rural markets. As far as by road transportation is
concerned, about 50% of Indian villages are connected by roads to the nearest big
cities. The rest of the rural markets do not have proper road linkage to other cities
which causes problems in physical distribution.
Many villages are located in hilly remote areas which is difficult to connect with them
through roads. Warehousing is another major problem in rural areas, as there you will
hardly get any organized agency to look after the storage issue. The services given by
central warehousing corporation and state warehousing corporations are limited only
to urban and suburban areas.
Ineffective Distribution Channels: The distribution chain is not organized and also
requires a large number of intermediates, which in return increases the cost. Due to
lack of appropriate infrastructure, manufacturers are giving back steps to open outlets
in these areas. That is why they need to dependent on dealers, who are rarely available
for rural area which increases the challenges for marketers.
Many Languages and Diversity in Culture: Factors like different behavior and
language of every respective area increases difficulties to handle the customers. The
sales force is required to match the various requirements of the specific areas
according to their culture.
Lack of Communication System: Quick communications facilities like computer,

internet and telecommunication systems etc. are the need of rural market which is a
biggest problem due to lack of availability. The literacy level in the rural areas is quite
low and consumer’s behavior is kind of traditional, which is a cause of problem for
effective communication.
Dummy Brands: Cost is an important factor for rural consumers which determine
purchasing decision in rural areas. A lot of fake brands or products that look similar to
the original one are available, providing low cost options to the rural consumers. Most
of the time, the rural consumers may not be aware of the difference due to illiteracy.
Seasonal Demand: Demand may be seasonal in rural market due to dependency on

seasonal production of agricultural products and the income due to those products.
Harvest season might see an increase in disposable income and hence more
purchasing power.
10
SERVICE MARKETING
The world economy nowadays is increasingly characterized as a service economy.

This is primarily due to the increasing importance and share of the service sector in
the economies of most developed and developing countries. In fact, the growth of the
service sector has long been considered as indicative of a country’s economic
progress.
Economic history tells us that all developing nations have invariably experienced a
shift from agriculture to industry and then to the service sector as the main stay of the
economy.
Some of the important characteristics of Service are:
Intangibility: Services are intangible and do not have a physical existence. Hence

services cannot be touched, held, tasted or smelt. This is most defining feature of a
service and that which primarily differentiates it from a product. Also, it poses a
unique challenge to those engaged in marketing a service as they need to attach
tangible attributes to an otherwise intangible offering.
Heterogeneity/Variability: Given the very nature of services, each service offering is

unique and cannot be exactly repeated even by the same service provider. While
products can be mass produced and be homogenous the same is not true of services.
eg: All burgers of a particular flavor at McDonalds are almost identical. However, the
same is not true of the service rendered by the same counter staff consecutively to two
customers.
Perishability: Services cannot be stored, saved, returned or resold once they have

been used. Once rendered to a customer the service is completely consumed and
cannot be delivered to another customer. eg: A customer dissatisfied with the services
of a barber cannot return the service of the haircut that was rendered to him. At the
most he may decide not to visit that particular barber in the future.
Inseparability/Simultaneity of production and consumption: This refers to the fact

that services are generated and consumed within the same time frame. Eg: a haircut is
delivered to and consumed by a customer simultaneously unlike, say, a takeaway
burger which the customer may consume even after a few hours of purchase.
Moreover, it is very difficult to separate a service from the service provider. Eg: the
barber is necessarily a part of the service of a haircut that he is delivering to his
customer.
SAMPLE MCQs
1. Economies of Scale is a concept related to
(a) Product Orientation
(b) Production Orientation
11
(c) Marketing Orientation
(d) Selling Orientation
Ans: b
2. Eureka Forbes follows which kind of market orientation?
Ans: d
3. Automobile dealers many times provide zero interest or nominal down payment
facility to customers to increase the sales of their products. What is the market
orientation they follow:
Ans: c
4. Dividing the market based on age of the target customers is what type of market
segmentation?
(a) Demographic
(b) Psychographic
(c) Geographical
(d) Behavioral
Ans: a
5. Some mobile manufacturers keep adding new features to their mobile sets to attract
customers. What kind of market orientation such companies follow:
12
Ans: a
6. A market structure where there is just one seller and many buyers is known as
(a) Oligopoly
(b) Perfectly Competitive
(c) Monopoly
(d) Monopsony
Ans: c
7. A market structure where there is just one buyer and many sellers is known as
(a) Oligopoly
(c) Monopolistic
(d) Monopsony
Ans: d
8. Product differentiation is one of the most important feature of which type of market
structure
(a) Oligopoly
(c) Monopolistic
(d) Monopsony
Ans: c
9. Cartel formation is witnessed in which type of market structure

(a) Oligopoly
(c) Monopolistic
(d) Monopsony
Ans: a
10. Which of the following industry is not known for cartel formation
(a) Cement Industry
(b) Airlines Industry
(c) Steel Industry
(d) Garment Industry
Ans: d
11. Broadly how many needs are there as per Maslow’s theory?
(a) 5
(b) 4
(c) 6
(d) 2
13
Ans: a
12. A limited edition gold plated Parker pen signed by a famous sports star meets
which needs
(a) Physiological need
(b) Esteem need
(c) Safety need
(d) Social need
Ans: b
13. Life Insurance products meet which of the following needs.

(b) Esteem need
(c) Safety need
(d) Social need
Ans: c
14. Membership in a professional association meets which of the following needs

(b) Esteem need
(c) Safety need
(d) Social need
Ans: d
15. A basic telephone connection is what type of need.

(b) Esteem need
(c) Safety need
(d) Social need
Ans: a
16. People working in software industry keep learning new skills from e-platforms
like Courseera and other courses offered by foreign universities. Learning meets what
kind of need.
(b) Esteem need
(c) Safety need
(d) Social need
Ans: c
17. Houses provided to poor by the Government under Pradhan Mantri Awas Yojna
meets what type of need.
14
(b) Esteem need
(c) Safety need
(d) Social need
Ans: a
18. Penthouses in a posh locality sold to customers only on invitation basis fulfills
which need.
(b) Esteem need
(c) Safety need
(d) Social need
Ans: b
19. Amway follows which market orientation:

Ans: d
20. Adventure sports meets which type of needs
(a) Self-Actualization need

(b) Esteem need
(c) Safety need
(d) Social need
Ans: a
SAMPLE SHORT ANSWER QUESTIONS

1. You have inherited the jewellery business of your father. You have four shops in
the four metro cities. Outline various ways in which you can segment the jewellery
market and target your customers.
2. What are the different ways in which educational service market can be segmented.
3. What are the different ways in which market segmentation can be made in tyre
industry.
4. Explain market segmentation citing examples from footwear industry.
5. Why in some industry we witness cartel formation. Cite some real life instances of
cartel formation in Indian market.
6. Explain the concept of Market orientation by giving examples from service
industry.
7. Make a market segmentation of insurance market.
15
8. You want to enter into tooth paste market with a new brand of tooth paste. Decide
the target market after proper market segmentation.
9. What do you understand by Marketing myopia. Explain with examples.
10. What do you understand by niche marketing. Explain with examples.
Weblinks
1. http://14.139.58.147:8080/jspui/bitstream/123456789/217/1/33LLM15.pdf
(Research article on cartel formation)
2. https://globalcompetitionreview.com/review/the-asia-pacific-antitrust-review/
2021/article/india-cartels#footnote-005 (A research article by AZB Partners on laws
related to cartel formation).
3. https://mirasee.com/blog/niche-market-examples/
MODULE-2: BUSINESS STRATEGIES
Module Objective
The enable the student to analyse business problems through some popular business
models.
16
Module Outcome
1. Students will be able to analyse and solve some business problems using models.
2. Students will be able to solve marketing problems through Marketing Mix strategy.
Sub-Modules
2.1. Business Strategy

2.2. Marketing Mix, ,
2.3. BCG SBU Matrix ,
2.4. McKinsey’s 7S Model,
2.5. Michael Porter’s 5Force Model,
2.6. SWOT analysis,
2.7. Pricing Strategy ,
2.8. Distribution Strategy.
2.9. Advertising and Sales Promotion.
2.10.Public Relation ,
2.11.Push and Pull type Communication ,
2.12.Surrogate advertising ,& Ethics in advertising ,
2.13.Targeted Online advertising ,
2.14.Budgeting for communication.
BUSINESS OBJECTIVES
Business Profitability Objectives
A common business goal is to run a profitable operation, which typically means increasing
revenue while limiting expenses. To reach this goal, objectives could consist of increasing
annual sales by 10 percent or landing three new accounts each month. Expense objectives
could involve finding a new operating facility that decreases your rent by $200 a month or
cutting monthly utility bills by 15 percent.
Customer Service Objectives
Customer service goals could include reducing complaints by 50 percent over one year or to
improve resolution times to customer complaints to a minimum of one business day. To meet
customer service goals, objectives could include increasing your customer service staff from
one to three workers by the end of the year or implementing a policy where customers are
guaranteed to receive a return phone call before the end of the business day.
Retention of Employees
If you've experienced a problem with employee turnover, your overall goal could be to
improve retention. To make this goal specific, you could measure the current turnover rate,
like one employee in five leaves after three months, and decide to double this figure to six
months. Objectives to meet this goal could include implementing a training program that
details new-hire activities for the first 90 days on the job. You also could implement one-on-
one bi-weekly meetings with your employees in an effort to build rapport and find out what's
on their mind.
17
Efficiency of Operations
Another goal could be to become more efficient in your business operation as a way to
increase productivity. To improve efficiency, you could set a goal of increasing shipping
times from three days to two days. Objectives to meet this goal could include finding a new
shipper, or improving production times to have units ready to ship before 10 a.m. each
morning.
Growth of the Business
Perhaps your goal is to grow your business operation. If you own a franchise unit, for
example, your goal might be to open three more units within a five-year period. If this was the
case, your objectives could include scouting a new city once each quarter, or reducing your
franchise fees by 25 percent for the next six months.
GROWTH STRATEGIES
These strategies are also called ‘organic growth strategies.
1. Intensive Growth Strategy

2. Integrative Growth Strategy
3. Diversification Growth Strategy
1. INTENSIVE GROWTH STRATEGIES
The firm pursues intensive growth strategies with an objective to achieve further growth of
existing products and/or existing markets.
The basic classification of intensive growth strategies:

(a) Market penetration strategy
(b) Market development strategy
(c) ©Product development strategy
(a) Market Penetration Strategy:
A firm pursuing market penetration strategy directs its resources to the profitable growth of a
existing products in current markets. It is the most common form of intensive growth strategy.
The variants of these strategies are:
(a) Increase sales to current customers by habituating existing customers to use more.
(b)Pull customers from the competitors’ products to company’s products maintaining existing
customers intact.
©Convert non-users of a product into users of the product and making potential opportunity
for increasing sales.
18
The firm try to increase market share for present products in current markets through increase
of marketing efforts like increase of sales promotion and advertising expenditure,
appointment of skilled sales force, proper customer support and after sales service etc.
(b) Market Development Strategy:
This strategy involves introducing present products or services into new geographic areas.
The marketing efforts are made on existing products, to customers in related market areas, by
adding different channels of distribution or by changing the current content of the advertising
and promotional efforts.The market development can be achieved in any of the following
ways:
(a) By adding new distribution channels to expand the consumer reach of the product.
(b) By entering new market segments.
(c) By entering new geographical markets.
In market development strategy, a firm seeks to increase the sales by taking its product into
new markets.
(c) Product Development Strategy:
This strategy involves the growth of market through substantial modification of existing
products or creation of new but related products that can be marketed to current customers
through established channels.
The variants of this strategy are:
(a) Expand sales through developing new products. (b)Create

different quality versions of the product. (c) Develop
additional models and sizes of the product to suit the varied preference of the customers.
A company can increase its current business by product improvement or introduction of

products with new features.
2. INTEGRATIVE GROWTH STRATEGIES:
The integrative growth strategies are designed to achieve increase in sales, assets and profits.
There are basically two variants in integrative growth strategy which involves:
(a) Integration at the same level or stage of business in the same industry i.e. horizontal
integration.
(b) Integration of different levels/stages of business in the same industry i.e. vertical
integration with backward and forward linkages.
(a) Horizontal Integration:
19
When two or more firms dealing in similar lines of activity combine together then horizontal
integration takes place. Many companies expand by creating other firms in their same line of
business. A firm is said to follow horizontal integration if it acquires or starts another firm
that produce the same type of products with similar production process/marketing practices.
When the combination of two or more business units (existing and created) results in greater
effectiveness and efficiency than the total yielded by those businesses, when they were
operated separately, the synergy has been attained.
The reasons for horizontal integration are as follows:
(a) Elimination or reduction in intensity of competition.

(b) Putting an end to practice of price cutting and Fixation of common price.
(c) Achieve economics of scale in production.
(d) Common pool of resources for research and development.
(e) Economies of scope (Use of common distribution channels and uniform brand name ,
administrative expenses.)
(f) Effective management of capacity imbalances.
(g) Greater leverage to deal with the customers and suppliers.
The horizontal integration will increase the monopolistic tendency in the market. Less number
of players in the industry will lead to collusion to reap abnormal profits by setting price of
finished products at higher level than the market determined price.
(b) Vertical Integration:
A vertical integration refers to the integration of firms in successive stages in the same
industry. The integration of different levels/stages of the industry is known as vertical
integration. Vertical integration may be either backward integration or forward integration.
I. Backward Integration:
In case of backward integration, it extends to the suppliers of raw materials. A vertical

integration is one in which the company expands backwards by diversification into supplying
raw materials. This allows for smooth flow of production, reduced inventory, reduction in
operating costs, increase in economies of scale, elimination of bottlenecks, lower buying cost
of materials etc.
It is a diversification engaged at different stages of production cycle within the same industry.
Firms adopting this strategy can have a regular and uninterrupted supply of raw materials
components and other inputs and the quality is also assured.
II. Forward Integration:
20
It is a case of down-stream integration extends to those businesses that sell eventually to the
consumer. The purpose of such diversification is to attain lower distribution costs, assured
supplies to the market, increasing or creating barriers to entry for potential competitors.
The firm expands forward in the direction of the ultimate consumer. For example- a cement
manufacturing company undertakes the civil construction activity; it will be a case of
diversification with forward linkage. With forward integration, firms can acquire greater
control over sales, distribution channels, prices, and can improve its competitive position
through differentiation and customer support.
3. DIVERSIFICATION GROWTH STRATEGIES:
Diversification means going into an operation which is either totally or partially unrelated to
the present operations.
Before opting for diversification, the following basic questions must be seriously
considered:
(a) Whether it brings a positive synergy, to the company?

(b) Whether the market wants the new product or service which we offer?
(c) Whether the product or service has a good growth potential?
Before selecting diversification strategy, one must have a clear understanding of the new
product/service, the technology and the markets. Diversification strategies are used to expand
firm’s operations by adding markets, products, services or stages of production to existing
operations. The purpose of diversification is to allow the company to enter lines of business
that are somewhat different from current operations.
Diversification makes addition to the portfolio of business the growth strategy is pursued
when the firm’s growth objectives are very high and it could not be achieved with in the
existing product/market scope. Spreading risks by operating in multiple areas decreases the
threat of any one area causing the firm to fail.
However, diversification spreads resources over several areas, similarly decreasing the
probability that the firm can be a strong force in any area. Diversification refers to the
directions of development which take the organization away from both its present products
and its present markets at the same time. Diversification strategies are becoming less popular
as organizations are finding it more difficult to manage diverse business activities.
The Different Types Of Diversification Strategies
The strategies of diversification can include internal development of new products or markets,
acquisition of a firm, alliance with a complementary company, licensing of new technologies,
and distributing or importing a products line manufactured by another firm. Generally, the
final strategy involves a combination of these options. This combination is determined in
21
function of available opportunities and consistency with the objectives and the resources of
the company.
There are three types of diversification: concentric, horizontal, and conglomerate.
Concentric diversification : This means that there is a technological similarity between the
industries, which means that the firm is able to leverage its technical know-how to gain some
advantage. For example, a company that manufactures industrial adhesives might decide to
diversify into adhesives to be sold via retailers. The technology would be the same but the
marketing effort would need to change.
It also seems to increase its market share to launch a new product that helps the particular
company to earn profit. For instance, the addition of tomato ketchup and sauce to the existing
"Maggi" brand processed items of Food Specialities Ltd. is an example of technological-
related concentric diversification.
The company could seek new products that have technological or marketing synergies with
existing product lines appealing to a new group of customers.This also helps the company to
tap that part of the market which remains untapped, and which presents an opportunity to earn
profits.
Horizontal diversification: The company adds new products or services that are often
technologically or commercially unrelated to current products but that may appeal to current
customers. This strategy tends to increase the firm's dependence on certain market segments.
For example, a company that was making notebooks earlier may also enter the pen market
with its new product.
Horizontal diversification is desirable if the present customers are loyal to the current
products and if the new products have a good quality and are well promoted and priced.
Moreover, the new products are marketed to the same economic environment as the existing
products, which may lead to rigidity and instability.
Conglomerate diversification (or lateral diversification)
The company markets new products or services that have no technological or commercial
synergies with current products but that may appeal to new groups of customers. The
conglomerate diversification has very little relationship with the firm's current business.
Therefore, the main reasons for adopting such a strategy are first to improve the profitability
and the flexibility of the company, and second to get a better reception in capital markets as
the company gets bigger. Though this strategy is very risky, it could also, if successful,
provide increased growth and profitability.
SWOT ANALYSIS
22
A SWOT Analysis is one of the most commonly used tools to assess the internal and external
environments of a company and is part of a company’s strategic planning process.
Internal:
Internal factors are the strengths and weaknesses of the company. Strengths are the

characteristics that give the business its competitive advantage, while weaknesses are
characteristics that a company needs to overcome in order to improve its performance.
Examples of internal factors include:
Company culture
Company image
Operational efficiency
Operational capacity
Brand awareness
Market share
Financial resources
Key staff
Organizational structure

