1. Overview of marketing.
2. Marketing management. 3. Marketing environment. 4. Customer demand & Market Segmentation. 5. Buyer behavior. 6. Demand & Sales forecasting. 7. Marketing information & Research process. 8. Marketing planning & Strategy. 9. Consumerism & Consumer protection act.

10. Product plan. 11. Product related strategies. 12. Price. 13. Promotion. 14. Personal selling. 15. Sales management. 16. Advertising.

Kevin Lane Keller.Reference Books y Marketing Management By Philip Kotler. Mithileshwar Jha. . Abraham Koshy.

Marketing The aim of marketing is to meet and satisfy the target customer s needs and wants better than competitors. the emergence of the mobile phone. For example. Marketers are always looking for emerging customer trends that suggest new marketing opportunities. has marketers rethinking their practices. . especially with teens and young adults.

to the web sites we click on. Marketing profoundly affects our day to day lives. Good marketing has become an increasingly vital ingredient for business success. It is embedded in every thing we do from the clothes we wear. . people and organizations engage in a vast number of activities that we could call marketing.Overview of Marketing Marketing is everywhere. Formally or informally. to the ads we see .

Contd. It s easier to learn its formulated side. but a result of careful planning and execution. It is both an art and a science there s a constant tension between its formulated side and its creative side. Good marketing is no accident. . but we will also study how real creativity and passion operate in many companies.

The Scope of Marketing To prepare to be a marketer. what is marketed. . and who does the marketing? What is Marketing? Marketing is about identifying and meeting human and social needs. It is also defined as Meeting needs profitably. you need to understand what marketing is. how it works.

we see Marketing management as the art and science of choosing target markets and getting. Thus. The American Marketing Association offers the following definition Marketing is an organizational function and a set of processes for creating. . keeping and growing customers through creating. communicating superior customer value. delivering.Contd. communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.

Peter Drucker put it this way There will always. one can assume. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. marketing should result in a customer who is ready to buy.Contd. but selling is not the most important part of marketing. be need for some selling. Ideally. Managers sometimes think of marketing as the art of selling products. But the aim of marketing is to make selling superfluous. All that should be needed then is to make the product or service available. .

Marketing originates with the recognition of a need on the part of a consumer and terminates with the satisfaction of that need by the delivery of a usable product at the right time. Customer Integrated Mktng. Product thru CS . right place and at an affordable price. The consumer is found both at the beginning and at the end of the marketing process.Contd.

Service includes airlines. experiences. hotels. What is Marketed? Marketing people market 10 types of entities: Goods. . organizations. Services As economies advance a growing proportion of their activities focuses on production of services. persons. care rentals bankers . information and ideas. places. etc. lawyers. events. properties. services.Contd. Goods Physical goods constitute the bulk of most countries production and marketing efforts.

Persons Celebrity marketing is big business. sporting events. .Contd. and market experiences. etc. A theme park or a theme restaurant. Ex. Events Marketers promote time bound events such as trade shows. a firm can create. exhibitions. stage. Experiences By orchestrating several services and goods.

favorable.Contd. etc. states. Properties are bought and sold and the require marketing. Properties They are either intangible( real estate) or financial property( stocks and bonds). companies. Places Cities. Corporate identity campaigns are result of intensive market research programs. . regions and whole nations compete actively to attract tourists. Organizations They work to build a strong. factories. and unique image in the mind of their target publics.

Information Information is essentially what books. packaging and distribution of information are some of our society s major industries. The production . we make cosmetics. schools and universities produce.Contd. market and distribute to parents. In the factory. in the store we sell Hope. For ex. CEO of Siemens Medical Systems Tom McCausland says. Charles Revson of Revlon once observed. our product is not X-Ray or MRI. . but information. Ideas Every market offering includes a basic idea. students and communities.