External:
External factors are the opportunities and threats to the company. Opportunities are elements

that the company sees in the external environment that it could pursue in the future to
generate value. Threats are elements in the external environment that could prevent the
company from achieving its goal or its mission or creating value.
Changes in the external environment may be due to:
23
Societal changes
Customers
Competitors
Economic environment
Government regulations
Suppliers
Partners
Market trends
BCG GROWTH-SHARE MATRIX (BCG SBU MODEL)
24
If you are working with a product portfolio you have a range of tools at your disposal to
determine how each one or a group of the products are doing. You could consider using the
Product Life Cycle but if you need a current “snap shot” of how the products are doing you
would benefit more from using the Boston Consulting Group Matrix.
Back in 1968 a clever chap from Boston Consulting Group, Bruce Henderson, created this
chart to help organisations with the task of analysing their product line or portfolio.
The matrix assess products on two dimensions. The first dimension looks at the products
general level of growth within its market. The second dimension then measures the product’s
market share relative to the largest competitor in the industry. Analysing products in this way
provides a useful insight into the likely opportunities and problems with a particular product.
Products are classified into four distinct groups, Stars, Cash Cows, Problem Child and Dog.
Let's have a look at what each one means for the product and the decision
25
Mobile : Market Growth Rate 20% , Market Share-60%
E-Commerce Business-Growth Rate 18% , Market Share- 5%
Desktop Business - Growth Rate 1% , Market Share 60%
Dot Matrix Printer - Groeth Rate 1% , Market Share - 5%
Stars (high share and high growth) : Star products all have rapid growth and dominant
market share. This means that star products can be seen as market leading products. These
products will need a lot of investment to retain their position, to support further growth as
well as to maintain its lead over competing products. This being said, star products will also
be generating a lot of income due to the strength they have in the market. The main problem
26
for product portfolio managers it to judge whether the market is going to continue to grow or
whether it will go down. Star products can become Cash Cows as the market growth starts to
decline if they keep their high market share. (Strategic Action - Hold)
Cash Cows (high share, low growth) : Cash cows don’t need the same level of support as
before. This is due to less competitive pressures with a low growth market and they usually
enjoy a dominant position that has been generated from economies of scale. Cash cows are
still generating a significant level of income but is not costing the organisation much to
maintain. These products can be “milked” to fund Star products.(Strategic Action - Harvest)
Dogs (low share, low growth) : Products classified as dogs always have a weak market share
in a low growth market. These products are very likely making a loss or a very low profit at
best. These products can be a big drain on management time and resources. The question for
managers is whether the investment currently being spent on keeping these products
alive could be spent on making something that would be more profitable. The answer to this
question is usually yes.(Strategic Action - Divest)
Question mark / Problem Child (low share, high growth) : Also sometime referred to as
Question Marks, these products prove to be tricky ones for product managers. These products
are in a high growth market but do not seem to have a high share of the market. The reason
for this could be that it's a very new product to the market. If this is not the case, then some
questions need to be asked. What is the organisation doing wrong? What are its competitors
doing right? It could be that these products just need more investment behind them to become
Stars. (Strategic Action - Build)
McKINSEY 7S MODEL
McKinsey 7s model was developed in 1980s by McKinsey consultants Tom Peters, Robert
Waterman and Julien Philips with a help from Richard Pascale and Anthony G. Athos. Since
the introduction, the model has been widely used by academics and practitioners and remains
one of the most popular strategic planning tools. It sought to present an emphasis on human
resources (Soft S), rather than the traditional mass production tangibles of capital,
infrastructure and equipment, as a key to higher organizational performance. The goal of the
model was to show how 7 elements of the company: Structure, Strategy, Skills, Staff, Style,
Systems, and Shared values, can be aligned together to achieve effectiveness in a company.
27
The key point of the model is that all the seven areas are interconnected and a change in one
area requires change in the rest of a firm for it to function effectively.
Below you can find the McKinsey model, which represents the connections between seven
areas and divides them into ‘Soft Ss’ and ‘Hard Ss’. The shape of the model emphasizes
interconnectedness of the elements.
The model can be applied to many situations and is a valuable tool when organizational
design is at question. The most common uses of the framework are:
To facilitate organizational change.
To help implement new strategy.
To identify how each area may change in a future.
To facilitate the merger of organizations.
In McKinsey model, the seven areas of organization are divided into the ‘soft’ and ‘hard’
areas. Strategy, structure and systems are hard elements that are much easier to identify and
manage when compared to soft elements. On the other hand, soft areas, although harder to
manage, are the foundation of the organization and are more likely to create the sustained
competitive advantage.
Strategy is a plan developed by a firm to achieve sustained competitive advantage and

successfully compete in the market. What does a well-aligned strategy mean in 7s McKinsey
model? In general, a sound strategy is the one that’s clearly articulated, is long-term, helps to
achieve competitive advantage and is reinforced by strong vision, mission and values. But it’s
hard to tell if such strategy is well-aligned with other elements when analyzed alone. So the
key in 7s model is not to look at your company to find the great strategy, structure, systems
and etc. but to look if its aligned with other elements. For example, short-term strategy is
usually a poor choice for a company but if its aligned with other 6 elements, then it may
provide strong results.
28
Structure represents the way business divisions and units are organized and includes the
information of who is accountable to whom. In other words, structure is the organizational
chart of the firm. It is also one of the most visible and easy to change elements of the
framework.
Systems are the processes and procedures of the company, which reveal business’ daily
activities and how decisions are made. Systems are the area of the firm that determines how
business is done and it should be the main focus for managers during organizational change.
Skills are the abilities that firm’s employees perform very well. They also include capabilities
and competences. During organizational change, the question often arises of what skills the
company will really need to reinforce its new strategy or new structure.
Staff element is concerned with what type and how many employees an organization will
need and how they will be recruited, trained, motivated and rewarded.
Style represents the way the company is managed by top-level managers, how they interact,
what actions do they take and their symbolic value. In other words, it is the management style
of company’s leaders.
Shared Values are at the core of McKinsey 7s model. They are the norms and standards that
guide employee behavior and company actions and thus, are the foundation of every
organization.
MICHAEL PORTER'S FIVE FORCES MODEL
Porter's Five Forces is a business analysis model that helps to explain why various industries
are able to sustain different levels of profitability. The model was published in Michael E.
Porter's book, "Competitive Strategy: Techniques for Analyzing Industries and Competitors"
in 1980. The Five Forces model is widely used to analyze the industry structure of a company
as well as its corporate strategy.
29
Competition in the Industry
The first of the five forces refers to the number of competitors and their ability to undercut a
company. The larger the number of competitors, along with the number of equivalent
products and services they offer, the lesser the power of a company. Suppliers and buyers
seek out a company's competition if they are able to offer a better deal or lower prices.
Conversely, when competitive rivalry is low, a company has greater power to charge higher
prices and set the terms of deals to achieve higher sales and profits.
Potential of New Entrants Into an Industry
A company's power is also affected by the force of new entrants into its market. The less time
and money it costs for a competitor to enter a company's market and be an effective
competitor, the more an established company's position could be significantly weakened. An
industry with strong barriers to entry is ideal for existing companies within that industry since
the company would be able to charge higher prices and negotiate better terms.
Power of Suppliers
The next factor in the five forces model addresses how easily suppliers can drive up the cost
of inputs. It is affected by the number of suppliers of key inputs of a good or service, how
unique these inputs are, and how much it would cost a company to switch to another supplier.
The fewer suppliers to an industry, the more a company would depend on a supplier. As a
result, the supplier has more power and can drive up input costs and push for other advantages
in trade. On the other hand, when there are many suppliers or low switching costs between
rival suppliers, a company can keep its input costs lower and enhance its profits.
Power of Customers
30
The ability that customers have to drive prices lower or their level of power is one of the five
forces. It is affected by how many buyers or customers a company has, how significant each
customer is, and how much it would cost a company to find new customers or markets for its
output. A smaller and more powerful client base means that each customer has more power to
negotiate for lower prices and better deals. A company that has many, smaller, independent
customers will have an easier time charging higher prices to increase profitability.
Threat of Substitutes
The last of the five forces focuses on substitutes. Substitute goods or services that can be used
in place of a company's products or services pose a threat. Companies that produce goods or
services for which there are no close substitutes will have more power to increase prices and
lock in favorable terms. When close substitutes are available, customers will have the option
to forgo buying a company's product, and a company's power can be weakened.
Understanding Porter's Five Forces and how they apply to an industry, can enable a company
to adjust its business strategy to better use its resources to generate higher earnings for its
investors.
THE MARKETING MIX
Marketing mix is the set of controllable, tactical marketing tools that a company uses to

produce a desired response from its target market. it consists of everything that a company
can do to influence demand for its product.
The 4 P's of Marketing : Product , Price , Place (distribution) , Promotion
These variables are known as the marketing mix or the 4 P's of marketing. They are the
variables that marketing managers can control in order to best satisfy customers in the target
market. The marketing mix is portrayed in the following diagram:
31
The firm attempts to generate a positive response in the target market by blending these 4Ps.
In case of Services three more Ps are considered - People , Process and Physical Environment.
PRICING STRATEGY
Cost-plus pricing—simply calculating your costs and adding a mark-up

Competitive pricing—setting a price based on what the competition charges
Value-based pricing—setting a price based on how much the customer believes what you’re
selling is worth
Price skimming—setting a high price and lowering it as the market evolves
Penetration pricing—setting a low price to enter a competitive market and raising it later
Predatory Pricing/Dumping- A pricing method by which one wishes to eliminate competition.
Psychological Pricing- A pricing which looks like less but actually not.
Combo Pricing- When you join two products and sell that as a combination.
PLACE OR DISTRIBUTION STRATEGY
Wholeselle
Manufacturer Manufacturer Retailer Customer
r
100/90 4 2 3 1
MRP-100 =90+4 94 96 99
1(Purchased
Qty Sold 10000 1000 100
)
Multi-level marketing (MLM) : It is a marketing strategy in which the sales force is

compensated not only for sales they personally generate, but also for the sales of the other
32
salespeople that they recruit. This recruited sales force is referred to as the participant's
"downline", and can provide multiple levels of compensation. Other terms used for MLM
include pyramid selling, network marketing, and referral marketing
Consignment Agent
Consignment is the act of consigning, which is placing any material in the hand of another,
but retaining ownership until the goods are sold or person is transferred. This may be done for
shipping, transfer of goods to auction, or for sale in a store (i.e., a consignment shop). To
consign means to send and therefore consignment means sending goods to another person. In
case of consignment goods are sent to the agent for the purpose of sale. The ownership of
these goods remains with the sender. The agent sells the goods on behalf of the sender,
according to his instructions. The sender of goods is known as consignor and the agent is
known as the consignee..
Franchise
Franchising is a long-term cooperative relationship between two entities—a franchisor and

one or more franchisees—that is based on an agreement in which the franchisor provides a
licensed privilege to the franchisee to do business. The franchisor grants the franchisee the
right to use a developed concept, including trademarks and brand names, production, service
and marketing methods and the entire business operation model, for a fee. The franchisee then
provides the time, capital, and desire to utilize the brand and services provided by the
franchisor to build a thriving business.
33
The product, method or service being marketed is usually identified by the franchisor's brand
name, and the holder of the privilege (franchisee) is often given exclusive access to a defined
geographical area for a defined period of time, all of which is defined in the Franchise
Agreement.
PROMOTION (MARKETING COMMUNICATION)
Generally, marketing communication mix is an integrated term that includes personal selling,
direct response marketing, sales promotion, media advertisement, and public relations. These
are the tools associated with strategic activities to communicate with the target audience.
The following table illustrates the common platforms of Marketing Communication mix −
Sales Promotion Personal Selling Advertisement Public Relations
Programs Sales meetings Print media Speech
Game, Contest, Sales Presentations Electronic media, Press Release,

Lotteries, Coupons Motion pictures Seminars
etc
Gifts, Sampling Incentive programs Brochures, Booklets, Charitable donations,

Magazines, etc. Lobbying
Exhibition, Trade Exhibition, Trade Billboards, Displays, Sponsorships

shows, Offers shows, Offers etc.
Low interest Brochure, mailing, Logos, Symbols,etc. Publications,

financing etc. Company magazine,
etc.
Rebates (Cash Digital shopping Audio & Video Community

Discounts/Quanity materials Relations
Discounts)
( Customer/ Channel
Partner)
Entertainment TV shopping Point-of purchase Events

display
Push and Pull Communication
In Push type of communication Distribution channel plays an important role in selling your
products in preference to competitors’ products. The manufacturer gives incentive to the
channel for such an act on their part. In a Pull type of communication , awareness and interest
34
about the product is created through advertisement and customers are motivated to buy the
products for reasons like brand image , novelty , schemes , discounts and other benefits.
Surrogate Advertising
'Surrogate Advertising' is a form of advertising which is used to promote banned products like
cigarettes and alcohol, in the disguise of another product. This type of advertising uses a
product of a fairly close category ex- club soda, or mineral water in case of alcohol, or
35
products of a completely different category ex- music CD's, playing cards etc to hammer the
brand name into the heads of consumers. The banned product (alcohol or cigarettes) may not
be projected directly to consumers but rather masked under another product under the same
brand name, so that whenever there is mention of that brand, people start associating it with
its main product(the alcohol or cigarette). In India there are tons of companies doing that,
from Bacardi Blast music CD's , Bagpiper Club Soda to Officers Choice playing cards.The
masking product i.e the music CD's, or mineral water might not even be marketed in real,it is
just a strategy used to generate top of the mind recall.
Bagpiper : Club soda
Imperial Blue : Music CD's 'Men will be men'
Royal Stag : Music CD's , Mega cricket, with the theme 'Make it Large'
McDowells No.1 : Soda and Indian cricket with the tagline 'The No.1 Spirit of Leadership'
Haywards 5000 : Soda and packaged drinking water
Royal Challenge : Golf accessories, music CD's and mineral water.
PRODUCT
Brand and Brand Equity
Branding is the act of making promises your customers believe you will uphold. Branding has
multiple elements and is typically a process that any business needs to invest in over the
lifetime of a product. The critical aspect that many founders or brand owners forget or get
confused with is the fact that 'branding' is simply not about having a brand name, a logo, a
visual identity or a typeset. Its about weaving a story around the brand, which is rooted in the
product's inherent functional and emotional benefits, the problem / challenge it embarked on
solving, the solutions it creates and how, in general, it endeavours to make the life of its
consumers better.
Brand equity is a long term benefit that you get via consistent brand building efforts. Equity is
the emotional mind share that a brand commands among its consumers, which allows it to
have a strategic differentiation, strengthens loyalty and provides the brand with an emotional
advantage in highly competitive categories.
Imagine yourself as a product or a service, then "Branding" is essentially the process of

creating your overall personality, which includes everything you say , promise and do . On
the other hand, "Brand Equity" is something that is built over the years.Its your reputation . It
is what people around you think about you.
Product Life Cycle
Products, like people, have life cycles. A product begins with an idea, and within the confines
of modern business, it isn't likely to go further until it undergoes research and
development (R&D) and is found to be feasible and potentially profitable. At that point, the
product is produced, marketed, and rolled out.
36
As mentioned above, there are four generally accepted stages in the life cycle of a product—
introduction, growth, maturity, and decline.
Introduction: This phase generally includes a substantial investment in advertising and

a marketing campaign focused on making consumers aware of the product and its benefits.
Growth: If the product is successful, it then moves to the growth stage. This is characterized
by growing demand, an increase in production, and expansion in its availability.
Maturity: This is the most profitable stage, while the costs of producing and marketing
decline.
Decline: A product takes on increased competition as other companies emulate its success—
sometimes with enhancements or lower prices. The product may lose market share and begin
its decline.
SAMPLE MCQs
1. How many types of SBUs are there in BCG SBU Model?
(a) 1
(b) 2
(c) 3
(d) 4
Ans: d
2. What is the the central element in Michael Porter’s 5Force Model?
(a) Rivalry among competitors

(b) Bargaining Power of suppliers
(c) Bargaining Power of buyers
(d) Availability of substitutes
Ans: a
3. Star type of SBU is represented by
37
(a) High Market Growth Rate High Relative Market Share
(b) High Market Growth Rate Low Relative Market Share
(c) Low Market Growth Rate High Relative Market Share
(d) Low Market Growth Rate Low Relative Market Share
Ans: a
4. A Cash Cow type of SBU is represented by
(a) High Market Growth Rate High Relative Market Share

(b) High Market Growth Rate Low Relative Market Share
(c) Low Market Growth Rate High Relative Market Share
(d) Low Market Growth Rate Low Relative Market Share
Ans: c
5. Selling more quantity of products to existing customers is known as
(a) Market Development strategy

(b) Product Development Strategy
(c) Market Penetration Strategy
(d) Overall growth strategy
Ans: c
6. A tea manufacturer deciding to have its own tea gardens is an example of
(a) Horizontal Integration

(b) Forward Integration
(c) Backward Integration
(d) None of the above
Ans: c
7. A Automobile manufacturer deciding to start a tyre manufacturing unit is an example of

Ans: c
8. Tata Motors acquiring a part of Ford Company’s automobile (Jaguar/Land Rover) is an

example of

Ans: a
38
9. Reliance Petrochemical entering into telecomm business is an example of
(a) Vertical Integration

(b) Horizontal Integration
(c) Diversification
Ans: c
10. Cadbury showing chocolates being eaten after dinner instead of sweets/ice-creams is an
example of
(a) Market Development strategy

(b) Product Development Strategy
(c) Market Penetration Strategy
(d) Overall growth strategy
Ans: a
11. Which is the central element of McKinsey’s 7S Model?
(a) Style
(b) System
(c) Shared Values
(d) Structure
Ans: C
12. Strategic action for a Question Mark type of SBU is
(a) Build
(b) Hold
(c) Harvest
(d) Divest
Ans: a
13. Strategic action for a Cash Cow type of SBU is
(a) Build
(b) Hold
(c) Harvest
(d) Divest
Ans: c
14. Merger of banks are generally example of

(d) Diversification
39
Ans: a
15. The size of tyre industry grew from 100 Cr to 200Cr during 2008-2009. The market share
of Company A increased from 10% to 20% during this period. What is the size of the
company A in terms of business volume?
(a) 30 Cr
(b) 40 Cr
(c) 20 Cr
(d) 45 Cr
Ans: b
16. The size of newspaper industry declined from 200 Cr to 100Cr during 2008-2009. The
market share of Media Company X increased from 10% to 20% during this period. What is
the effect on the business volume of Company X during the period.
(a) Higher business

(b) Lower business
(c) No affect
Ans: c
17. Skimming Pricing means
(a) Maximize the profit with high price in short run

(b) Maximize the profit with high price in long run
(c) Fixing the price much below the market price
(d) Fixing a competitive price
Ans: a
18. Which of the following pricing is most suitable for a new company with a new brand of
product.
(a) Predatory Pricing

(b) Market Penetration pricing
(c) Perceptual pricing
(d) Cost plus pricing
Ans: b
19. USP is defined as
(a) Unique selling price

(b) Unique sales preposition
(c) Unique selling proposition
(d) Unique strategy promotion
Ans: c
40
20. Who suggested product, pricing, place, promotion all these in a company represents
“Market Mix”?
(a) Neil Borden

(b) Neilsen
(c) Philip Kotler
(d) Stephen Morse
Ans: a
SAMPLE SHORT ANSWER QUESTIONS
1. A consignment agent doesn’t make any investment but makes lot of profit. Do you agree.
Justify.
2. What do you understand by dumping. Explain citing examples.
3. What is the difference between volume discount and cash discount.
4. “Take care of your employees.They will take care of your customers”. Justify the statement
with reference to selling of a service.
5. “Surrogate advertising is legally right but morally wrong”. Justify the statement with
examples.
6. What is the controversy around the brand “Fair and Lovely”.
7. Plot the following SBUs in BCG Grid. (Relative Market Share & Market Growth Rate) -
A(1.2, 15%) , B( 0.6, 15%). C(2, 4%) and D(0.5, 6%)
8. Some products can remain immune to Product life cycle. Explain citing examples.
9. Make a SWOT Analysis of India Post.
10. What is the difference between push and pull type of marketing communication.Explain
with examples.
41
MODULE-3: CONSUMER BEHAVIOUR
Module Objective
To make the students appreciate the importance of consumer behaviour for better
marketing of products and services.
Module Outcome
1. Students will be generally aware about the buying process and factors that
influence consumer behaviour
2. Students will be able to draft Purchase Orders.
Sub-Modules
3.1. Decision making ,

3.2. Buying process ,
3.3. Individual buyer and Organizational buyer,
3.4. Loyalty , Relationship Marketing,
3.5. CRM , Data Mining and Data Analytic ,
3.6. Tendering and Contracting.
Consumer buying behavior refers to the study of customers and how they behave while
deciding to buy a product that satisfies their needs. It is a study of the actions of the
consumers that drive them to buy and use certain products.
Study of consumer buying behavior is most important for marketers as they can understand
the expectation of the consumers. It helps to understand what makes a consumer to buy a
product. It is important to assess the kind of products liked by consumers so that they can
release it to the market. Marketers can understand the likes and dislikes of consumers and
design base their marketing efforts based on the findings.
Consumer buying behavior studies about the various situations such as what do consumers
buy, why do they buy, when do they buy, how often do consumers buy, for what reason do
they buy, and much more.
42
For example, consumer buying behavior is studied by consumer researchers and their aim is
to know why women buy moisturizers (to reduce skin problems), the most preferred brand
(Olay, L’Oréal), how often do they apply it (twice a day, thrice a day), where do the women
prefer to buy it (supermarkets, online) and how many times do they buy it (weekly, monthly).
Importance of Consumer Behavior
Understanding consumer behavior is essential for a company to find success for its current
products as well as new product launches. Every consumer has a different thought process
and attitude towards buying a particular product. If a company fails to understand the reaction
of a consumer towards a product, there are high chances of product failure.
Due to the changing fashion, technology, trends, living style, disposable income, and similar
other factors, consumer behavior also changes. A marketer has to understand the factors that
are changing so that the marketing efforts can be aligned accordingly.
What is the importance of consumer buying behavior? This article outlines several of them.
1. Consumer Differentiation:
In marketing, consumer differentiation is a way to distinguish a consumer from several other

consumers. This helps to make a target group of consumers with the same or similar behavior.
Though you have a targeted customer demographic in your business, you can still have
variations between individual customers. Each group of consumers are different and their
needs and wants differ from other groups. When a marketer is knowledgeable about
differentiation of each group of consumers, he can design separate marketing programs.
Consumer differentiation will help to tailor your strategies to the needs of varying customer
groups. When consumer differentiation is done, you can expand the width and breadth of your
services. You will be able to effectively serve a wider group of people.
2. Retention of Consumers:
“Consumer behavior is of most importance to marketers in business studies as the main aim is
to create and retain customers” says Professor Theodore Levitt.
Consumer behavior is not just important to attract new customers, but it is very important to
retain existing customers as well. When a customer is happy about a particular product,
he/she will repeat the purchase. Therefore, marketing the product should be done in such a
way that it will convince customers to buy the product again and again.
Thus, it is very evident that creating customer and retaining them is very important. This can
be done only by understanding and paying attention towards the consumer’s buying behavior.
3. Design Relevant Marketing Programs:
Understanding consumer behavior allows you to create effective marketing campaigns. Each
campaign can speak specifically to the separate group of consumers based on their behavior.
43
For example, while targeting kids market, you may have to look out for venues such as TV
ads, school programes and blogs targeting young mothers. You will need to take different
messaging approaches for different consumer groups.
A study of consumer behavior enables the marketers to understand what motives consumers

to make purchases. Furthermore, the same motive can be utilized in advertising media to stir
the desire to make a purchase. Moreover, marketers should take decisions regarding the brand
logo, coupons, packing and gifts on the basis of consumer behavior.
4. Predicting Market Trend:
Consumer behavior analysis will be the first to indicate a shift in market trend. For example,
the recent trend of consumers is towards environment friendliness and healthy food. This
changing market trend was observed by many brands including McDonalds. Based on the
consumer behavior, McDonald’s brought healthy food options.
By conducting consumer behavior study, a company saves a lot of resources that might
otherwise be allocated to produce a product that will not be sold in the market. For example,
in summer a brand will not waste its resources for producing a product that will not sell in
summer. Based on consumer behavior the company decides on production strategy which will
save on warehouse costs and marketing costs.
5. Competition:
One of the most important reasons to study consumer behavior is to find out answers to some
of the questions:
Is the customer buying from your competitor?
Why is a consumer buying from your competitor?
What features attracts a consumer to your competitor products?
What gaps are your consumers identifying in your products when compared to your
competitors?
Studying consumer behavior facilitates in understanding and facing competition. Based on

consumers’ expectations, your brand can offer competitive advantages.
6. Innovate New Products:
We all know some of the big names such as New Coke, Crystal Pepsi, Colgate Kitchen
Entrées, Earring Magic Ken Doll, and Wheaties Dunk-a-Balls Cereal. Can you see the
similarities in these products? Yes, they all failed!!
The sad truth is that most new products and new ideas end up in failure. There is an estimate
of new product failures – they range from 33% to 90% based on the kind of industry.
Companies consistently strive hard to improve the success rate of their new products or new
ideas. One of the most important ways is to conduct sound and thoughtful consumer behavior
study.
44
With the help of consumer behavior analysis, Nike realized that most of its target audience is
not professional athletes, but many of them were striving to be more like them. So at the 2012
Olympics in London, Nike introduced a campaign to encourage athletics called ‘Find Your
Greatness’. It aimed to promote the aspirations of being an athlete, not just with high-
performing athletes, but wanted to include all people regardless of their physical capability.
The campaign was well planned and was data-driven, of course, carefully analyzed before
taking any action. This message inspired many consumers and had enormous appeal for target
consumers.
7. Stay Relevant in the Market
When the world is changing as rapidly as it is happening today, the biggest challenge we all
face is staying relevant to our target market. And do you know what is the main reason behind
the rapid changes? It is the ever-changing behavior of our customers.
Today’s consumers have greater choices and opportunities, which means they can easily
switch to a company that offers better products and services.
Losing relevance will only cost the company its market share. Haven’t we seen Sony
Walkman failing to stay relevant in the digital music era, and the taxi industry doom with no
preparedness to battle the UBER uprise!!
8. Improve Customer Service
Consumers require different levels of customer service, and understanding the differences
within your customer base will help you provide the most appropriate service for individual
needs.
For example, if you own an electronics store, high school or college students who buy a new
laptop are more likely to understand the features they’re looking for than a person buying his
first computer. With the first demographic, your service goal will be to provide information
about the latest trends in technology, while with the second demographic, you’ll need to
spend more time educating the customer, finding out what his specific needs are, and even
teaching him how to use the features of his new electronic device.
45
As illustrated in the figure above, the external stimuli that consumers respond to include the
marketing mix and other environmental factors in the market. The marketing mix (the four
Ps) represents a set of stimuli that are planned and created by the company. The
environmental stimuli are supplied by the economic, political, and cultural circumstances of a
society. Together these factors represent external circumstances that help shape consumer
choices.
The internal factors affecting consumer decisions are described as the “black box.” This
“box” contains a variety of factors that exist inside the person’s mind. These include
characteristics of the consumer, such as their beliefs, values, motivation, lifestyle, and so
forth. The decision-making process is also part of the black box, as consumers come to
recognize they have a problem they need to solve and consider how a purchasing decision
may solve the problem. As a consumer responds to external stimuli, their “black box” process
choices based on internal factors and determine the consumer’s response–whether to purchase
or not to purchase.
For this reason, consumer purchasing behavior is considered by many to be a mystery or

“black box.” When people themselves don’t fully understand what drives their choices, the
exchange process can be unpredictable and difficult for marketers to understand.
STAGES OF CONSUMER BUYING BEHAVIOR
Consumers go through a set of sequential steps while buying a product. A buying process is

the sequence of steps that a consumer takes while making a purchasing decision. A normal
consumer purchase includes the recognition of needs and wants. Next comes the information
search, followed by an evaluation of all the choices. Finally the purchase happens, and post-
purchase evaluation follows a purchase.
46
Let’s go over each stage of a consumer buying process:
1. Identify the Problem
This is the first stage of the buying process. A consumer will not initiate a purchase without
the recognition of the needs or wants. When a consumer feels the need to buy a particular
product, he will go for a purchase decision. There is an unmet need or there is a problem
which can be solved by buying a particular product.
Needs arise as there is a problem. For example, you broke your table that you were regular ly
using for your business. And due to this problem, you now have to buy a new table.
Wants arise either because you have need a product or just because you are influenced by
external factors. For example, you see your friends using a laptop for their project work. You
might also have seen numerous advertisements about how a laptop can help you in your
project work. Due to this influence, you feel you want to upgrade to a laptop though you may
already have a desktop.
In this stage, the marketer should identify the needs of the consumers and offer the products
based on the desire.
2. Information search
At this stage, the consumer is aware of his need or want. He also knows that he wants to buy a
product that can relive his problem. Therefore, he wants to know more about the product that
can relive of his problem. This leads to the information search stage.
The consumer will try to find out the options available and the best solution for his problem.
The buyer will look for information in internal and external business environments. A
consumer may look into advertisements, print, videos, online and even might ask his friends
and family.
When consumers want to buy a laptop, they look for a laptop, its features, price, discounts,
warranty, after sales service, insurance, and a lot of other important features.
Here, a marketer must offer a lot of information about the product in the form of informative
videos, demos, blog, how-to-do videos, and celebrity interviews.
3. Evaluation of Alternatives
47
By now the consumer has done enough research about the kind of product that can solve his
problem. The next step is to evaluate alternative products that can solve his problem. Various
points of information gathered from different sources are used in evaluating alternatives.
Generally, consumers evaluate the alternatives based on a number of attributes of the product.
Looks, durability, quality, price, service, popularity, brand, social media reviews are some to
the factors that consumers consider.
The market offers many products that can solve the problem of a consumer. Hence the
consumer has to make a choice after evaluating the various alternatives available.
At the end of this stage, the consumer will rank his choices and pick a product that best
matches his needs and wants.
4. Purchase Decision/Purchase
At this point, customers have already explored multiple options. They are aware of the pricing
and payment options available. Here, consumers are deciding whether to buy that product or
not. Yes, even at this stage they can still drop the purchase and walk away.
Philip Kotler (2009) says, the final purchase decision may be ‘interrupted’ by two factors.
Customer may get a negative feedback from friends or other customers who bought it. For
example, a customer shortlisted a laptop, but his friend gave a negative feedback. This will
make him to change his decision. Furthermore, the decision might also change. Sudden
change in business plans, financial crunch, unexpected higher prices, etc. might lead the
consumer to drop the idea of buying the laptop.
The Consumer, chooses the product that he wants to buy, but many times, he may not actually
buy it for various reasons. At this stage, a marketer should find out the various reasons due to
which the consumer is hesitating to buy. The reasons could be price, value, and change in the
needs of the consumer.
Marketer needs to step up the game. Start by reminding the customers of the reason behind
their decision to buy the product. Furthermore give as much information regarding your brand
reiterating that you are the best provider of the product that can fulfill his needs.
Retargeting by simple email reminders can enforce the purchase decision.
5. Post-Purchase Evaluation
This is the last stage and most often ignored by marketers.
After buying the product, customers compare products with their expectations. There can be
two outcomes: Either satisfied or dissatisfied. Consumers will be happy after buying the
product if it has satisfied their needs. But in case the product was not up to his expectations,
the consumer will be dissatisfied. A consumer can be lost even at this stage.
A dissatisfied customer might feel as though he took an incorrect decision. This will result in
returns! Offering an exchange will be a straightforward action. However, even when a
customer is satisfied, there is no guarantee that the customer might be a repeat customer.
Customers, either satisfied or dissatisfied, can take actions to distribute their experience in the
form of customer reviews. This may be done through reviews on customer forums, website,
social media conversations or word of mouth.
A marketer has to make sure that the consumer will be satisfied with the product so that his
experience will lead to repeat customers. Brands need to careful to create positive post-
purchase experience.
48
TYPES OF CONSUMER BEHAVIOR
A consumer’s buying decision depends on the type of products that they need to buy. The
behavior of a consumer while buying a coffee is a lot different while buying a car.
Based on observations, it is clear that purchases that are more complex and expensive involve
higher deliberation and many more participants.
Consumer buying behavior is determined by the level of involvement that a consumer shows
towards a purchase decision. The amount of risk involved in a purchase also determines the
buying behavior. Higher priced goods tend to high higher risk, thereby seeking higher
involvement in buying decisions.
There are four type of consumer buying behavior:
1. Complex buying behavior

2. Dissonance-reducing buying behavior
3. Habitual buying behavior
4. Variety seeking behavior
1. Complex buying behavior
Complex buying behavior is encountered particularly when consumers are buying an

expensive product. In this infrequent transaction, consumers are highly involved in the
purchase decision. Consumers will research thoroughly before committing to invest.
Consumer behaves very different when buying an expensive product or a product that is
unfamiliar to him. When the risk of buying a product is very high, a consumer consults
friends, family and experts before making the decision.
For example, when a consumer is buying a car for the first time, it’s a big decision as it
involves high economic risk. There is a lot of thought on how it looks, how his friends and
family will react, how will his social status change after buying the car, and so on.
49
In complex buying behavior, the buyer will pass through a learning process. He will first
develop beliefs about the product, then attitudes, and then making a thoughtful purchase
choice.
For complex buying behavior customers, marketers should have a deep understanding of the
products. It is expected that they help the consumer to understand about their product. It is
important to create advertising message in a way that influences the buyer’s beliefs and
attitudes.
2. Dissonance-reducing buying behavior
In dissonance-reducing buying behavior consumer involvement is very high. This might be

due to high price and infrequent purchase. In addition, there is a low availability of
choices with less significance differences among brands. In this type, a consumer buys a
product that is easily available.
Consumers will be forced to buy goods that do not have too many choices and therefore
consumers will be left with limited decision making. Based on the products available, time
limitation or the budget limitation, consumers buy certain products without a lot of research.
For example, a consumer who is looking for a new collapsible table that can be taken for a
camping, quickly decides on the product based on few brands available. The main criteria
here will be the use and the feature of the collapsible table and the budget available with him.
Marketers should run after-sale service camps that deliver focused messaging. These
campaigns should aim to support consumers and convince them to continue with their choice
of their brand. These marketing campaigns should focus on building repeat purchases and
referrals by offering discounts and incentives.
3. Habitual buying behavior
Habitual Buying Behavior is depicted when a consumer has low involvement in a purchase

decision. In this case the consumer is perceiving only a few significant differences between
brands.
When consumers are buying products that they use for their daily routine, they do not put a
lot of thought. They either buy their favorite brand or the one that they use regularly – or the
one available in the store or the one that costs the least.
For example, while a consumer buys a loaf of bread, he tends to buy the brand that he is
familiar with without actually putting a lot of research and time. Many products fit into this
category. Everyday use products, such as salt, sugar, biscuits, toilet paper, and black pepper
all fit into this product category.
Consumer just go for it and buy it – there is no brand loyalty. Consumers do not research or
need information regarding purchase of such products.
Habitual buying behavior is influenced by radio, television and print media. Moreover,
consumers are buying based on brand familiarity. Hence marketers must use repetitive
advertisements to build brand familiarity. Further to initiate product trial, marketers should
use tactics like price drop promotions and sales promotions.
50
Marketers should attract consumers using visual symbols and imagery in their advertising.
Consumers can easily remember visual advertisements and can associate with a brand.
4. Variety seeking buying behavior
In variety seeking consumer behavior, consumer involvement is low. There are significant
differences between brands. Here consumers often do a lot of brand switching. The cost of
switching products is low, and hence consumers might want to try out new products just out
of curiosity or boredom. Consumers here, generally buy different products not because of
dissatisfaction but mainly with an urge to seek variety.
For example, a consumer likes to buy a cookie and choose a brand without putting much
thought to it. Next time, the same consumer might may choose a different brand out of a wish
for a different taste. Brand switching occurs often and without intention.
Brands have to adopt different strategies for such type of consumer behavior. The market
leader will persuade habitual buying behavior by influencing the shelf space. The shelf will
display a large number of related but different product versions.
Marketers avoid out-of-stock conditions, sponsor frequent advertising, offer lower prices,
discounts, deals, coupons and free samples to attract consumers.
VALS
VALS which is also known as values attitude and lifestyle is one of the primary ways to
perform psychographic segmentation. All three terms are intangible in nature and therefore
give an idea of the inert nature of the consumer. If you know what your consumer is thinking,
you would know what kind of promotions or communications will attract him most. And how
do you know what the consumer is thinking? By determining his vals – Values, attitudes and
lifestyle.
VALS is different for different people. Lets take income as an example. If you are a person
with high income your lifestyle would probably include habits of the SEC A class such as
dining out of home frequently and that too in top class restaurants, wearing only branded
clothes and buying the best cars out there. Whereas if you are a middle class income group
consumer, you would be more wary of spending money and would rather concentrate on
savings.
So now how does VALS affect a marketer? Lets say you were a banker. What would you sell
someone who had a high income lifestyle? You would sell them investment options and
would also dedicate a relationship manager to take care of their needs. In fact, the bankers
also have a term for high income individuals known as HNI – high networth individuals. But,
if your lifestyle was that of a low income customer, you are more likely to be targeted for
savings
The VALS framework
51
As mentioned in the history of VALS, The VALS framework was developed keeping a
consumers resources as well as his capacity to accept innovation in mind. The
X axis consisted of primary motivation (explained below) and the Y axis consisted of
resources such as income, education, confidence etc. Thus these two factors were determined
to be critical to define the values attitude and lifestyle of any consumer.
Resources – Included resources available to an individual such as income, education,
intelligence, emotional support, etc.
Primary motivation – Which determined what actually drives the individual. Is it knowledge,
the desire to achieve something or is it to be social.
After researching above 1500 consumers, Arnold mitchell actually divided consumers into 9
different types based on the amount of resources they had as well as their capacity for primary
motivation. These classes of consumers based on their VALS were.
9 types of Consumers as per VALS framework
Innovators – The class of consumer at the top of the vals framework. They are
characterized by High income and high resource individuals for whom independence is very
important. They have their own individual taste in things and are motivated in achieving the
finer things in life.
52
Thinkers – A well educated professional is an excellent example of Thinkers in the vals
framework. These are the people who have high resources and are motivated by their
knowledge. These are the rational decision making consumers and are well informed about
their surroundings. These consumers are likely to accept any social change because of their
knowledge level.
Believers – The subtle difference between thinkers and believers is that thinkers make their
own decisions whereas believers are more social in nature and hence also believe other
consumers. They are characterized by lower resources and are less likely to accept innovation
on their own. They are the best class of word of mouth consumers.
Achievers – The achievers are mainly motivated by – guess what – Achievements. These
individuals want to excel at their job as well in their family. Thus they are more likely to
purchase a brand which has shown its success over time. The achievers are said to be high
resource consumers but at the same time, if any brand is rising, they are more likely to adopt
that brand faster.
Strivers – Low resource consumer group which wants to reach some achievement are known
as strivers. These customers do not have the resources to be an achiever. But as they have
values similar to an achiever, they fall under the striver category. If a striver can gain the
necessary resources such as a high income or social status then he can move on to becoming
an achiever.
Experiencers – The group of consumers who have high resources but also need a mode of
self expression are known as Experiencers. Mostly characterized by young adults, it consists
of people who want to experience being different. This class of consumers is filled up with
early adopters who spend heavily on food, clothing and other youthful products and services.
Makers – These are consumers who also want self expression but they are limited by the
number of resources they have. Thus they would be more focused towards building a better
family rather than going out and actually spending higher amount of money. Making
themselves into better individuals and families becomes a form of self expression for the
Makers.
Survivors – The class of consumers in the Vals framework with the least resources and
therefore the least likely to adopt any innovation. As they are not likely to change their course
of action regularly, they form into brand loyal customers. An example can include old age
pension earners living alone for whom the basic necessities are important and they are least
likely to concentrate on anything else.
ORGANIZATIONAL BUYING
Organization buying is the decision-making process by which formal organizations establish

the need for purchased products and services and identify, evaluate, and choose among
alternative brands and suppliers. (Webster and Wind)
Some of the characteristics of organizational buyers are:
53
1. Consumer market is a huge market in millions of consumers where organizational buyers
are limited in number for most of the products.
2. The purchases are in large quantities.
3. Close relationships and service are required.
4. Demand is derived from the production and sales of buyers.
5. Demand fluctuations are high as purchases from business buyers magnify fluctuation in
demand for their products.
6. The organizational buyers are trained professionals in purchasing.
7. Several persons in organization influence purchase.
8. Lot of buying occurs in direct dealing with manufacturers.
ORGANIZATIONAL BUYING SITUATIONS
Straight rebuy
In this buying situation, only purchasing department is involved. Thet get an information from
inventory control department or section to reorder the material or item and they seek
quotations from vendors in an approved list.
The "in-suppliers" make efforts to maintain product and service quality. The "out-suppliers"
have to make efforts to get their name list in the approved vendors' list and for this purpose
they have to offer something new or find out any issues of dissatisfaction with current
suppliers and promise to provide better service.
Modified rebuy
In this buying situation, there is a modification to the specifications of the product or