Nonexistent demand . we call them both marketers. a purchase. Eight demand states are possible: Negative demand -consumers dislike the product and may even pay a price to avoid it. a vote.consumers may be unaware of or uninterested in the product. If two parties are seeking to sell something to each other.Who Markets? Marketers and Prospects A marketer is someone who seeks a response attention. called the prospect. . a donation from another party.

Irregular demand . Latent demand .consumers begin to buy the product less frequently or not at all.consumers may share a strong need that cannot be satisfied by an existing product. daily or even hourly basis. monthly. . Full demand .consumers purchases vary on a seasonal. Declining demand .Contd.consumers are adequately buying all products put into the market place. weekly.

consumers may be attracted to products that have undesirable social consequences. Unwholesome demand . . Overfull demand .more consumers would like to buy the product then can be satisfied.Contd.

The Marketing Concept. 2. 3. . The Sales Concept. The Exchange Concept. The Product Concept.The Marketing Concept Different concepts of marketing: 1. We will study and understand each og these concepts individually. 4. 5. The Production Concept.

.production dominates in the company. The production concept .Product dominates in the of a product y y y y between a seller and a buyer.Contd. The sales concept promote and push the product aggressively. The marketing concept . The product concept . Products don t sell automatically.Drucker says the essence here is that the entire business has to be seen from the point of view of the customer. y The exchange concept .

Marketing Myopia Prof. Theodore Levitt explained that. He further says. . They don t get so excited about their customers in their own backyard as about the oil in the distant Sahara.A colored or crooked perception of marketing and a short sightedness about business with excessive attention to production or product or selling aspects at the cost of customer and his actual needs creates Marketing Myopia.Contd.

Marketing views the entire business as consisting of a tightly integrated effort to discover. Selling starts with the existing products and views business as a task of somehow promoting these products. Marketing revolves around the needs and interests of the buyer. Difference between Selling and Marketing. create. .Contd. arouse an satisfy customer needs. Marketing is much wider than selling and more dynamic. Selling revolves around the needs and interests of the seller. Marketing on the contrary starts with the customers present and potential and views the business as a task of meeting the needs of the customer.

In other words marketing concept represents a shift in orientation. ..Contd.From Production Marketing orientation Product Customer orientation Supply Demand orientation Sales Satisfaction orientation Internal External orientation.

Definition of marketing concept. It enunciates that business is basically a need satisfying process and that business must be managed keeping the consumer and his need as the focus. The concept prescribes that all goals of business. . Marketing concept is essentially a point of view about business. Creating and delivering better consumer value is the only route by which firms implement marketing concept. must be realized through consumer orientation and generation of consumer satisfaction.Contd. including profit.

Contd. delivering. . Theodore Levitt drew a perspective contrast between the selling and marketing concepts: Selling focuses on the needs of the seller. delivering and finally consuming it. marketing on the needs of the buyer. marketing with the idea of satisfying the needs of the customer by means of the product and the whole cluster of things associated with creating. and communicating superior customer value to your chosen target markets. The marketing concept holds that the key to achieving organizational goals is being more effective than competitors in creating. Selling is preoccupied with the seller s need to convert his product into cash.

an ongoing process of  Discovering and translating consumer needs and desires into products and services. Marketing is a system of integrated business activities designed to develop strategies and plans to the satisfaction of customer wants of selected market segments or targets.  Serving consumer demand with the help of marketing channels. It is a total system of business. and  Expanding the market even in the face of competition. This brings us to the Modern definition of Marketing . .Contd.  Creating demand for these products and services.

Market demand. . 4. The marketing process has four components 1.  Pricing. 2.  Promotion. 3.  Physical distribution.  Merchandising matching products to customer needs. y Marketing Functions  Contractual searching of buyers and sellers.Contd. Marketing functions are performed by the manufacturers middlemen. Marketing functions. Marketing management. Marketing channels.

Contd. The New Concept Customers Integrated Marketing Profits thru CS. The Old Concept Products Selling & Promotion Profit thru Sales vol. .