specifications related to delivery. Executives apart from the purchasing department are
involved in the buying decisions. The company is looking for additional suppliers or is ready
to modify the approved vendors list based on the technical capabilities and delivery
capabilities.
New task buy
In this situation, the buyer is buying the product for the first time. As the cost of the product
or consumption value becomes higher, more number of executives are involved in the
process. The stages of awareness, interest, evaluation, trial, and adoption will be there for the
products of each potential supplier. Only the products which pass all the stages will be on the
approved list and price competition will follow subsequently.
Systems buy
Systems buying is a process in which the organization gives a single order to a single
organization for supplying a full system. The buying organization knows that no single party
is producing all the units in the system. But it wants the system seller to engineer the system,
procure the units from various vendors and assemble, fabricate or construct the system.
54
PARTICIPANTS IN THE BUSINESS BUYING PROCESS
Buying Center Concept
Webster and Wind in the model they proposed to describe organizational buying process,
identified the organizational buying process as a team process and called the team or the
buying decision-making unit of the organization as buying center. The buying center consists
of all persons of the organizations who are involved in the buying process playing one or the
other seven roles: Initiators, Users, Influencers, Deciders, Approvers, Buyers, and
Gatekeepers.
Users
The persons who use the item. Say for safety gloves the operators.
Initiators
The persons who request the purchase. The safety officer may initiate the request for the
purchase.
Influencers
Persons who held define specifications. In this case of safety gloves, the safety officer may
himself define specifications. If an industrial engineer is in the organization, he may also be
consulted. There can a different gloves for different working situations and industrial engineer
may be more aware of specific requirements due to his special nature of work - human effort
engineering.
Buyers
They are the person who actually do the buying transaction.
Gatekeepers
They control access to personnel in a company. The receptionist, the secretaries etc.
55
Deciders
People who decide on product requireements and suppliers. It is the final approval for product
specfications and suppliers' list.
Approvers
Persons who approve the purchase. In the case of safety gloves, the personal manager may
have the power to approve.
STANDARD TERMS OF A PURCHASE ORDER
Purchasing terms are core to every purchase from a vendor by a company. When a
company requires the services of one or more vendor there are always a set of
purchasing terms agreed between them. Usually these are set out in writing and the
vendor tries to impose their terms and conditions – also known as T & C’s – on the
purchaser.
Larger purchasers are able to insist on their own purchasing terms. At the very least,
these terms will consist of:
Prices: At the very least prices are always agreed.
Taxes : Extra as applicable , 18% GST extra)
56
Discounts: Many vendors offer and purchasers expect that when order quantities
increase, discounts on prices be provided.
Delivery Schedules: When the products will be delivered. When services are

procured, this will be a start and end date.
Payment Terms: This is when payment is expected, in what format and what fees are
charged for late payments.
Exception Handling: This describes the process for late, over or under deliveries or
non-delivery. Cancellations and changes to orders may also be included.
Quality Expectations: Many companies may describe the quality that they expect the
products to meet. In retail, there may be different levels of quality, particularly in
fresh food. In services, the quality may be expressed in the experience of the staff.
In manufacturing, this may be with respect to the quality of the raw material to be
provided. As quality has a direct impact upon the product price, it is important that all
parties’ expectations be positioned correctly.
When more detailed purchasing terms are required, they will also include one or more
of the following:
Contractual Responsibilities: Who legally has to do what and by when.
Green Credentials: Many companies now require recyclable packaging, the least

transport possible and natural products wherever possible.
Supplier Responsibilities: This includes their legal responsibilities, what they are

expected to do and by when.
Purchaser Responsibilities: This includes their legal responsibilities, when they are

expected to receive the goods, their need to pay promptly etc.
Limits of Liability: A group of legal terms that set out the boundaries of the contract.
Confidentiality: Most companies require their financial transactions kept confidential.
Force Majeure: What is the procedure when unforeseen problems happen? This

would cover situations such as fire, flood, strikes etc.
Purchasing terms are often the form of a contract between the purchaser and the
vendor and are often negotiated at the start of the business relationship. It is very
common for a large purchaser to express their purchasing terms in the form of a
Master Agreement that they use for all of their vendors.
Conversely, a large vendor that deals with numerous smaller purchasers will ensure
that their purchasing terms are followed by the procuring companies, so the power of
the company always seems to prevail.
57
RELATIONSHIP MARKETING
Relationship marketing is designed to build meaningful customer relationships. Its

goal is to not only cultivate greater engagement but also to encourage shoppers to
form emotional connections with your brand. When done right, the result is more
consistent sales and a greater customer lifetime value.
This marketing method is unique because it fully focuses on supporting your current
buyers rather than seeking new customers. It also recognizes the ongoing importance
of the customer experience for every shopper, as buyers can go through the sales
funnel multiple times. Relationship marketing techniques drive returning buyers to
fully trust your business—in some cases, never considering your competitors again.
Why relationship marketing matters
Most business owners will tell you that finding new buyers can be hard—and it can
also be expensive. Customer acquisition can cost up to 25 times more than customer
retention. Through relationship marketing, you can strengthen your base of repeat
buyers and cut back on acquisition costs.
Loyal customers can help you do more than save money and time. They’re also
valuable assets who help you profit more in the long run. When your relationship
marketing efforts improve your retention rates by just 25%, you can boost your
company’s profits by 25% to 95%.
Despite the power that long-term customers hold, your competitors are twice as
likely to set their eyes on acquisition instead of focusing on keeping their existing
customers. Relationship marketing is your opportunity to not only win over your
target audience but also keep them as long-term and loyal buyers.
5 steps to build your relationship marketing strategy
Creating a strong relationship marketing plan is the first step to growing your
business through customer loyalty. By building an organized strategy before you take
action, you cultivate more effective relationships and amplify your results.
Here are a few examples of how you can work toward your first customer-focused
marketing campaign:
1. Create a customer loyalty program
One of the most effective relationship marketing tactics is developing a program

that’s built to especially increase customer loyalty. Loyalty programs can take many
forms—including points-based programs and even paid VIP clubs—but their main
role is always to reward your repeat customers for choosing your brand. Whether
you’re an airline offering frequent flyer miles or a coffee shop with punch cards, you
can make sure every buyer feels valued by rewarding their continuing business.
Loyalty rewards provide far more than short-term customer satisfaction. An MIT
study found that participants in top-performing loyalty programs were 77% more
likely to purchase from the rewarding brand as opposed to competitors. They also
58
tended to spend more money with the brand and recommend the brand to others. So,
this relationship marketing technique can even increase your word-of-mouth
promotions and online reviews.
If you see more online reviews stream in as a result of your loyalty program, don’t
forget to respond to your customers to thank them again—perhaps with the help of
a comprehensive review management software.
2. Guarantee reliable customer service
Regardless of whether a consumer bought from you for the first time or they’re back
for the thousandth purchase, they may need your support at any time. When they look
for ways to reach out, your company should be ready to respond. After all, 96% of
consumers agree that customer service has a huge impact on brand loyalty.
Relationship marketing can be as simple as demonstrating your brand’s attentiveness

to current customers by providing responses with a quick turnaround—think 48 hours
at the max. Some companies will even automate instant responses (often to confirm a
message has been received) to help buyers immediately feel heard.
When it comes to responding to your customers’ feedback and inquiries, your team
members should be well-trained to provide shoppers with a consistent experience that
they love. Once they know how to send consistent support, your team can use Podium
to streamline messages from all platforms into one location so no customer is
ignored.
Customers also expect responses to their online reviews. In order to maintain a strong

relationship with your most loyal supporters, don’t forget to add a review monitoring
tool to your strategy.
3. Collect customer data
The richer your data, the better you’ll be able to curate your customer experience to
your buyers’ needs. Relationship marketing is all about showing how much you care
about your customers. Presenting enough data to prove you’re listening can help big
time.
When compiling data, many companies choose to use a customer relationship

management (CRM) software to keep it organized in a centralized place. Using your
company’s CRM tool, your employees can better understand buyer needs in every
customer interaction.
4. Personalize every interaction
With enough customer data, you can continue building close relationships with your
shoppers by personalizing every message. When companies add personal elements to
their email marketing alone—calling your customer by name is the bare minimum—
their click rates end up 27% higher.
This relationship marketing strategy works because it’s an effective method of

showing customers they’re more than one face in a massive group. Rather, you see
59
them as individual humans who play a big role in the success of a business. As a
result, you’ll drive your customers to return and continue to support your brand.
5. Follow up
When you think about how to build great relationships with your customers, consider
how you maintain relationships with your closest friends. You talk and you interact—
and then you follow up.
Just as you and your friends keep your relationships strong by checking in and asking
each other to hang out, relationship marketing calls for business owners to
consistently reach out to consumers. For example, you could follow up each time a
customer makes a purchase to check if your product or service has reached their
needs. A couple of weeks later, you may reach out again to reengage them in what
you have to offer.
You can even turn your follow-ups into an online review ask with Podium Reviews.
This not only shows you care about your current customers’ opinions, but it also
helps you build your online reputation at the same time.
CRM AND DATA MINING
In layman’s terms, that simply means data mining is a method for analyzing a set of
data, such as a CRM database, to extract valuable insights. Data mining takes your
company’s sea of information and gives it meaning. The goal is to make it useful in
some way.
The ability to pinpoint key patterns will inform your decisions and build your
strategies on the solid bedrock of data rather than the shifting sands of guesswork.
But how exactly do you accomplish this? Let’s run over a few of the main data
mining techniques.
We won’t go super deep, but it’s helpful to have an understanding of the main
functions in play when you use data mining. If that’s not your cup of tea (or you’re
already in the know), feel free to skip ahead to the next section on data mining
benefits.
Association
This is one of the simpler (and most familiar) techniques. It involves making a logical
connection between items in order to uncover patterns. A real-world example of this
is Amazon’s “Customers who bought this item also bought” feature. The algorithm
draws an association based on previous buyer behavior to add extra insight for
shoppers.
Classification
Classification is the act of determining a specific class of items based on their various
attributes. In marketing, an age demographic of 35-50 would be a classification, as
would the leads who entered your system by downloading a CRM best practices
guide from your website.
60
Clustering
You can use clustering to build off your classifications to gain a better understanding
of your data. For example, it could reveal job title trends for those leads I just
mentioned. One cluster could be sales managers, while another might be marketing
managers.
Sequential Analysis
You could consider sequential analysis an “in progress” technique. It takes a long-
term approach by looking at data over time, which enables you to spot trends or other
regular events. To illustrate, a sequential pattern could reveal which times of the year
are most lucrative for your company or which products are best combined for cross-
sell based on past purchases.
Anomaly Detection
What happens when there’s a break in the data’s pattern? Detecting these outliers is
useful for gaining a better understanding of your data beyond looking at the big
picture. If, for example, you always see lower sales in the spring except for the first
week in April, you’ll want to investigate to identify what’s causing the anomaly.
Regression
Regression is a more advanced technique and helps pinpoint the correlation between
different variables. It’s typically used for planning various scenarios. For example,
you could project annual revenue based on the market landscape, your current
customer base, product demand and other factors.
MCQs
1. A person's ________ consist(s) of all the groups that have a direct (face-to-
face) or indirect influence on his/her attitudes or behavior.
A) subculture
B) family
C) social class
D) reference groups
Ans: D
2. ________ refers to a set of distinguishing human psychological traits that lead

to relatively consistent and enduring responses to environmental stimuli.
A) Image
B) Personality
C) Psychological transformation
D) Lifestyle
Ans: B
3. Marketers who target consumers on the basis of their ________ believe that
they can influence purchase behavior by appealing to people's inner selves.
A) core values
B) sophistication
61
C) money constrain
D) social class
Ans: A
4. .___________ develop on the basis of wealth, skills and power.

A) Economical classes
B) Purchasing communities
C) Competitors
D) Social classes
Ans: D
5. .__________ is the single factor that best indicates social class.

A) Time
B) Money
C) Occupation
D) Fashion
Ans: C
6. .____________ is the definition of reference groups.

A) Groups that an individual looks to when forming attitudes and opinions
B) Groups of people who have been referred to by someone they know
C) Groups of office colleagues
D) Chat groups on the internet
Ans: A
7. Marketing strategies are often designed to influence _______________ and

lead to profitable exchanges.
A) Consumer decision making
B) Sales strategies
C) Advertising strategies
D) Export strategies
Ans: A
8. One of the key tasks of marketers is ____________ and to create consumer

perceptions that the product is worth purchasing.
A) To make products easily visible and available
B) To promote sales of products
C) To differentiate their products from those of competitors
D) To do marketing surveys
Ans: C
9. .________ can influence the consumers’ thoughts about products.

A) Marketing and popularity
B) Advertising, sales promotions, salespeople, and publicity
C) Sales promotion, popularity, and marketing
D) Billboards
Ans: B
10. Product involvement refers to ____________ or personal relevance of an item.

A) A consumer’s perception of the importance
B) The need of the product
C) The price the product
D) The amount of people who bought the product
An\s: A
62
11. If the purchase is for a high-involvement product, consumers are likely to
develop a high degree of ________________ so that they can be confident that the
item they purchase is just right for them.
A) Brand loyalty
B) Society
C) Product knowledge
D) References
Ans: C
12. The energizing force that activates behavior and provides purpose and direction
to that behavior is known as _____.
A) motivation
B) personality
C) emotion
D) perception
Ans: A
13. People can form different perceptions of the same stimulus because of three
perceptual processes. These processes are best described as being:
A) Selective attention, selective distortion, and selective retention. .
B) Subliminal perception, selective remembrance, selective forgetting.
C) Closure, modeling, and perceptual screening.
D) Needs distortion, wants analysis, and perceptual screening.
Ans: A
14. ._______________ describes changes in an individual’s behavior arising from

experience. A) modeling
C) motivation
D) perception
E) learning
Ans: D
15. Primary reference groups include ________________

A) college students
B) office colleague
C) family and close friends
D) sports groups
Ans: C
16. Which of the following is NOT part of group influence?

A) Social Class
B) Social Group
C) Reference Group
D) Personality
Ans. D
17. ____________ is individuals and households who buy goods and services for
personal consumption.
A) The target market
B) A market segment
C) The consumer market.
D) The ethnographic market
Ans:C
63
18. According to the stimulus-response model of buyer behavior , the place
where consumers process marketing stimuli prior to making purchase decision
is called_______________
A) Consumer’s value chain.
B) Consumer’s cognitive schema.
C) Consumer’s black box. .
D) Consumer’s thoughts-emotions network.
Ans: C
19. The theory of motivation that views people as responding to urges that are
repressed but never fully under control was developed b ___________
A) Marshall.
B) Kant.
C) Freud. .
D) Maslow.
Ans: C
20. __________________ is the process by which people select, organize, and

interpret information to form a meaningful picture of the world.
A) Readiness
B) Selectivity
C) Perception .
D) Motivation
Ans: C
21. If a company makes products and services for the purpose of reselling or
renting them to others at a profit or for use in the production of other products and
services, then the company is selling to the__________
A) Business market. .
B) International market.
C) Consumer market.
D) Private sector market.
Ans: A
SHORT ANSWER TYPE QUESTIONS
1. A consumer’s purchase decision is influenced by many factors. Consider that you

intend to buy a car and looking for options. Who all will influence your buying
decision.
2. What are the benefits of studying Consumer Behaviour. Explain citing examples.
3. Explain 4 types of Consumer buying behaviour citing examples.
4. Draft a Purchase Order for buying 10 numbers of Air-conditioners.
5. Explain the stages of a buying behaviour citing example of a product or a service.
6. Data Mining and Data Analysis are helpful in making right kind of Marketing Mix
decisions. Explain with examples.
7. What are the important characteristics of Organizational buying.
8. Explain business buying process citing an example.
9. Why is Consumers mind is compared to a Black Box. Explain.
10. What do you understand by targeted advertising. How is it related to consumer
behaviour.
64
MODULE-4: MARKETING RESEARCH
Module Objective
To make the students aware about the importance of marketing research in marketing
of goods and services.
Module Outcome
1. Students will be aware of the research process and methods.

2. Students will be able to make simple data analysis using MS excel.
Sub-Modules
4.1. Market Research , Marketing Research , Types of Research

4.2. Research methods , Qualitative Research and Quantitative Research 4
4.3. Dependent and Independent variables , Scaling
4.4. Population and Sample , Sampling
4.5. Data Collection Methods , Questionnaire
4.6. Statistical tools and data analysis.
Managers need information in order to introduce products and services that create value in the
mind of the customer. But the perception of value is a subjective one, and what customers
value this year may be quite different from what they value next year. As such, the attributes
that create value cannot simply be deduced from common knowledge. Rather, data must be
collected and analyzed. The goal of marketing research is to provide the facts and direction
that managers need to make their more important marketing decisions.
To maximize the benefit of marketing research, those who use it need to understand the
research process and its limitations.
Marketing Research vs. Market Research
These terms often are used interchangeably, but technically there is a difference.
Market research deals specifically with the gathering of information about a market's size and
trends. Marketing research covers a wider range of activities. While it may involve market
research, marketing research is a more general systematic process that can be applied to a
variety of marketing problems.
The Value of Information

Information can be useful, but what determines its real value to the organization? In general,
the value of information is determined by:
 The ability and willingness to act on the information.

 The accuracy of the information.
65
 The level of indecisiveness that would exist without the information.
 The amount of variation in the possible results.
 The level of risk aversion.
 The reaction of competitors to any decision improved by the information.
 The cost of the information in terms of time and money.
THE MARKETING RESEARCH PROCESS

Once the need for marketing research has been established, most marketing research projects
involve these steps:
1. Define the problem

2. Determine research design
3. Identify data types and sources
4. Design data collection forms and questionnaires
5. Determine sample plan and size
6. Collect the data
7. Analyze and interpret the data
8. Prepare the research report
Problem Definition
The decision problem faced by management must be translated into a market research
problem in the form of questions that define the information that is required to make the
decision and how this information can be obtained. Thus, the decision problem is translated
into a research problem. For example, a decision problem may be whether to launch a new
product. The corresponding research problem might be to assess whether the market would
accept the new product.
The objective of the research should be defined clearly. To ensure that the true decision
problem is addressed, it is useful for the researcher to outline possible scenarios of the
research results and then for the decision maker to formulate plans of action under each
scenario. The use of such scenarios can ensure that the purpose of the research is agreed upon
before it commences.
Research Design
Marketing research can classified in one of three categories:
 Exploratory research
 Descriptive research
 Causal research
These classifications are made according to the objective of the research. In some cases the
research will fall into one of these categories, but in other cases different phases of the same
research project will fall into different categories.
1. Exploratory research has the goal of formulating problems more precisely, clarifying
concepts, gathering explanations, gaining insight, eliminating impractical ideas, and forming
hypotheses. Exploratory research can be performed using a literature search, surveying certain
people about their experiences, focus groups, and case studies. When surveying people,
exploratory research studies would not try to acquire a representative sample, but rather, seek
to interview those who are knowledgeable and who might be able to provide insight
concerning the relationship among variables. Case studies can include contrasting situations
or benchmarking against an organization known for its excellence. Exploratory research may
66
develop hypotheses, but it does not seek to test them. Exploratory research is characterized by
its flexibility.
2. Descriptive research is more rigid than exploratory research and seeks to describe users of
a product, determine the proportion of the population that uses a product, or predict future
demand for a product. As opposed to exploratory research, descriptive research should define
questions, people surveyed, and the method of analysis prior to beginning data collection. In
other words, the who, what, where, when, why, and how aspects of the research should be
defined. Such preparation allows one the opportunity to make any required changes before the
costly process of data collection has begun.
There are two basic types of descriptive research: longitudinal studies and cross-sectional
studies. Longitudinal studies are time series analyses that make repeated measurements of the
same individuals, thus allowing one to monitor behavior such as brand-switching. However,
longitudinal studies are not necessarily representative since many people may refuse to
participate because of the commitment required. Cross-sectional studies sample the
population to make measurements at a specific point in time. A special type of cross-sectional
analysis is a cohort analysis, which tracks an aggregate of individuals who experience the
same event within the same time interval over time. Cohort analyses are useful for long-term
forecasting of product demand.
3. Causal research seeks to find cause and effect relationships between variables. It
accomplishes this goal through laboratory and field experiments.
Data Types and Sources
Secondary Data
Before going through the time and expense of collecting primary data, one should check for
secondary data that previously may have been collected for other purposes but that can be
used in the immediate study. Secondary data may be internal to the firm, such as sales
invoices and warranty cards, or may be external to the firm such as published data or
commercially available data. The government census is a valuable source of secondary data.
Secondary data has the advantage of saving time and reducing data gathering costs. The
disadvantages are that the data may not fit the problem perfectly and that the accuracy may be
more difficult to verify for secondary data than for primary data.
Some secondary data is republished by organizations other than the original source. Because
errors can occur and important explanations may be missing in republished data, one should
obtain secondary data directly from its source. One also should consider who the source is
and whether the results may be biased.
There are several criteria that one should use to evaluate secondary data.
 Whether the data is useful in the research study.

 How current the data is and whether it applies to time period of interest.
 Errors and accuracy - whether the data is dependable and can be verified.
 Presence of bias in the data.
 Specifications and methodologies used, including data collection method, response
rate, quality and analysis of the data, sample size and sampling technique, and
questionnaire design.
 Objective of the original data collection.
 Nature of the data, including definition of variables, units of measure, categories
used, and relationships examined.
Primary Data
67
Often, secondary data must be supplemented by primary data originated specifically for the
study at hand. Some common types of primary data are:
demographic and socioeconomic characteristics
 psychological and lifestyle characteristics
 attitudes and opinions
 awareness and knowledge - for example, brand awareness
 intentions - for example, purchase intentions. While useful, intentions are not a
reliable indication of actual future behavior.
 motivation - a person's motives are more stable than his/her behavior, so motive is a
better predictor of future behavior than is past behavior.
 behavior
Primary data can be obtained by communication or by observation. Communication involves

questioning respondents either verbally or in writing. This method is versatile, since one
needs only to ask for the information; however, the response may not be accurate.
Communication usually is quicker and cheaper than observation. Observation involves the
recording of actions and is performed by either a person or some mechanical or electronic
device. Observation is less versatile than communication since some attributes of a person
may not be readily observable, such as attitudes, awareness, knowledge, intentions, and
motivation. Observation also might take longer since observers may have to wait for
appropriate events to occur, though observation using scanner data might be quicker and more
cost effective. Observation typically is more accurate than communication.
Personal interviews have an interviewer bias that mail-in questionnaires do not have. For
example, in a personal interview the respondent's perception of the interviewer may affect the
responses.
Sampling definition: Sampling is a technique of selecting individual members or a subset of

the population to make statistical inferences from them and estimate characteristics of the
whole population. Different sampling methods are widely used by researchers in market
research so that they do not need to research the entire population to collect actionable
insights. It is also a time-convenient and a cost-effective method and hence forms the basis of
any research design. Sampling techniques can be used in a research survey software for
optimum derivation.
For example, if a drug manufacturer would like to research the adverse side effects of a drug
on the country’s population, it is almost impossible to conduct a research study that involves
everyone. In this case, the researcher decides a sample of people from each demographic and
then researches them, giving him/her indicative feedback on the drug’s behavior.
Types of sampling: sampling methods
Sampling in market research is of two types – probability sampling and non-probability

sampling. Let’s take a closer look at these two methods of sampling.
1. Probability sampling: Probability sampling is a sampling technique where a researcher

sets a selection of a few criteria and chooses members of a population randomly. All the
members have an equal opportunity to be a part of the sample with this selection parameter.
2. Non-probability sampling: In non-probability sampling, the researcher chooses members

for research at random. This sampling method is not a fixed or predefined selection
68
process. This makes it difficult for all elements of a population to have equal opportunities
to be included in a sample.
In this blog, we discuss the various probability and non-probability sampling methods that
you can implement in any market research study.
Types of probability sampling with examples:
Probability sampling is a sampling technique in which researchers choose samples from a

larger population using a method based on the theory of probability. This sampling method
considers every member of the population and forms samples based on a fixed process.
For example, in a population of 1000 members, every member will have a 1/1000 chance of
being selected to be a part of a sample. Probability sampling eliminates bias in the population
and gives all members a fair chance to be included in the sample.
There are four types of probability sampling techniques:
Simple random sampling: One of the best probability sampling techniques that helps in
saving time and resources, is the Simple Random Sampling method. It is a reliable method of
obtaining information where every single member of a population is chosen randomly, merely
by chance. Each individual has the same probability of being chosen to be a part of a sample.
For example, in an organization of 500 employees, if the HR team decides on conducting team
building activities, it is highly likely that they would prefer picking chits out of a bowl. In this
case, each of the 500 employees has an equal opportunity of being selected.
Cluster sampling: Cluster sampling is a method where the researchers divide the entire
population into sections or clusters that represent a population. Clusters are identified and
included in a sample based on demographic parameters like age, sex, location, etc. This makes
it very simple for a survey creator to derive effective inference from the feedback.
For example, if the United States government wishes to evaluate the number of immigrants
living in the Mainland US, they can divide it into clusters based on states such as California,
Texas, Florida, Massachusetts, Colorado, Hawaii, etc. This way of conducting a survey will be
more effective as the results will be organized into states and provide insightful immigration
data.
Systematic sampling: Researchers use the systematic sampling method to choose the sample

members of a population at regular intervals. It requires the selection of a starting point for the
sample and sample size that can be repeated at regular intervals. This type of sampling method
has a predefined range, and hence this sampling technique is the least time-consuming.
For example, a researcher intends to collect a systematic sample of 500 people in a population
of 5000. He/she numbers each element of the population from 1-5000 and will choose every
10th individual to be a part of the sample (Total population/ Sample Size = 5000/500 = 10).
Stratified random sampling: Stratified random sampling is a method in which the researcher

divides the population into smaller groups that don’t overlap but represent the entire
population. While sampling, these groups can be organized and then draw a sample from each
group separately.
For example, a researcher looking to analyze the characteristics of people belonging to different
annual income divisions will create strata (groups) according to the annual family income. Eg –
less than $20,000, $21,000 – $30,000, $31,000 to $40,000, $41,000 to $50,000, etc. By doing
this, the researcher concludes the characteristics of people belonging to different income
69
groups. Marketers can analyze which income groups to target and which ones to eliminate to
create a roadmap that would bear fruitful results.
Uses of probability sampling
There are multiple uses of probability sampling. They are:
Reduce Sample Bias: Using the probability sampling method, the bias in the sample derived
from a population is negligible to non-existent. The selection of the sample mainly depicts the
understanding and the inference of the researcher. Probability sampling leads to higher
quality data collection as the sample appropriately represents the population.
Diverse Population: When the population is vast and diverse, it is essential to have adequate
representation so that the data is not skewed towards one demographic. For example, if Square
would like to understand the people that could make their point-of-sale devices, a survey
conducted from a sample of people across the US from different industries and socio-economic
backgrounds helps.
Create an Accurate Sample: Probability sampling helps the researchers plan and create an
accurate sample. This helps to obtain well-defined data.
Types of non-probability sampling with examples
The non-probability method is a sampling method that involves a collection of feedback

based on a researcher or statistician’s sample selection capabilities and not on a fixed
selection process. In most situations, the output of a survey conducted with a non-probable
sample leads to skewed results, which may not represent the desired target population. But,
there are situations such as the preliminary stages of research or cost constraints for
conducting research, where non-probability sampling will be much more useful than the other
type.
Four types of non-probability sampling explain the purpose of this sampling method in a
better manner:
Convenience sampling: This method is dependent on the ease of access to subjects such as

surveying customers at a mall or passers-by on a busy street. It is usually termed
as convenience sampling, because of the researcher’s ease of carrying it out and getting in
touch with the subjects. Researchers have nearly no authority to select the sample elements, and
it’s purely done based on proximity and not representativeness. This non-probability sampling
method is used when there are time and cost limitations in collecting feedback. In situations
where there are resource limitations such as the initial stages of research, convenience sampling
is used.
For example, startups and NGOs usually conduct convenience sampling at a mall to distribute
leaflets of upcoming events or promotion of a cause – they do that by standing at the mall
entrance and giving out pamphlets randomly.
Judgmental or purposive sampling: Judgemental or purposive samples are formed by the

discretion of the researcher. Researchers purely consider the purpose of the study, along with
the understanding of the target audience. For instance, when researchers want to understand the
thought process of people interested in studying for their master’s degree. The selection criteria
will be: “Are you interested in doing your masters in …?” and those who respond with a “No”
are excluded from the sample.
70
Snowball sampling: Snowball sampling is a sampling method that researchers apply when the
subjects are difficult to trace. For example, it will be extremely challenging to survey
shelterless people or illegal immigrants. In such cases, using the snowball theory, researchers
can track a few categories to interview and derive results. Researchers also implement this
sampling method in situations where the topic is highly sensitive and not openly discussed—for
example, surveys to gather information about HIV Aids. Not many victims will readily respond
to the questions. Still, researchers can contact people they might know or volunteers associated
with the cause to get in touch with the victims and collect information.
Quota sampling: In Quota sampling, the selection of members in this sampling technique
happens based on a pre-set standard. In this case, as a sample is formed based on specific
attributes, the created sample will have the same qualities found in the total population. It is a
rapid method of collecting samples.
Uses of non-probability sampling
Non-probability sampling is used for the following:
Create a hypothesis: Researchers use the non-probability sampling method to create an

assumption when limited to no prior information is available. This method helps with the
immediate return of data and builds a base for further research.
Exploratory research: Researchers use this sampling technique widely when conducting

qualitative research, pilot studies, or exploratory research.
Budget and time constraints: The non-probability method when there are budget and time
constraints, and some preliminary data must be collected. Since the survey design is not rigid, it
is easier to pick respondents at random and have them take the survey or questionnaire.
Sampling Errors
In designing the research study, one should consider the potential errors. Two sources of
errors are random sampling error and non-sampling error. Sampling errors are those due to
the fact that there is a non-zero confidence interval of the results because of the sample size
being less than the population being studied. Non-sampling errors are those caused by faulty
coding, untruthful responses, respondent fatigue, etc.
There is a tradeoff between sample size and cost. The larger the sample size, the smaller the
sampling error but the higher the cost. After a certain point the smaller sampling error cannot
be justified by the additional cost.
While a larger sample size may reduce sampling error, it actually may increase the total error.
There are two reasons for this effect. First, a larger sample size may reduce the ability to
follow up on non-responses. Second, even if there is a sufficient number of interviewers for
follow-ups, a larger number of interviewers may result in a less uniform interview process.
Data Collection
In addition to the intrinsic sampling error, the actual data collection process will introduce
additional errors. These errors are called non-sampling errors. Some non-sampling errors may
be intentional on the part of the interviewer, who may introduce a bias by leading the
respondent to provide a certain response. The interviewer also may introduce unintentional
errors, for example, due to not having a clear understanding of the interview process or due to
fatigue.
71
Respondents also may introduce errors. A respondent may introduce intentional errors by
lying or simply by not responding to a question. A respondent may introduce unintentional
errors by not understanding the question, guessing, not paying close attention, and being
fatigued or distracted.
Such non-sampling errors can be reduced through quality control techniques.
Questionnaire Design
The questionnaire is an important tool for gathering primary data. Poorly constructed
questions can result in large errors and invalidate the research data, so significant effort
should be put into the questionnaire design. The questionnaire should be tested thoroughly
prior to conducting the survey.
Measurement Scales
Attributes can be measured on nominal, ordinal, interval, and ratio scales:
 Nominal numbers are simply identifiers, with the only permissible mathematical use
being for counting. Example: social security numbers.
 Ordinal scales are used for ranking. The interval between the numbers conveys no
meaning. Median and mode calculations can be performed on ordinal numbers.
Example: class ranking
 Interval scales maintain an equal interval between numbers. These scales can be used
for ranking and for measuring the interval between two numbers. Since the zero point
is arbitrary, ratios cannot be taken between numbers on an interval scale; however,
mean, median, and mode are all valid. Example: temperature scale
 Ratio scales are referenced to an absolute zero values, so ratios between numbers on
the scale are meaningful. In addition to mean, median, and mode, geometric averages
also are valid. Example: Income , Expenditure etc.
Validity and Reliability
The validity of a test is the extent to which differences in scores reflect differences in the
measured characteristic. Predictive validity is a measure of the usefulness of a measuring
instrument as a predictor. Proof of predictive validity is determined by the correlation
between results and actual behavior. Construct validity is the extent to which a measuring
instrument measures what it intends to measure.
Reliability is the extent to which a measurement is repeatable with the same results. A
measurement may be reliable and not valid. However, if a measurement is valid, then it also is
reliable and if it is not reliable, then it cannot be valid. One way to show reliability is to show
stability by repeating the test with the same results.
Data Collection Methods
1. Qualitative Research- Qualitative Research is generally undertaken to develop an

initial understanding of the problem. It is non statistical in nature. It uses an inductive
method, that is, data relevant to some topics are collected and grouped into
appropriate meaningful categories. The explanations are emerged from the data itself.
It is used in exploratory research design and descriptive research also. Qualitative
72
data comes into a variety of forms like interview transcripts; documents, diaries and
notes made while observing. There are two main methods for collecting Qualitative
data
a. Direct Collection Method-When the data is collected directly, it makes use of
disguised method. Purpose of data collection is not known. This method
makes use of-
i. Focus Groups
ii. Depth Interview
iii. Case Study
b. Indirect Collection-Method
i. Projective Techniques
2. Quantitative Research- Quantitative Research quantifies the data and generalizes
the results from the sample to the population. In Quantitative Research, data can be
colleted by two methods
0. Survey Method
1. Observation Method
Types of questions
1. Contingency questions - A question that is answered only if the respondent gives a

particular response to a previous question. This avoids asking questions of people that
do not apply to them (for example, asking men if they have ever been pregnant).
2. Matrix questions - Identical response categories are assigned to multiple questions.
The questions are placed one under the other, forming a matrix with response
categories along the top and a list of questions down the side. This is an efficient use
of page space and respondents’ time.
3. Closed ended questions - Respondents’ answers are limited to a fixed set of
responses. Most scales are closed ended. Other types of closed ended questions
include:
o Yes/no questions - The respondent answers with a "yes" or a "no".
o Multiple choice - The respondent has several option from which to choose.
o Scaled questions - Responses are graded on a continuum (example : rate the
appearance of the product on a scale from 1 to 10, with 10 being the most
preferred appearance). Examples of types of scales include the Likert scale,
semantic differential scale, and rank-order scale (See scale for a complete list
of scaling techniques.).
4. Open ended questions - No options or predefined categories are suggested. The
respondent supplies their own answer without being constrained by a fixed set of
possible responses. Examples of types of open ended questions include:
o Completely unstructured - For example, "What is your opinion on
questionnaires?"
o Word association - Words are presented and the respondent mentions the
first word that comes to mind.
o Sentence completion - Respondents complete an incomplete sentence. For
example, "The most important consideration in my decision to buy a new
house is . . ."
o Story completion - Respondents complete an incomplete story.
o Picture completion - Respondents fill in an empty conversation balloon.
o Thematic apperception test - Respondents explain a picture or make up a
story about what they think is happening in the picture
o
73
TYPES OF DATA IN RESEARCH
Every kind of data has a rare quality of describing things after assigning a specific value to it.
For analysis, you need to organize these values, processed and presented in a given context, to
make it useful. Data can be in different forms; here are the primary data types.
Qualitative data: When the data presented has words and descriptions, then we call
it qualitative data. Although you can observe this data, it is subjective and harder to analyze
data in research, especially for comparison. Example: Quality data represents everything
describing taste, experience, texture, or an opinion that is considered quality data. This type of
data is usually collected through focus groups, personal interviews, or using open-ended
questions in surveys.
Quantitative data: Any data expressed in numbers of numerical figures are

called quantitative data. This type of data can be distinguished into categories, grouped,
measured, calculated, or ranked. Example: questions such as age, rank, cost, length, weight,
scores, etc. everything comes under this type of data. You can present such data in graphical
format, charts, or apply statistical analysis methods to this data. The (Outcomes Measurement
Systems) OMS questionnaires in surveys are a significant source of collecting numeric data.
Categorical data: It is data presented in groups. However, an item included in the categorical

data cannot belong to more than one group. Example: A person responding to a survey by
telling his living style, marital status, smoking habit, or drinking habit comes under the
categorical data. A chi-square test is a standard method used to analyze this data.
Data analysis in qualitative research
Data analysis and qualitative data research work a little differently from the numerical data as
the quality data is made up of words, descriptions, images, objects, and sometimes symbols.
Getting insight from such complicated information is a complicated process. Hence it is
typically used for exploratory research and data analysis.
Finding patterns in the qualitative data
Although there are several ways to find patterns in the textual information, a word-based
method is the most relied and widely used global technique for research and data analysis.
Notably, the data analysis process in qualitative research is manual. Here the researchers
usually read the available data and find repetitive or commonly used words.
For example, while studying data collected from African countries to understand the most
pressing issues people face, researchers might find “food” and “hunger” are the most
commonly used words and will highlight them for further analysis.
The keyword context is another widely used word-based technique. In this method, the
researcher tries to understand the concept by analyzing the context in which the participants
use a particular keyword.
74
For example, researchers conducting research and data analysis for studying the concept
of ‘diabetes’ among respondents might analyze the context of when and how the respondent
has used or referred to the word ‘diabetes.’
The scrutiny-based technique is also one of the highly recommended text analysis methods

used to identify a quality data pattern. Compare and contrast is the widely used method under
this technique to differentiate how a specific text is similar or different from each other.
For example: To find out the “importance of resident doctor in a company,” the collected data
is divided into people who think it is necessary to hire a resident doctor and those who think it
is unnecessary. Compare and contrast is the best method that can be used to analyze the polls
having single answer questions types.
Metaphors can be used to reduce the data pile and find patterns in it so that it becomes easier
to connect data with theory.
Variable Partitioning is another technique used to split variables so that researchers can find
more coherent descriptions and explanations from the enormous data.
Methods used for data analysis in qualitative research
There are several techniques to analyze the data in qualitative research, but here are some
commonly used methods,
Content Analysis: It is widely accepted and the most frequently employed technique for data
analysis in research methodology. It can be used to analyze the documented information from
text, images, and sometimes from the physical items. It depends on the research questions to
predict when and where to use this method.
Narrative Analysis: This method is used to analyze content gathered from various sources
such as personal interviews, field observation, and surveys. The majority of times, stories, or
opinions shared by people are focused on finding answers to the research questions.
Discourse Analysis: Similar to narrative analysis, discourse analysis is used to analyze the

interactions with people. Nevertheless, this particular method considers the social context
under which or within which the communication between the researcher and respondent takes
place. In addition to that, discourse analysis also focuses on the lifestyle and day-to-day
environment while deriving any conclusion.
Grounded Theory: When you want to explain why a particular phenomenon happened, then
using grounded theory for analyzing quality data is the best resort. Grounded theory is applied
to study data about the host of similar cases occurring in different settings. When researchers
are using this method, they might alter explanations or produce new ones until they arrive at
some conclusion.
Data analysis in quantitative research
Preparing data for analysis
The first stage in research and data analysis is to make it for the analysis so that the nominal
data can be converted into something meaningful. Data preparation consists of the below
phases.
75
Phase I: Data Validation
Data validation is done to understand if the collected data sample is per the pre-set standards,
or it is a biased data sample again divided into four different stages
Fraud: To ensure an actual human being records each response to the survey or the
questionnaire
Screening: To make sure each participant or respondent is selected or chosen in compliance

with the research criteria
Procedure: To ensure ethical standards were maintained while collecting the data sample
Completeness: To ensure that the respondent has answered all the questions in an online
survey. Else, the interviewer had asked all the questions devised in the questionnaire.
Phase II: Data Editing
More often, an extensive research data sample comes loaded with errors. Respondents

sometimes fill in some fields incorrectly or sometimes skip them accidentally. Data editing is
a process wherein the researchers have to confirm that the provided data is free of such errors.
They need to conduct necessary checks and outlier checks to edit the raw edit and make it
ready for analysis.
Phase III: Data Coding
Out of all three, this is the most critical phase of data preparation associated with grouping
and assigning values to the survey responses. If a survey is completed with a 1000 sample
size, the researcher will create an age bracket to distinguish the respondents based on their
age. Thus, it becomes easier to analyze small data buckets rather than deal with the massive
data pile.
Methods used for data analysis in quantitative research
After the data is prepared for analysis, researchers are open to using different research and
data analysis methods to derive meaningful insights. For sure, statistical techniques are the
most favored to analyze numerical data. The method is again classified into two groups.
First, ‘Descriptive Statistics’ used to describe data. Second, ‘Inferential statistics’ that helps in
comparing the data.
Descriptive statistics
This method is used to describe the basic features of versatile types of data in research. It
presents the data in such a meaningful way that pattern in the data starts making sense.
Nevertheless, the descriptive analysis does not go beyond making conclusions. The
conclusions are again based on the hypothesis researchers have formulated so far. Here are a
few major types of descriptive analysis methods.
Measures of Frequency
Count, Percent, Frequency
It is used to denote how often a particular event occurs.
Researchers use it when they want to showcase how often a response is given.
76
Measures of Central Tendency
Mean, Median, Mode
The method is widely used to demonstrate distribution by various points.
Researchers use this method when they want to showcase the most commonly or averagely
indicated response.
Measures of Dispersion or Variation

Range, Variance, Standard deviation
Here the field equals high/low points.
Variance standard deviation = difference between the observed score and mean
It is used to identify the spread of scores by stating intervals.
Researchers use this method to showcase data spread out. It helps them identify the depth
until which the data is spread out that it directly affects the mean.
Measures of Position
Percentile ranks, Quartile ranks
It relies on standardized scores helping researchers to identify the relationship between

different scores.
It is often used when researchers want to compare scores with the average count.
For quantitative market research use of descriptive analysis often give absolute numbers, but
the analysis is never sufficient to demonstrate the rationale behind those numbers.
Nevertheless, it is necessary to think of the best method for research and data analysis suiting
your survey questionnaire and what story researchers want to tell. For example, the mean is
the best way to demonstrate the students’ average scores in schools. It is better to rely on the
descriptive statistics when the researchers intend to keep the research or outcome limited to
the provided sample without generalizing it. For example, when you want to compare average
voting done in two different cities, differential statistics are enough.
Descriptive analysis is also called a ‘univariate analysis’ since it is commonly used to analyze
a single variable.
Inferential statistics
Inferential statistics are used to make predictions about a larger population after research and
data analysis of the representing population’s collected sample. For example, you can ask
some odd 100 audiences at a movie theater if they like the movie they are
watching. Researchers then use inferential statistics on the collected sample to reason that
about 80-90% of people like the movie.
Here are two significant areas of inferential statistics.
Estimating parameters: It takes statistics from the sample research data and demonstrates
something about the population parameter.
Hypothesis test: It’s about sampling research data to answer the survey research questions.