 Privatization.  Disintermediation.  Globalization. .  Deregulation.  Consumer resistance.  Heightened competition.The new marketing realities The market place is not what it used to be. Major Societal Forces.  Industry convergence.  Retail transformation. Marketers must attend and respond to a number of significant developments.  Network information technology.

 An ability to compare notes on products and services.New consumer capabilities.  A greater variety of available goods and services. and they are becoming more price and quality sensitive in their search for value.  Greater ease in interacting and placing and receiving orders.  An amplified voice to influence peer and public opinion .  A great amount of information about practically any thing. Consider what customers have today over the past  A substantial increase in buying power. Customers today perceive fewer real product differences and show less brand loyalty.

. 1. Th company does not fully undersatnd its target customers. 3. 5. The company is not good at finding new opportunities. focused and customer driven. The company is not sufficiently market 2. 4.The ten deadly sins of marketing. The company has not properly managed its relationship with its stakeholders. The company needs to better define and monitor its competitors.

The company has not made maximum use of technology. The company s product and service policies need tightening. . 7. 8. The company is not well organized to carry an effective and efficient marketing. 9.Contd. The company s marketing plans and planning process are deficient. 10. The company s brand building and communication skills are weak. 6.

. chooses the best segments and develops a strong position in each chosen segment. 3. 4. preferences and behavior and motivates its stakeholders to obsess about serving and satisfying the customers.The ten commandments of marketing. The company segments the market. 1. 5. The company develops systems for identifying opportunities. perceptions. 2. The company builds partners out of its stakeholders and generously rewards them. ranking them and choosing the best ones. The company maps its customer s needs. The company knows its major competitors and their strengths and weaknesses.

The company builds strong brands by using the most effective communication and promotion tools. The company exercises strong control over its product and service mix. The company manages a marketing planning system that leads to insightful long-term and short-term plans. The company builds marketing leadership and a team spirit among its various departments. 6. 10. 8. 9.Contd. . 7. The company constantly adds technology that gives it a competitive advantage in the market place.

for pressure is what turns rough stones into diamonds. y Our greatest glory is not in never falling but in rising every time we fall.Quotes y Don t fear pressure. .

.Relationship Marketing A key goal of marketing is to develop deep. Relationship marketing aims to build mutually satisfying long-term relationships with key constituents in order to earn and retain their business. enduring relationships with people and organizations that could directly or indirectly affect the success of the firm s marketing activities.

Relationship Marketing Marketing department Senior Management Other departments Products & Services Communications Channels Internal Marketing Integrated Marketing Holistic Marketing Performance Marketing Relationship Marketing .

. analysts). ad agencies.  Employees. agencies)  Members of the financial community( shareholders. distributors.Contd. employees. suppliers. suppliers. dealers. retailers.  Marketing partners( channels. Four key components for relationship marketing are:  Customers. investors. distributors. The ultimate outcome of relationship marketing is a unique company asset called a marketing network. and others with whom it has built mutually profitable business relationships. A marketing network consists of the company and its supporting stakeholders customers.

which he called the four P s of marketing Product Place Promotion Price . McCarthy classified these activities as marketing mix tools of four broad kinds. communicate. The marketers task is to devise marketing activities and assemble fully integrated marketing programs to create.Integrated marketing The Marketing Mix. and deliver value for consumers.

Product Marketing Mix Product variety Quality Design Price Features Brand name List price Packaging Discounts Sizes Allowances Services Payment period Warranties Credit terms Returns Promotion Place Sales promotion Channels Advertising Coverage Sales force Assortments Public relations Locations Direct marketing Inventory Transport .Contd.

advertising. product management.Internal Marketing Holistic marketing incorporates internal marketing. ensuring that everyone in the organization embraces appropriate marketing principles. other departments must embrace marketing. training and motivating able employees who want to serve customers well. Internal marketing is the task of hiring. Internal marketing must take place on two levels. they must also think customer. At the second level. At one level the various marketing functions sales force. marketing research must work together from the customers point of view. . customer service.

customer satisfaction. ethical. Social responsibility marketing.Performance Marketing Holistic marketing incorporates performance marketing and understanding the returns to the business from marketing activities and programs. Management is going beyond sales revenue to examine the marketing scorecard and interpret what is happening to market share. as well as addressing broader concerns and their legal. distributor and other measures. product quality. . Financial Accountability. social and environmental effects. customer loss rate.