For example, researchers might be interested to understand if the new shade of lipstick
77
recently launched is good or not, or if the multivitamin capsules help children to perform
better at games.
These are sophisticated analysis methods used to showcase the relationship between different

variables instead of describing a single variable. It is often used when researchers want
something beyond absolute numbers to understand the relationship between variables.
Here are some of the commonly used methods for data analysis in research.
Correlation: When researchers are not conducting experimental research wherein the

researchers are interested to understand the relationship between two or more variables, they
opt for correlational research methods.
Cross-tabulation: Also called contingency tables, cross-tabulation is used to analyze the

relationship between multiple variables. Suppose provided data has age and gender
categories presented in rows and columns. A two-dimensional cross-tabulation helps for
seamless data analysis and research by showing the number of males and females in each age
category.
Regression analysis: For understanding the strong relationship between two variables,

researchers do not look beyond the primary and commonly used regression analysis method,
which is also a type of predictive analysis used. In this method, you have an essential factor
called the dependent variable. You also have multiple independent variables in regression
analysis. You undertake efforts to find out the impact of independent variables on the
dependent variable. The values of both independent and dependent variables are assumed as
being ascertained in an error-free random manner.
Frequency tables: The statistical procedure is used for testing the degree to which two or more
vary or differ in an experiment. A considerable degree of variation means research findings
were significant. In many contexts, ANOVA testing and variance analysis are similar.
Analysis of variance: The statistical procedure is used for testing the degree to which two or
more vary or differ in an experiment. A considerable degree of variation means research
findings were significant. In many contexts, ANOVA testing and variance analysis are
similar.
SAMPLE MCQs
1.Which form of data below can usually be obtained more quickly and at a lower cost than the
others?
a) Primary
b) Survey research
c) Experimental research
d) Secondary
e) Observational research
Ans: d
2. Causal research is used to ________

a) Describe marketing problems or situations
b) Quantify observations that produce insights unobtainable through other forms of research
c) Find information at the outset in an unstructured way
78
d) Gather preliminary information that will help define problems
e) Test hypotheses about cause-and-effect relationships
Ans: e
3.Secondary data consists of information ________.

a) That already exists somewhere and was collected for another purpose
b) Used by competitors
c) That does not currently exist in an organized form
d) That already exists somewhere and is outdated
e) That the researcher can obtain through surveys and observation
Ans: a
5.Which form of data below can usually be obtained more quickly and at a lower cost than the
others?
a) Survey research
b) Syndicated
c) Secondary
d) Primary
e) Online marketing research
Ans: c
6.Which method could a marketing researcher use to obtain information that people are
unwilling or unable to provide?
a) Focus groups
b) Personal interviews
c) Questionnaires
d) Observational research
e)Internet surveys
Ans: d
7. Typically, customer information is buried deep in separate databases, plans, and records of
many different company functions and departments. To overcome such problems, which of
the following could you try?
a) Customer satisfaction measurement
b) Synergetic meetings of the minds
c) Customer relationship management
d) More sophisticated software
e) Less marketing intelligence
Ans:c
8. Mr. Ravi regularly conducts online marketing research at work. He has found that it has
several advantages over traditional methods. Which of these is not an advantage?
a) Respondents cannot remain anonymous.
b) It is more cost efficient.
c) It is easy to control who responds to surveys.
d) Report generation turnaround time is much quicker
e) It is easier for respondents to complete.
Ans: c
9. What are the two types of research data?

a) Qualitative and Quantitative.
b) Primary and secondary.
c) Predictive and quantitative.
d) Qualitative and predictive.
Ans: a
79
10. The real value of a company's marketing research and information system lies in the
_____
a) Amount of data it generates
b) Marketing information system it follows
c) Efficiency with which it completes studies
d) Variety of contact methods it uses
e) Quality of customer insights it provides
Ans: e
11. What is the first step in the marketing research process?

a) Developing a marketing information system
b) Developing the research plan for collecting information
c) Implementing the research plan
d) Defining the problem and research objectives
e) Interpreting data and deciding on type of research
Ans: d
12. “what new product should be developed” is an example of …………??

a) Causal
b) Exploratory
c) Descriptive
d) None of the above
Ans: b
13. Sources of marketing information are categorized into two groups - what are they?
a) External sources; internal sources.
b) Causal resources.
c) Macro environmental sources; micro environmental sources
d) All of the above. e) None of the above.
Ans: a
14. What are secondary data?

a) Information that has been collected for the specific purpose at hand
b) Information that has already been collected and recorded for another purpose and is thus
readily accessible
c) Information based on second-rate research
d) Information based solely on rumours
Ans: b
15. What is the first stage of the marketing research process?

a) Implement the research plan
b) Collect and analyse the data
c) Develop the research plan
d) Report the findings
e) Define the research problem
Ans: e
16. Primary data is ___________.

a) Always collected before secondary data
b) Collected for the specific purpose at hand
c) Information that already exists
d) Data collected for other purposes
e) Usually collected through annual reports
Ans: b
80
17. Cause and effect research comes under which research type?
a) Causal
b) Exploratory
c) Descriptive
Ans: a
18. “How should a new product be distributed??” is an example of …………?

a) Causal
b) Exploratory
c) Descriptive
Ans: c
19. “Will increase in the service staff be profitable?” Is an example of…………??

a) Causal
b) Exploratory
c) Descriptive
Ans: a
20. The research which is “unstructured, qualitative, highly flexible “ is called as

a) Causal
b) Exploratory
c) Descriptive
Ans: b
Questions :
1. Why Marketing Research is an important element of making marketing decisions. Explain

giving examples.
2. What is the difference between Market Research and Marketing Research.
3. What are the three types of research. Explain with examples.
4. What is the importance of validity and reliability of a scale in research.
5. What is the difference between Population and Sample. What are the different types of
sampling we use in research.
6. What are the different methods of data collection in Market Research?
7. What is the difference between primary data and secondary data. Explain with examples.
8. What is the difference between sampling and non-sampling error in Research.
9. What are the different types of numbers used in framing of questions. List with examples.
10. Explain Marketing Research process with an example.
81
MODULE-5: BUSINESS NEGOTIATION
Module Objective
To make the student aware of the finer nuances of business negotiation and acquire
few skills for negotiation.
Module Outcome
1. Student will be able to make simple business negotiations.
Sub-Modules
5.1. Meaning of Negotiation & Need for negotiation

5.2. Negotiation types and Business negotiation
5.3. Theories of Negotiation
5.4. Negotiation skills
5.5. Ethics in negotiation.
Effective business negotiation is a core leadership and management skill. This is the ability to
negotiate effectively in a wide range of business contexts, including deal making,
employment discussions, corporate team building, labor/management talks, contracts,
handling disputes, employee compensation, business acquisitions, vendor pricing and sales,
real estate leases, and the fulfillment of contract obligations. Business negotiation is critical to
be creative in any negotiation in a business setting. Business negotiation strategies include
breaking the problem into smaller parts, considering unusual deal terms, and having your side
brainstorm new ideas.
Examples of Negotiation from Students.
82
TYPES OF NEGOTIATION
The two basic types of negotiations require different approaches.
Integrative negotiations are based on cooperation. Both parties believe they can walk away
with something they want without giving up something important. The dominant approach in
integrative negotiations is problem solving. Integrative negotiations involve:
Multiple issues. This allows each party to make concessions on less important issues in return
for concessions from the other party on more important issues.
Information sharing. This is an essential part of problem solving.
Bridge building. The success of integrative negotiations depends on a spirit of trust and
cooperation.
Distributive negotiations involve a fixed pie. There is only so much to go around and each
party wants as big a slice as possible. An example of a distributive negotiation is haggling
over the price of a car with a car salesman. In this type of negotiation, the parties are less
interested in forming a relationship or creating a positive impression. Distributive
relationships involve:
Keeping information confidential. For example, you don’t want a car salesman to know how
badly you need a new car or how much you are willing to pay.
Trying to extract information from the other party. In a negotiation, knowledge truly is power.
The more you know about the other party’s situation, the stronger your bargaining position is.
Letting the other party make the first offer. It might be just what you were planning to offer
yourself!
The three phases of a negotiation are:
Exchanging Information
Bargaining
Closing
These phases describe the negotiation process itself. Before the process begins, both parties
need to prepare for the negotiation. It involves gathering information about the issues to be
addressed in the negotiation. After the negotiation, both parties should work to restore
relationships that may have been frayed by the negotiation process. It is essential to pay
attention to all the phases of negotiation. Without the first phase, the exchange of information,
and the establishment of bargaining positions, the second phase cannot happen in any
meaningful sense because no one knows where they stand. It sets a scene for demands to be
manageable and reasonable. Negotiations are, after all, about the art of the possible. Without
the third phase, anything that has been decided during phase two cannot be formalized and
will not take hold - leading to the necessity for further negotiation or an absolute breakdown
in a relationship.
Skills for Successful Negotiating
Effective speaking
83
Effective listening
A sense of humor
A positive attitude
Respect
Self-confidence
Emotional intelligence
Persistence
Patience
Creativity
Without the above factors, negotiations will be difficult if not impossible. The necessity for
negotiation arises because neither party will be able to get everything they want. Knowing
that there must be concessions, each party in the negotiation is required to adopt an attitude of
understanding that they must get the best deal possible in a way which is acceptable to the
other party. The importance of effective speaking and listening is clear; it is necessary to
establish what you are looking for and what you are prepared to accept, while understanding
what the other parties will be happy with.
A sense of humor and a positive attitude are essential because they allow for a sense of give
and take. Negotiations can become fraught, and having the ability to see the other side’s point
of view while being sanguine with regard to what you can achieve will be essential. Of course
you will want as much as you can get - but the other side needs to achieve what they can, too.
Seriously uneven negotiations will simply lead to further problems along the line. An
atmosphere of respect is essential. If you do not make concessions while demanding them
from your counterpart, it makes for a negotiation which will end in dissatisfaction.
However important a sense of understanding for your “opponent” may be, it is also necessary
to have the confidence to not settle for less than you feel is fair. Good negotiators understand
the importance of balance. Yes, you will have to make concessions, but the point of making
concessions is to secure what you can get - so you need to pay attention to your bottom line
and ensure you are not beaten down to a minimum. Knowing what is realistic, and ensuring
that you can get the best deal, relies on being ready to insist upon something that the other
side may not be willing to give initially. Emotional intelligence, persistence, patience, and
creativity can all play a part here.
TACTICS FOR SUCCESSFUL BUSINESS NEGOTIATIONS
1. Listen and understand the other party’s issues and point of view. Some of the worst
negotiators I have seen are the ones who do all the talking, seeming to want to control the
conversation and expound endlessly on the merits of their position. The best negotiators tend
to be the ones who truly listen to the other side, understand their key issues and hot buttons,
and then formulate an appropriate response. Try to gain an understanding about what is
important to the other side, what limitations they may have, and where they may have
flexibility. Refrain from talking too much.
2. Be prepared. Being prepared entails a whole host of things you may need to do, such as:
 Review and understand thoroughly the business of the other party by

reviewing their website, their press releases, articles written about their
company, and so forth. A thorough Google and LinkedIn search is advisable
here.
84
 Review the background of the person you are negotiating with by reviewing
any bio on the company’s site, the person’s LinkedIn profile, and by doing a
Web search
 Review what similar deals have been completed by the other side, and the
terms thereof. For public companies, some of their prior agreements may be
filed with the SEC.
 Understand the offerings and pricings from competitors of the party you are
negotiating with.
3. Keep the negotiations professional and courteous. This is also known as the “don’t be an
asshole rule.” Nobody really wants to do business with a difficult or abusive
personality. After all, even after the negotiations are concluded, you may want to do business
with this person again, or the transaction may require ongoing involvement with the
representative of the other side. Establishing a good long-term relationship should be one of
the goals in the negotiation. A collaborative, positive tone in negotiations is more likely to
result in progress to a closing.
4. Understand the deal dynamics. Understanding the deal dynamics is crucial in any

negotiation. So be prepared to determine the following:
 Who has the leverage in the negotiation? Who wants the deal more?
 What timing constraints is the other side under?
 What alternatives does the other side have?
 Is the other side going to be getting a significant payment from you? If so, the
leverage will tend to be on your side.
5. Always draft the first version of the agreement. An absolutely fundamental principle of
almost any negotiation is that you (or your lawyers) should prepare the first draft of the
proposed contract. This lets you frame how the deal should be structured, implement key
points that you want that haven’t been discussed, and gets momentum on your side. The other
party will be reluctant to make extensive changes to your document (unless it is absurdly one
sided), and therefore you will have already won part of the battle by starting off with your
preferred terms. Having said that, you want to avoid starting the negotiations with an
agreement that the other side will never agree to. Balance is key here.
6. Be prepared to “play poker” and be ready to walk away. You must be able to play
poker with the other side, and be able to walk away if the terms of the deal aren’t up to your
liking. This is easier said than done, but is sometimes critical to get to an end game. Know
before you start what your target price or walkaway price is. Be prepared with market data to
back up why your price is reasonable, and if you are confronted with an ultimatum that you
absolutely can’t live with, be prepared to walk away.
7. Avoid the bad strategy of “negotiating by continually conceding.” Ten years ago, a

company I was involved with was desperate to sell itself. The CEO was convinced that a
certain prospective buyer was the ideal acquirer and he wanted to do the deal with them. But
the buyer kept coming up with new unreasonable demands, and the CEO kept giving into
those demands in the hopes of getting to a closing. So what did the buyer do? It learned that it
could just keep asking for more unreasonable things, and that the CEO would always
eventually cave.
85
Nine months and $1 million in legal fees later, the company still didn’t have a deal. I then
took over the negotiations and told the buyer that we were no longer interested in the terms
they had been proposing, and we were walking away unless the price and deal terms got much
better for us. By that time, the buyer itself had expended a great deal of legal fees and
management time to get to a deal, and they panicked at the prospect of losing the deal. So
they conceded to virtually every point I wanted, including an increased purchase price, and
we closed the deal in 45 days. So the lesson was that continually conceding points (while not
getting anything in return) can lead to the exact opposite of what you are hoping for. If you
are conceding a point, make sure to try and get something in return.
8. Keep in mind that time is the enemy of many deals. You have to understand that the
longer a deal takes to get completed, the more likely that something will occur to derail it. So
be prompt at responding, get your lawyer to turn documents around quickly, and keep the deal
momentum moving. However, that doesn’t mean you should rush through negotiations and
make concessions that you don’t need to make. Understand when time is on your side and
when time could be your real enemy.
9. Don’t fixate on the deal in front of you and ignore alternatives. In many situations you
want to have competitive alternatives. This can enhance your negotiating position and allow
you to make the best decision as to how to proceed. For example, if you are engaging in a
process to sell your company, the best thing you can do is to have several potential bidders at
the table. You want to avoid being locked up into exclusive negotiations with one bidder until
you have reached a meeting of the minds as to the best price and terms available. Similarly, if
you are looking to buy a product, lease office space, or acquire a loan for your business, you
will often be better off if you have alternatives—and the other party knows it has viable
competitors. By negotiating simultaneously with two or more parties, you can often obtain
better pricing or better contractual terms.
10. Don’t get hung up on one issue. You want to avoid getting stuck on a seemingly
intractable issue. Sometimes it’s best to suggest that an issue be set aside for the moment and
both parties move on to make progress on other issues. A creative solution may come to you
later outside the heat of the negotiation.
11. Identify who the real decision-maker is. You want to understand what kind of authority
the other person that you are negotiating with has. Is he or she the ultimate decision-maker? I
recently went through a long and fruitless set of negotiations with a person who kept telling
me that he didn’t have the authority to agree to a number of points we were negotiating. He
could tell me “no” to my requests but didn’t have the ability to tell me “yes.” My solution
(because I had leverage) was that I ended the conversation and said that for us to make any
progress, I needed to negotiate with the person who was authorized to make decisions and
concessions.
12. Never accept the first offer. It’s often a mistake to accept the first offer from the other
side. For example, if you are selling your home and you receive an offer, consider countering
at a higher price or better terms (even if there are no other offers). If you don’t counter, the
other party will be concerned that they offered too much and may end up with buyer’s
remorse and attempt to get out of the deal. And buyers expect that there will be a counter as
they expect that their first offer will likely be rejected. Most buyers will leave room in their
first offer to go up by at least 5%-15% in price, depending on the situation. Counter-offers
86
and some back-and-forth negotiation will most likely lead to the two parties being satisfied
that they struck the best deal they could, and thus be more committed to closing the deal.
13. Ask the right questions. Don’t be afraid to ask the other party many questions. The
answers can be informative for the negotiations. Depending on the type of deal, you could
ask:
 Is this the best pricing or offer you can give me?
 What assurances do I get that your product or solution will actually work for
me?
 Who are your competitors? How do their products compare?
 What else can you throw in to the deal without cost to us? (A particularly
useful question to ask car dealers.)
 What is your desired timing for the deal?
 How does our deal benefit you?
 We want to avoid unreasonable forms of contracts or unreasonable lawyers on
your end. How do we ensure that?
14. Prepare a Letter of Intent or Term Sheet to reflect your deal. It is often helpful, at the
appropriate time, to prepare a Letter of Intent or Term Sheet to reflect your view of the key
terms of a deal. This can help expedite getting to an agreement, save on legal costs, and
continue the momentum for a deal. It is more informal than a definitive agreement and easier
to reach agreement on. For example, Letters of Intent are often prepared and agreed to in
connection with mergers and acquisitions (see Negotiating an Acquisition Letter of
Intent). And here are some good sample forms to review that can help you draft such a
document:
 A letter of intent for a joint venture
 A term sheet for leasing office space
 A venture capital term sheet
 A term sheet for investment by a strategic investor
 A term sheet for selling the company, favorable to the seller
 An acquisition letter of intent, favorable to the buyer
15. Get the help of the best advisors and lawyers. If it’s a big or complicated deal, you
want real expertise on your side helping you in the negotiations and drafting the contract. For
example, if you are selling your company, it is usually worth the money to hire an investment
banker who knows your industry and has relationships with prospective buyers. If you are
doing a real estate deal, you want an experienced real estate attorney who has done many
deals like the one you are working on (and not a general practitioner lawyer). If you are doing
an M&A transaction, you want a lawyer that has done 50 or 100 M&A deals (and not a
general business lawyer). These advisors don’t come cheap, but are worth it if you get the
right one.
CASES ON NEGOTIATION
1. PURCHAE OF ELECTRIC BULB
You have gone to the market to purchase a 10 electric bulbs of 12V . The shop owner sells
each bulb at 240/-. He makes a profit of 40/- in each bulb he sells , but you are not aware of
this information . You are aware that such bulbs are priced by other dealers around 250/- per
piece and you also know that sellers get a profit of 20% on such items. How are you going to
negotiate if you wish to purchase at the lowest price possible.
87
2. PURCHASE OF WHEAT FOR TRADING
There are three parties in this negotiation - Farmer , Trader and the Miller. The Trader buys
wheat from the farmers and sells to the millers. The business plans of each party is mentioned
below:
Farmer Trader Miller
Cost Price Cost Price Cost Price
100 120-150 170-200 220-230
Min Profit 20 Min Profit 20 Min Profit 20

Needed Needed Needed
Negotiate as a Farmer/ a Trader/a Miller
3. PURCHASE OF 100 NUMBER OF SPLIT AIR CONDITIONERS
Mr. Biswas is the Head (Purchase) of Crystal Engineering Company. For the new office
building , this company needs 100 number of Split Air Conditioners. The details of the
quotations received from various suppliers are as follows:
Sl Name of the Price Delivery Payment Warranty Installation/

Dealer
piece
1 Acme Ltd 40000 Ex-shop Immediate 1 Year 1000/-
2 Sigma Ltd 42000 FOR- 30 days 2 Year 1000/-

Destination
3 Shyam Ltd 43000 FOR- 90 days 2 Year Free

Destination
4 Citizen Lts 41000 Ex-shop 7 days 1 Year 1500/-
You know that each of the dealer keeps minimum 10% profit while selling their air-
conditioners. Extended warranty cost 1000/- per year and the cost of capital of money is appx.
1% per week. Transportation will cost 200/- per air-conditioner.
You have been advised to help Mr.Biswas in the purchase. Negotiate with each of these
dealers and decide from which dealer to buy the air-conditioners.
4. NEGOTIATION OF PROPERTY DEVELOPMENT WITH A BUILDER
In a prime location of Bhubaneswar , Ms. Namra Das (55) owns a plot of land of size
40ftx70ft (frontage-40 ft). On this plot she has constructed a 1BHK asbestos roofed outhouse
on an area of 500 sq ft. His house that she had constructed by spending 3Lakh has been rented
out at a monthly rent of 5000/-. Electricity and water bills are to be paid as per actual. The
tenant pays Rs5000/- to Ms. Das every month and pays deposits the electricity and water bills
at the respective utility company’s offices. She is unmarried and stays in her paternal house
alone. She needs at least 15000/- per month for her monthly expenses and the rent that she is
getting is grossly inadequate. The fixed deposit of Rs5 Lakh that she had is slowly depleting
as she has to take out some money from there every month. There are also occasional medical
and other emergency expenses that she has to incur. In this context , she has been
contemplating following options:
88
(i) To sell off the land - The current market price of the land is 5000/- per square feet. That
means she can get 1.40Cr. by disposing the land. She had purchased the land some twenty
years back at 5 Lakh rupees. Therefore she has to pay a capital gain tax of 25% on this
transaction. But if she uses the money to buy another house , there will be no taxes. The
market price of a 3BHK flat is 90Lakh and the rental is 15000/- per month.
(ii) To give to a builder - The builder will construct a four storied building with a 3BHK flat
of 1300 sq ft in each floor. Entire investment will be by the builder and the developed
property will be shared 50:50 basis. That means the land owner will get 2 flats and the builder
will get 2 flats. Ms. Mohanty has to give a Power of Attorney to the builder so that he can
develop the property. Before giving the PoA she wants a lump-sum payment of minimum
5Lakh from the builder. Later she wants minimum 5Lakh more from the builder. She can get
a rent of 15000/- from each flat. Society fee has to be paid by the tenant extra. But if the
house remains vacant , she has to pay the society fee of 2000/- per month.
The land owner wants the builder to construct a 1BHK house at the basement which will be
used as a servant house but will remain under the ownership of the land owner. In case he
didn’t agree to the proposal , she should get additional 5 Lakh or a 15x15 commercial space
near the entrance of the proposed building. She is also wondering if it is a good idea to
convert one of the 3BHK of her share into two 2BHK of 650 sq ft each. She can rent each one
at 6000/- or can rent out one and keep one for her own use. There is another builder who had
recently approached her with similar proposal but she has not considered that as the
discussion with the first builder is going on for the last six months.
The builder has to invest 2000/- per sq ft for construction of the building including the four
parking places , gen-set and lift. The construction will take between 18-24 months.He will be
able to sell the flats between 80-90 Lakh depending on the market condition. There is a
preliminary expenses of 5Lakh for getting the building plan approval , marketing and other
incidental expenses.
Once the builder gets the PoA , he will demolish the existing house and will start the
construction. The sale value of the salvaged items of the house will be 1 Lakh. It is not clear
who will take this money. Relevant to mention that once the house is demolished , the land
owner will cease to get any rent from the existing tenant. Construction of the servant room
will cost 2000/- per sq ft to the builder. Keeping that in the name of the land owner will not be
convenient to the builder , because the customers who would buy the flats from him will want
facility for caretaker room at the basement. One caretaker is needed to look after the building
and other help to the owners. The builder is keen on this property development as the flats can
be easily sold.
Negotiate the contract as the land owner or the builder.
89
MODULE-6: e-COMMERCE
Module Objective
To make the students understand the business models of e-commerce business.
Module Outcome
1. Student will be able to understand business model of any e-commerce company.

2. Student will also be aware of the technology that is driving the e-commerce
business.
Sub-Modules
6.1. e-Commerce
6.2. Business Models
6.3. Role of Technology
6.4. Logistics
6.5. Opportunities and Challenges
e-Commerce
Simply put, e-commerce refers to commercial transactions conducted online. This means that
whenever you buy and sell something using the Internet, you’re involved in e-commerce.
Classification of e-Commerce
Classifying e-commerce according to the parties involved
Another effective way to classify e-commerce sites? Look at the parties participating in the
transaction. These typically include:
1. Business to consumer (B2C) – Transactions happen between businesses and consumers.

In B2C e-commerce, businesses are the ones selling products or services to end-users (i.e.
consumers).
90
Online retail typically works on a B2C model. Retailers with online stores such
as Walmart, Macy’s, and IKEA are all examples of businesses that engage in B2C e-
commerce.
2. Business to business (B2B) – As its name states, B2B e-commerce pertains to transactions
conducted between two businesses. Any company whose customers are other businesses
operate on a B2B model.
Examples include Xero, an online accounting software for small businesses, ADP, a payroll

processing company, and Square, a payments solution for SMBs.
3. Consumer to business (C2B) – Consumer to business e-commerce happens when a

consumer sells or contributes monetary value to a business. Many crowdsourcing campaigns
fall under C2B e-commerce.
Soma, a business that sells eco-friendly water filters is one example of a company that
engaged in B2C e-commerce. Back in 2012, Soma launched a Kickstarter campaign to fund
the manufacturing of their product. The project was successful, and Soma went on to raise
$147,444.
4. Consumer to consumer (C2C) – As you might have guessed, C2C e-commerce happens
when something is bought and sold between two consumers. C2C commonly takes place on
online marketplaces such as eBay, in which one individual sells a product or service to
another.
5. Government to business (G2B) – G2C transactions take place when a company pays for
government goods, services, or fees online. Examples could be a business paying for taxes
using the Internet.
6. Business to government (B2G) – When a government entity uses the Internet to purchases

goods or services from a business, the transaction may fall under B2G e-commerce. Let’s say
a city or town hires a web design firm to update its website. This type of deal may be
considered a form of B2G.
7. Consumer to government (G2C) – Consumers can also engage in B2C e-commerce.

People paying for traffic tickets or paying for their car registration renewals online may fall
under this category.
Revenue models of e-Commerce Companies
1. They earn by selling their products
Company A manufactured a product which was in good demand. It also had retail stores
across the country. Many customers inquired if the company can deliver to their home?
Company said yes. And then the customers started placing order via call. However, this was
possible only at office hours. And the company had to spend a lot on tele-callers. Few days
later, customers asked if they could place order online at time they feel convenient. Company
felt that a website with inventory management makes sense. Hence the company opened a
website only for itself. Now the customers can place order anytime. Also, company could
now ship multiple orders . Company made good profits via its e-commerce website because it
gave them better margins. The company even closed few retail stores and it saved a lot on
operations. The best example for this is in 1974 Tesco (supermarket chain) which launched its
first online store in Gateshead and Mrs Snowball, 72, is the first online home shopper.

2. They earn by helping someone else sell product
91
Now, seeing company A selling product online, Company B also wanted to open its site.
However, it would require a huge investment from Company B and it didn’t had that kind of
money. Dejected, Company B went drinking at the local pub where he met Technical A.
Now, Technical A was the same company which made the website for Company A. After
hearing plea of Company B, Technical A came up with an idea. He did a small market survey
and found that there were many other companies like B which were interested in selling their
products online but couldn’t afford the operations cost. Technical A thus came up with a
common platform where all these companies can list their product and customers can order
online. Technical A made profits from commissions, advertising and promotions. Book
Stacks Unlimited started. It was created by Charles M Stack in 1992, which was 2 years
before Amazon Inc.Book Stacks Unlimited

3. They earn by selling somebody else’s products
Technical B upon seeing the business model of Technical A felt that it can have a dominance
in market in terms of sales and customer base if it invests in a warehouse which will hold all
(most of the fast moving) items and crater to customers directly. This would eliminate the
middle men and Technical B can make more profits. Thus Technical B, in collaboration with
Consultant A started a company where they invested heavily upon technology, warehouse and
delivery chain. They held inventory of millions of products and intended to make profits over
economies of scale and world dominance! Amazon started in 1995 is the classic example
wherein they started as a online bookstore and diversified into selling electronics, clothing
and what not. It took Amazon 8 years to become profitable in 2003. Flipkart, Paytm
(company) and Snapdeal.com (product) are examples of similar sites in India.

4. They earn by helping two people connect
Citizen A wanted to move out of town because he got a job in new city. He calculated that the
shipping cost of his household items exceed the cost of items. Hence he wanted to sell some
of those products. He told few of his friend and they told to their friends. They shared pictures
of items on email along with an excel of price list. Soon the products got sold. But it took a
lot of man hours. Similar process was followed when Citizen B wanted to sell his furniture
and books. Techie A was observing this pattern and found that there was a huge potential for
an online store where they can connect a buyer and a seller to discover products and make a
commission out of it. eBay (product) is one classic example of a company which helps 2
people buy and sell products. Olx and Qickr are examples of similar e-commerce sites.

5. They earn by solving problem for customers and companies
Citizen A wanted to buy an item from Citizen B. They both had found each other on eBay.
However, the problem was that Citizen B had to wait for the cheque or draft from Citizen A,
en-cash it and then only ship the product. Citizen A was skeptical as to what if Citizen B
never ships the product even after sending the money. And eBay was wondering how they
could make profit in this whole process. Then came Techie E saying that they can provide an
online platform for cash transfer which is highly secured and reliable. Many companies liked
it and started using it. Techie E made profits by taking a commission on every transaction.
PayPal (product) is a classic example online money exchange started in 1998. eBay later
acquired PayPal for $1.5 billion in 2002 and presently comprises of over 40% revenue for
eBay.

6. They earn by aggregating related services
92
Citizen A wanted to book a movie ticket for night show. There are 2 options: 1. Go to the
movie theatre beforehand and get a seat. However, this means he had to make two trips to
theatre. 2. Go to theatre just before show starts. The catch is here that he has to return empty
handed in case of a full house.Same goes for booking flight tickets, bus tickets, concert tickets
and the like.
Ticketing is a classic example of this business model. Customers faced difficulty in booking
bus tickets. RedBus solved the problem by aggregating every possible bus operator in India.
MakeMyTrip aggregated bus, air and hotel operators. BookMyShow aggregated all movie
theaters in India. EventBrite aggregates and gives a platform for event organizers and
participants.TheCollegeFever.com is another niche which aggregates college events across
India and provides organizers a platform to sell tickets. For students, they have a benefit of
searching every possible event happening around them.Such companies make profits from
exclusive commissions and promotions.
7. They earn by helping people in finding the services they need
Citizen A is new to the city. He doesn’t have any friends. He used an aggregating e-
commerce site to reach and book a room. However, he has no idea about which restaurant to
go for or how to get reservations. Customer A is also looking for some laundry service in the
city or he wants to gift some flowers to a person he visited. Many e-commerce companies
solve this problem. They help customer in finding the right services. Yelp and Zomato
(product)for example are companies which help customers in discovering restaurants in their
locality. They also help in seat reservations or in ordering food online. They make profits via
commissions of direct sales or via advertising.
8. They earn by empowering customers
Citizen A has lives alone in a big house. He doesn’t have much of a family and wants to
share part of his house in exchange of some cash. Citizen B also wants to do the same. Citizen
C, a traveler wants a home stay at an affordable price. They all put up their requirements on a
site called Airbnb (product) which empowers people to sell the beds. Same goes
with Uber where the company helps people in sharing cabs. This is good both for the owner
and traveler as they could share the burden for gas. Such e-commerce companies make profit
by taking a cut of every exchange that happens on their site.
9. They earn by helping people and companies get visibility
Company A wants to hire few people, Startup A wants to hire few freelancers, Citizen A
wants to apply for Company X. Many e-commerce companies help in solving a problem of
hiring people or as an online market place where people can exhibit their skills. Fiver,
Freelancer, Naukri, Monster, and many other companies make profits by connecting
candidates with companies and vice versa.
10. They earn by localizing intelligent minds
Student A lives in a remote part of the world but is interested in learning about
supercomputers. However, he does not have access to such teaching. Professor A of an Ivy
league college finds his true calling in teaching the under privileged. They both can interact
with each other using a site which gives such a platform. These companies make profits via
selling premium, professional courses to corporate or charging user for the certificate.
Khan Academy, Udemy, Codeacademy and many other sites have a common mission of
giving world class education to everyone in the world.
Cyber security
93
In an increasingly interconnected world, online shopping and electronic transactions have part
of our daily lives. Its ease of use and convenience can also mean significant security risks
since sensitive information and personal data are routinely shared between merchants,
payment providers and shoppers.
Security risks include the following:
FINANCIAL DATA THEFT/FRAUD: Many attackers target personal information such as

names, addresses and credit card numbers. This allows them to make purchases online using
someone else’s payment information. One method being used is called pharming orusing
fraudulent websites to manipulate people into giving out their credentials.
Another more effective and insidious method is deliberately targeting specific users and
manipulating them into giving their personal information (also known as spear
phishing). Other exploits used to steal financial information include, but are not limited to:
SQL Injection, Cross-Site Scripting, Path Traversal, Session Hijacking, and Drive-by
Downloading.
DISTRIBUTED DENIAL OF SERVICE (DDoS) ATTACKS: A Denial of Service attack’s

aim is to take down e-commerce sites by flooding them with requests. This kind of attack
overloads the e-commerce site to the point where it can’t handle anymore requests, making
the service slow down or even go offline.
Slow service for an e-commerce site means loss of potential revenue and massive impact to
brand reputation.
MAN IN THE MIDDLE ATTACK: Man in the Middle attacks do exactly what they say —
the attacker eavesdropping or intercepting the user’s (in this case, the online shopper’s)
connection with the website. Even with Secure Sockets Layer (SSL)/Transport Layer Security
(TLS) in place, there are still ways attackers can trick the browser to gain access to the plain
text data.
Side effects
If such an attacker manages to compromise an e-commerce site, the following can happen:
LOSS OF REVENUE: The first, most obvious effect of a security breach is loss of income.
Small businesses shell out an average of $38,000 to recover from a single data breach in
direct expenses alone.
On top of that, a company that experiences a security breach can also be held accountable for
not following data protection policies, leading to hefty fines that can lead to a business’s
insolvency.
DAMAGE TO BRAND REPUTATION: Apart from the direct loss of sales due to site
unavailability (due to a DDoS attack, for example), losses of sales can also be due to
customers walking (or in this case, browsing) away from the shop in favour of other shops
without such security breaches. Losing customers’ and stakeholders’ trust is the most harmful
impact of a security breach.
People will not do business with a breached company, plain and simple.
Even if the company is eventually able to recover the financial losses, the impact on the
company’s reputation would be a scar that would take a significant amount of time to fade.
That is, if it even fades at all.
INTELLECTUAL PROPERTY THEFT/DAMAGE: Another impact of a security breach is

theft and damage to intellectual property like trade secrets, blueprints, and anything else that
94
gives a company their competitive advantage. This can mean missing out on expanding the
business since the company can no longer fully implement new and innovative ideas brewing
in the pipeline.
The good news is there are ways e-commerce shop owners can protect their websites,
customers and data:
1. Research the e-commerce platform and payment gateway the e-commerce business
runs on to ensure it complies with information security standards. Make sure the
platform is compliant with the Payment Card Industry Data Security Standard (PCI
DSS). PCI DSS is an information security standard defined to control how credit and
debit card information is handled. To determine if the e-commerce platform is
compliant, refer to Visa and Mastercard’s compliant service provider lists.
2. If you plan to implement your own platform using open-source platforms

like Magento, then the responsibility is on the shop owner to implement security
measures. Ensure that your shop is PCI-compliant and other basic security measures
are in place.
3. Make sure the entire site (not just the payment area) uses HTTPS and do keep the
SSL certificate updated. The certificate creates a secure connection between the user
and the server. Otherwise, the data is easily accessible and readable by anyone.
Contact your hosting provider if the shop is not hosted via HTTPS.
4. Only store customer data that is needed and make regular backups of them.
5. Conduct a vulnerability scan on the online shop. Even with security measures in

place, it is possible that the site is still vulnerable to threats that are not obvious to the
end user. This is where a web scanner comes in. Web scanner scans web applications
for known vulnerabilities by spidering through links and ignoring pages linked
outside the target domain.
Block-chain technology in e-commerce
In 2008, a new currency changed the way people viewed financial transactions. Here was a
perfectly functional currency that had no central bank, no central authority, and was backed
by no commodities. And while it saw moderate use among tech savvy users for years, its total
value is expected to reach $1.2 trillion by the end of 2018.
But the truly revolutionary part of this currency is how it tracks transactions. Every single
transaction that will ever take place using this currency is stored in one single, continuous,
unchangeable record completely open to the public. This record is known as a blockchain,
and the technology behind it has big implications for e-commerce.
What is a Blockchain?
A blockchain is a digital record that stores a list of transactions (called "blocks") backed by a
cryptographic value. Each block contains a link to the previous block, a timestamp, and data
about the transactions it represents. Blocks are immutable, meaning that they can't be
modified once they're created. This creates a level of trust between each party in the
blockchain. Since nobody can modify a block after it's been created, all parties can be assured
that the data it contains is still valid long after its creation.
The concept of a blockchain has been around since 1991. However, blockchains as we know
them today were created by Bitcoin creator Satoshi Nakamoto to serve as the currency's
ledger. Blockchains consist of proofs of work, which are pieces of data verifying the contents
of a block. Proofs of work are generated for each block based on the block's contents. Since
95
they're difficult to create and extremely difficult to modify, they essentially guarantee that the
block hasn't been duplicated or modified.
The blockchain is what allows Bitcoin to remain decentralized while ensuring the integrity
and honesty of each transaction. Since then, blockchain technology has been adapted to store
medical records, events, traditional financial transactions, and even voting records.
Blockchain in e-commerce
Blockchains are a natural fit for e-commerce, since they were designed for storing
transactional data. However, this data doesn't need to be financial. It can be any distinct action
that requires an immutable record, including actions related to payment and order fulfillment.
1. Alternative Payment Methods
Blockchain-powered currencies (called cryptocurrencies) were the first implementation of