Marketing Environment Environment plays a crucial role in marketing and that securing the right fit between the firm and the environment using the marketing mix as the tool is the crux of Marketing. Opportunities and Threats is the starting point and spotting them is important as it is their that the economy achieves its growth objectives. Purpose of marketing environment analysis  To know where the environment is heading?  To discern which events are favorable. .  To assess scope of various opportunities.  To help secure the right fit between environment and business unit crux of marketing.

foreign exchange reserves. inflation.  Socio-cultural environment.Contd. Mega/Macro Environment Factors.  Credit availability and interest rates.  Rate of growth of each sector. tax rates.  General economic conditions  Economic conditions of different segments of the population.  Culture religion. etc. language.  Social class. education.  Demographic environment. .  Savings.  Economic Environment.

.2%  Capital markets healthy trend  Political trend .Contd. consumer protection. employee protection.stable  Natural Environment  Ecology  Natural Resources  Climate  Technology Environment  Legal environment/ Business Legalization  corporate affairs. Facts of Indian Economy  6% plus growth  Per capita still low  Industrial growth 6.

Government & Environment Economic System We find that millions are engaged in work. this creates a need for economizing resources or from an economists point of view it means making the best use of what is available. but. labor and capital which are scarce. This applies to individuals and society as a whole. a few of which work for pleasure. the vast majority work to earn a living and to secure an income needed for satisfying their wants. Human wants are unlimited but resources are limited. Thus.Business. .land. Societies Resources .

Economics thus deals fundamentally with choices in the use of resources. . Economic Organization It refers to the arrangement by which the basic problems of an economy allocation of resources. Professor Lionel Robbins defined economics as a Science which studies human behavior as a relationship between ends and scarce means which have alternative uses.Contd. It develops principles for making the best use of available resources. These principles can be used for making policy. fuller employment and growth of resources are settled.

. It now embraces North America( USA & Canada). It prevails in many countries. New Zealand & Australia. Goods are produced with hired labor for sale in the market to earn profits.Contd. Japan. ie. It was frist developed in England and later spread. Capitalism Capitalism has been defined as an economic system in which commodity production is dominant. Western Europe.

capital and business enterprises are privately owned. for whom are decided by price mechanism.  Role of the price mechanism. how.  It guides resources into production where profit is high.  Prices are determined by the market forces of supply and demand.  Land.  Management maybe in the hand of professional managers.Contd.  Profit making the motivating force.  Basic question of what. . Some of the features are:  Private Property  Dominant in capitalist countries.

education and other services.  Maintenance of the state.  Collective consumption of people in the form of health. it has to be growth with social justice.  Investment or creation of physical capital assets.Contd. Socialism  Public ownership in property.  State ownership industry  Collective ownership agriculture  Planned economy Four basic ways by which product of society is used  Private consumption of workers who participate in production.  Inequalities of income and wealth - Such capitalist societies tell us that while growth is necessary. .

Mixed Economy Defined as an economy in which the state or the public sector exists side by side with the private sector. A socialist society has only the latter.Contd. .  Income inequalities Two sources private property and wages/salaries.

The concept of divide and rule applies to the market segmentation. If the marketing effort is spread over a wide area it does not have that effect but if it is concentrated on a point it can go much further and can be more effective.Market Segmentation Market Segmentation implies that the entire market is broken down into smaller groups having similar wants. choose your target market and then master it. You divide the market. .

Contd. broad. or diverse markets. . To develop the best marketing plans. But they can divide such markets into groups of consumers or segments with distinct needs or wants. This decision requires a keen understanding of consumer behavior and careful strategic thinking. A company then needs to identify which market segments it can serve effectively. Companies cannot connect with all customers in large. management need to understand what makes each segment unique and different.