modern blockchain technology, with Bitcoin leading in popularity and global adoption.
Today, cryptocurrencies are commonly used as alternatives to traditional currencies.
Customers can choose to pay with Bitcoin in much the same way as they would choose to pay
with PayPal, Stripe, or any other payment processor.
Bitcoin and other cryptocurrencies provide several advantages over traditional currencies that
benefit both customers and merchants. In addition to being relatively easy to implement,
sending or receiving money is often as simple as sharing a QR code.
2. Faster Transactions
According to Monetha, a payment processing company based on the Ethereum blockchain,

traditional payment processing systems can involve up to 16 different steps with total fees
ranging from 2 to 6%. And considering the number of parties involved, from payment
processors to credit card vendors, simplifying the transaction process benefits both merchants
and customers.
Blockchain transactions take place on a single network, reducing or outright eliminating the
need for intermediaries. Transaction speeds are limited only by the speed of the network and
by the speed at which new blocks can be generated. While Bitcoin once struggled to handle 7
transactions per second, platforms like the Lightning Network promise millions of
transactions in the same amount of time.
3. More Secure Payments
Another advantage for customers is that blockchain-based currencies don't expose personally
identifiable information. Credit and debit cards were used in over 100 billion transactions in
2015 for a value of $5.72 trillion dollars. However, 31.8 millionUS consumers were victims
of credit card fraud just one year prior.
Currencies such as Bitcoin are like cash in that they don't require the customer to expose
sensitive data such as a credit card number. Instead, the customer authorizes a transfer from
his or her own personal "wallet" to that of a recipient. The only distinguishing bit of data tied
to each user's wallet is a randomly generated unique identifier.
Blockchains work well for payment processing because they balance speed, privacy, and
integrity. Customers and merchants can make secure transactions quickly without exposing
themselves nearly as much to fraud.
4. Improved Order Fulfillment
96
One of the key benefits to e-commerce platforms is that each block in the blockchain links to
the previous block. This creates a visible chain of events that closely mirrors the process of
fulfilling an order.
For example, imagine a customer is placing an online order on a blockchain-powered e-

commerce site. Each step in the ordering process (order placement, payment, fulfillment, and
shipping) adds a new block to the chain with the time that the action was performed. The
process would look similar to the following:
1. The customer places an order by selecting her item(s) and entering her shipping
information. The marketplace generates a block and a proof of work for the order.
2. The customer pays for the product using her credit card. This generates another block
backed by another proof of work that verifies payment to the seller.
3. The seller receives the block for the order and payment, then ships the product. This
generates a third block indicating the product was shipped and the order was fulfilled.
This can be extended to other parties in the process as well, such as the shipping provider. In
this example, a fourth block could be generated by the shipping provider after delivery.
A key benefit of blockchain technology is that it establishes trust between all parties. Disputes
regarding payment or order details are less likely to occur due to the decentralized, tamper-
proof nature of the blockchain. Only 1-3% of global e-commerce transactions generate a
dispute, but with the blockchain being a transparent and public record of all transactions, it's
possible that this will decrease even further.
By 2025, 10% of the global GDP is expected to be generated on the blockchain. Financial

institutions around the world are experimenting with blockchain as a platform for future
trade. Mastercard has already deployed its own blockchain technology for processing
payments. Justin Pinkham, who leads Mastercard's blockchain initiatives, foresees blockchain
as a solution for tracking the movement of pharmaceuticals, luxury goods, and even
diamonds.
Even if cryptocurrencies like Bitcoin don't take over the world, the blockchain technology
that powers them is poised to transform e-commerce and hundreds of other industries.
AI in e-commerce
The internet has opened the door for revolutionizing various sectors. E-commerce sector is
one of them. E-commerce sectors have unlocked new opportunities and scope for retailers.
Retailers also have never seen such a growth in their sales. Artificial intelligence is taking E-
commerce to the next level. In this article, we are going to discuss 10 applications of artificial
intelligence in E-commerce.
1. Chatbots
E-commerce websites are using chatbots to improve the customer support service. Chatbots
are providing 24/7 customer support to buyers. Visit any recognized E-commerce website.
You will be prompted with a chat box asking what do you want or how can I help. You can
tell your requirements in the chatbox and you will be served with highly filtered results.
Chatbots are built using artificial intelligence and are able to communicate with humans.
97
They can also collect your past data and provide you with a very personalized user
experience.
2. Image search
Ever come across a situation where you liked any product or item but don’t what it is called
or what it is? Artificial intelligence service eases this task for you. The concept of image
search is implemented in E-commerce websites with the application of artificial intelligence.
Artificial intelligence has made it possible to understand images. Buyers can make a search
on the basis of images. Mobile apps of E-commerce websites can find the product by just
pointing the camera towards the product. This eliminates the need for keyword searches.
3. Handling Customer Data
E-commerce platforms have two things in abundance. On is an endless list of products and
other is data. E-commerce has to deal with a lot of data every day. This data can be anything
like daily sales, the total number of items sold, the number of orders received in an area or as
a whole and what not. It has to take care of customer data also. Handling that amount of data
is not possible for a human. Artificial intelligence can not only collect this data in a more
structured form but also generate proper insights out of this data.
This helps in understanding the customer behaviour of the whole populations as well as of the
individual buyer. Understanding the customer buying pattern can make E-commerce to make
changes wherever needed and predicting the next buy of the user also.
4. Recommendation Systems
Have you ever experienced how E-commerce websites like Amazon are constantly showing
the products similar you just checked? Well, this is the application of artificial intelligence in
E-commerce. AI and machine learningalgorithms can predict the behaviour of the buyer from
its past searches, likings, frequently bought products. By predicting the behaviour of the user,
E-commerce websites are able to recommend the products that user is highly interested in.
This improves the user experience as the user no longer have to spend hours searching the
product. It also helps the E-commerce websites to improve their sales.

5. Inventory management
The inventory management is one of the most important areas in any business. You have to
keep yourself updated on how much inventory you are holding and how much more is
needed. There are thousands of product categories over the E-commerce websites. Keeping an
eye on the inventory of all the products daily is not possible for a human. This is where
artificial intelligence comes into the picture. Artificial intelligence applications have helped
E-commerce in managing the inventory. Moreover, the inventory management system will
get better over the time. AI systems build a correlation between the current demand and the
future demand.
98
6. Cybersecurity
Artificial intelligence has also improved the cybersecurity of the E-commerce websites. It can
prevent or detect any fraudulent activities. E-Commerce has to deal with a lot of transactions
on daily basis. Cybercriminals and hackers can hack the user account to gain unauthenticated
access. This can lead to the exposure of private data and online fraud. The reputation of the
business also gets a big blow. To prevent this, Artificial intelligence and machine
learning algorithms are developed that can mitigate the chances of fraud activities over the
website.
7. Better Decision Making
E-commerce can make better decisions with the application of Artificial intelligence. Data
analysts have to handle a lot of data every day. This data is too huge for them to handle.
Moreover, analyzing the data also becomes a difficult task. Artificial intelligence has fastened
the decision-making process of E-Commerce. AI algorithms can easily identify the complex
patterns in the data by predicting user behaviour and their purchasing pattern.
8. After Sales Service
Selling the product is not enough. Businesses have to aid the customer in the complete buying
cycle. After sales service is an integral part of after-sales service. Artificial intelligence
applications can automate the feedback form, replacements and handling any other ambiguity
in the product. By solving the buyer’s issues, the brand value of the website gets improved.
9. CRM
In the past, Customer Relationship Management (CRM) relied on the people to collect a huge
amount of data in order to collect the data and serve the clients. But today, artificial
intelligence can predict which customers are most likely to make a purchase and how can we
better engage with them. Artificial intelligence applications can help in identifying the trends
and plan the actions according to the latest trends. With the help of machine learning
algorithms, advanced CRM can learn and improve over time.
10. Sales Improvement
Artificial intelligence applications can generate and predict the accurate forecast of the E-
commerce business. The study of historical data, data analytics, and latest trends can help in
optimizing the resource allocation, build a healthy pipeline and analyze the team
performance. The managers can get a better insight into the latest trends in sales. They can
analyze the trends and can improve the sales by making strategies well before time.
Data analytics in e-commerce
1. The e-commerce business is to connect buyers with suppliers, The analytics helps the
supplier to determine efficiency, pricing as compared to other suppliers. Pricing is
99
effectively managed using a predictive analytics that looks at historical data for
products, sales, customers, and more.
2. E-commerce businesses have faced lots of problems in supplying the duplicates of
products. Though the product was sent by the supplier, the brand name will be sold
by (E-commerce name) where this causes a loss of trust. The trust is the major
success for every business. The analytics helps to keep a track of issues causing loss
of trust and take necessary actions to resolve them at the earliest.
3. The consumer analytics pay a great way for the marketers to identify the most sales
product and also helps to their brand with respect to the competitors and it provides
great assistance to customize the consumer experiences based on their preferences to
increase retention rate.
4. Needed to track the product arrives on working days from the place of order. The
supply chain management can be easily analyzed and corrected to produce the
amazing customer experience.
5. The fraud management using analytics is to identify potential fraud before the
customer completes the transaction, resulting in reduced chargeback and also reduced
labor and fees required to process the chargeback. E-Commerce is moving towards by
adopting the analytics tool to detect frauds and also prevent from negative impact that
is caused towards the business.
6. Product specific analysis is the most crucial to comprehend the customer satisfaction
and to forecast the sales of a product.
Legal Issues in e-Commerce
No matter whether enlarges the existing e–commerce or starts a brand new business in
internet, the online entrepreneur must have a panoramic perspective over the legal framework
and detailed look over the traditional and specific legal issues of internet law. The creation of
a website is neither the beginning nor the end of the chain of questions for consideration and
resolving. The website is only the shop window of the business.
This article does not describe comprehensively all legal aspects of the online business. The
idea is to mark the main questions upon startup and organization of the e–commerce.
1. Domain name
The choice of domain name in the e–commerce is difficult process requiring assessment of
many factors. Except the considerations for association a domain with the name of a brand
and the meaning of the domain in the process of the website optimization, there are also legal
aspects whose neglecting or ignorance can have serious consequences in the future.
The chosen name must not be similar or like to the name of registered trademarks, especially
of well-known trademarks. Registering a domain that is close or similar to the name brand is
considered an offense known as "cybersquating". In the Internet there are different databases,
where domains can be checked for a similarity with registered trademarks. On the website of
the World Intellectual Property Organization can be found a public database facilitating
searching into registered trademarks here
2. Website
The well optimized and functional website with friendly user interface plays a key role for the
success of the e–commerce. The contract for its creation should cover a wide range of legal
issues. Firstly, the contract or the enclosed Terms of reference should set out clearly, in
details, the company’s requirements regarding the website - functional and performance
requirements and in terms of whole visible content ( video, images, music or text referred as
components of design). Other important issues in the contract are clauses for tests and
warranty period for debugging, assigning rights and responsibility for the actions of
100
subcontractors (if any) provisions for disclosure of confidential information made known to
the contractor in connection with the creation of the website, clauses for warranties and
liability for failure, and others depending on the specifics of the contract.
3. Rights of Intellectual Property
By creating an e-commerce website emerged a new object of intellectual property and all
copyrights and related rights with regard to their use in the website must be clearly stipulated
in the contract. The owner of the website should receive right to use the website without
restriction in time and scope, to make changes in it, the right to update and improve website
without limitations, depending of the changing business needs and conditions. Last but not
least, the contract must provide warranty by the contractor that with the creation of the
website no copyrights and other rights of the intellectual property of third parties are violated.
4. Terms and conditions, required information
E-commerce site must contain certain information that is expressly referred to the Law on
Consumer Protection. These duties include providing information to the user regarding the
name and the address of the provider, the general characteristics of the commodities/services,
the price of the commodities/services, including all taxes and fees, the cost of postal or
transport charges, which are not included in the price of the commodities/services, related to
their delivery, the cost of using a mean of communication from distance, when it is calculated
in a way, different from the one indicated in the general tariff, the way of payment, delivery
and implementation of the contract, the right of the customer to withdraw from the contract
and the conditions in which the commodity may be returned, the period for which the
particular offer or price shall be valid, the minimal duration of the contract for contracts of
constant or periodical delivery of commodities/services.
5.Privacy and security
Data protection is becoming increasingly important issue for the customers in the e-
commerce. Collection and the storage of personal data of the costumers should be made
lawfully, with the implementation of adequate measures and modern technical resources for
protection of the personal data of the costumers. The Law on Personal Data Protection
requires the trader to be registered as a data administrator into the register of Personal Data
Protection Commission. The law describes in details the obligations of the administrators of
personal data. E-commerce websites must have a policy for personal data protection that is
available and posted in a conspicuous place on the site. Published rules for the protection of
personal data must be drafted in compliance with the law.
6. Online deals
Forming legally binding online agreements consists of the following main elements - an offer
and acceptance, consideration and a capacity to enter into a contract. Enforceability of
electronic contracts generally requires: sufficient notice of terms (particularly onerous terms
specifically brought to attention); sufficient opportunity of the user to consider terms and to
decline; evidence of acceptance of terms that is sufficiently clear and positive as to
demonstrate actual consent to be bound by terms; the absence of terms that are
unconscionable or greatly unfair.
Establishing the validity of an online transaction either by producing a document or record in

writing, or recording or retaining of all the necessary information in electronic form, are the
two ways in which a documentary record can be established that a transaction has taken place
between the consumer and the business.
7. Return policy
101
The Law on the consumer protection which regulate the sales in e-commerce contains an
unambiguous provision for the right of every costumer to return the purchased goods within
seven days term after the delivery. The law does not require the presence of defects or
inconsistency in the good quality; neither any reason for return has to be mentioned. The
conditions upon which the right of return of goods purchased over the Internet cannot be
exercised by the user are explicitly listed in the law. In any other case the entrepreneur should
respect the legal right of the costumer and should accept back the purchased goods upon
existence of the conditions for returning.
The legal framework for e-commerce is increasingly becoming complex even in one single
jurisdiction. Things become more and more complicated when you are faced simultaneously
with hundreds of potentially applicable legislation because you are entering agreements with
customers located anywhere in the world.
The Internet provides many new sales and marketing opportunities and online business must
adapt to this changing commercial environment.
Advantages and disadvantages of e-commerce
Advantages
1. More clients. There is no local store or company with sufficient offices in different

cities that compares with e-commerce’s reach. The possibility of selling and buying
from any part of the world expands the target public and allows the company to gain
more clients.
2. No schedule: E-commerce does not run on schedules, whereas it is nearly impossible

to find a traditional store that is open 24/7. Websites are open all day long and clients
can buy whatever they want whenever they want it.
3. Less costs: not needing a physical store reduces the costs of running a traditional
business. In addition, when e-commerce brings suppliers together with consumers
there are not even production costs.
4. Bigger profit margin: cost reduction and market extension mean that, even with
lower prices, a bigger profit margin can be obtained than with a traditional store.
More products are sold and more money is made.
5. Scalability: This means that you can sell to either one or to a thousand people at the
same time. In a physical store there is always a limit to the number of clients that you
can assist at the same time. On the other hand, with e-commerce, the only limit is
your ability to attract clients. Well, that and your server.
Disadvantages (challenges)
We wanted to call them challenges more than disadvantages to avoid showing a distorted
picture.
Of course there are some disadvantages, as with everything in life, but if there were none,
starting an e-commerce would be too easy and there wouldn’t be any perks to it at all. ;)
 Lack of trust: Although payment platforms have evolved to the point of being as

secure as any physical business, or even more so, a lot of people still think that less
payment security, lack of trust. This means mistrust. We can help solve it by adding
an SSL (https) certificate that encrypts the transferred information as well as by
adding other stamps that transmit the necessary trust.
102
 Products and services that “cannot be seen or touched”: Everyone likes the
feeling of making a good investment. A way of making that feeling real is by seeing
and touching the products with our hands. That tangible feeling is missing in an e-
commerce shop. How can we solve it? With very thorough product cards and by
adding images, videos, and very detailed descriptions of the products.
 Requiring access to the Internet: This is obvious, but to be able to buy and sell, you
need a connected device. Nowadays, the large majority of people have this kind of
access, but there are some sectors in which the target audience is either older or less
“techy”, which could be a problem.
 Technical problems: Any type of entrepreneurship, whether it is offline or online,

implies dealing with unfamiliar issues. In the specific case of an e-commerce shop,
the technological part requires a minimum knowledge that not everyone has. The best
way to solve this is by outsourcing that part, although, of course, that carries a cost.
 Competitors: The initial investment in order to start an e-commerce is not as high as

the initial cost of a physical business. This means more competitors.
 It takes time to get results: When a physical store is opened, the products are being
shown to potential clients right from the very first minute. For an e-commerce,
gaining visibility is more difficult than most people may think. You could have a
great product and a great platform, but if you don’t work on your visibility, nobody
will see them.
Sample Questions
1. As per classification of e-Commerce , what are the different types of e-Commerce
companies.
2. What are the different ways in which e-Commerce companies earn revenue.
3. What are the various legal and security concerns of e-Commerce.
4. How AI facilitates e-Commerce. Explain with examples.
5. What are the advantages and disadvantages of e-Commerce.
103

Study Material-Marketing Management

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Study Material-Marketing Management

Uploaded by

Copyright:

Available Formats

SCHOOL OF LAW

KIIT Deemed to be UNIVERSITY

SUBJECT: MARKETING MANAGEMENT

Module No Module Name Page

MODULE-1 MARKET AND MARKETING 1-17

MODULE-2 BUSINESS STRATEGIES 18-41

MODULE-3 CONSUMER BEHAVIOUR 42-64

MODULE-4 MARKETING RESEARCH 65-82

MODULE-5 BUSINESS NEGOTIATION 83-90

MODULE-6 E-COMMERCE 91-104

1.Principles of Marketing by Philip Kotler , Gary Armstrong , Prafulla Y Agnihotri , and

1. Students will understand different types of market structure.

1.1 . Market , Examples of Market and Types of Market

MARKET : The economic definition of a Market is “An actual or nominal place

NEEDS, WANTS & DEMAND :

Utility : Satisfaction is the ability of a product or service to meet expected needs of a

Perfect competition occurs when there is a large number of small companies

 No incentive for innovation: In the real world, if competition exists and a

Monopolistic competition refers to an imperfectly competitive market with the traits

An oligopoly market consists of a small number of large companies that sell

In a situation where companies mutually compete, they may create agreements to

In a monopoly market, a single company represents the whole industry. It has no

STRATEGIC PLANNING & MARKETING STRATEGY

MARKET SEGMENTATION AND TARGET MARKET

Geographic: Where a consumer lives affects their interests and purchasing habits.

Behavioral: This segmentation type involves understanding the way people behave

Psychographic: The kind of lifestyle a consumer lives is an important part of market

A niche market is a focused, targetable portion of a broader market in which

There are several benefits to targeting a niche market:

Transportation and Warehousing: Transportation and supply chain management

Lack of Communication System: Quick communications facilities like computer,

Seasonal Demand: Demand may be seasonal in rural market due to dependency on

The world economy nowadays is increasingly characterized as a service economy.

Some of the important characteristics of Service are:

Intangibility: Services are intangible and do not have a physical existence. Hence

Heterogeneity/Variability: Given the very nature of services, each service offering is

Perishability: Services cannot be stored, saved, returned or resold once they have

Inseparability/Simultaneity of production and consumption: This refers to the fact

1. Economies of Scale is a concept related to

(a) Product Orientation

(b) Production Orientation

(d) Selling Orientation

2. Eureka Forbes follows which kind of market orientation?

(a) Product Orientation

(b) Production Orientation

(c) Marketing Orientation

(d) Selling Orientation

(a) Product Orientation

(b) Production Orientation

(c) Marketing Orientation

(d) Selling Orientation

(b) Production Orientation

(c) Marketing Orientation

(d) Selling Orientation

9. Cartel formation is witnessed in which type of market structure

13. Life Insurance products meet which of the following needs.

14. Membership in a professional association meets which of the following needs

15. A basic telephone connection is what type of need.

19. Amway follows which market orientation:

(b) Production Orientation

(c) Marketing Orientation

(d) Selling Orientation

20. Adventure sports meets which type of needs

(a) Self-Actualization need