Contd. etc. . Market segmentation is a process of dividing a potential market into distinct sub-sets of consumers with common needs and characteristics and selecting one or more segments to target with a distinct marketing mix. Ex. automobiles. market segmentation has proved to be a positive force for both consumers and markets alike. Vitamin market. hotels. Today every product category in the consumer market is highly segmented. Thus.

For each target segment.Customer Demand & Market Segmentation To compete more effectively. Select on or more market segments to enter(target marketing). Identify and profile distinct group of buyers who differ in their needs and preferences(market segmentation). Instead of scattering their marketing efforts . Effective target marketing requires 1. many companies are now embracing target marketing. establish and communicate the distinctive benefits of the company s market offering(market positioning). they re focusing on those consumers they have the greatest chance of satisfying. 3. . 2.

It is thus natural that many differing segments occur within a market. . Market segmentation rests on the recognition that 1. distinguished from one another by their varying needs and buying behavior. consumers who make a market are seldom one homogenous lot. But would be homogenous within each segment. characteristics and buying behavior the members would vary significantly among/across segments. 2. and. A market is the aggregate of consumers of a given product. They vary in their characteristics and buying behavior. It is feasible to disaggregate the consumers into segments in such a manner that in needs.Market Segmentation The market for any product is normally made up of several segments. Any market is made up of several sub-markets or subgroups of consumers.

Facilitates proper choice of target market. Facilitates tapping of the market. 3. Helps identify less satisfied segments and concentrate on them. 2. 5. Makes the marketing effort more efficient and economic. Benefits the customer as well.Contd. Why segment the market? 1. . Helps to divide the market and conquer them. 4. 6. adapting the offer to the market.

Contd. Advantages of market segmentation  Helps distinguish one customer group from another within a given market. promotion and pricing for matching the customer group and develop marketing offers and appeals that match needs of such groups.  Helps develop marketing programs on a more predictable basis.  Makes the marketing efforts more efficient and economic.  Helps achieve specialization required in product distribution.  Helps develop marketing offers that are most suited to each group. .  Helps crystallize the needs of the target buyers and elicit more predictable responses.  Facilitates proper choice of target market.

East India State. . illiterate. The major basis that marketers use for segmenting markets are  Geographic South.  Demographic Age. language. income. Rural/Urban. Race. Bases for segmenting consumer markets.Contd. sex. North. religion. etc Among demographics purchasing capacity/price preference forms a major base. West. education. District.

Ford.Contd. Ex. Passenger cars based on price preference Segment Car Budget car 800/omni 60% market Compact car Zen. Santro. lifestyle.05% Psychographic Personality traits. Swift 10% Premium car Honda. Indica -15% Family car Esteem.10% Super Luxury Mercedes. Lancer . attitude. Audi . value system. .

Contd. sense of self-worth. safety. f.. conservatives. introvert.. y Psychographic Segmentation a. aggressive. affection. moderate. Negative Psychographic( lifestyle) Swingers. high risk. Learning Involvement Low. b. status seekers . Needs Motivation .. shelter. High Attitudes . d. c. Personality Extrovert. Perception Low risk. e. security.Positive. compliants. straights.

Demographic and Psychographic lifestyles are complimentary and work best together. The products we consume are related to our lifestyle. and psychographics provide insights into the segments.Psychographic or Lifestyle Segmentation It is your attitudes. Demographic variables help to locate the target markets. innate characteristics and current situations. . Lifestyles segmentation is based on activities and interests and opinions of groups. It is determined by our past experiences. interests and opinions that project your lifestyle Introduction It is defined simply as how one lives and spends money.

Characteristics of Lifestyle Lifestyle is a group phenomenon which influences others in the society. A person having a certain lifestyle shows consistency of behavior in other areas as well. Lifestyle influences all area s of one s activities. You can always predict that a person shopping from elite or specialty stores. would not shop from common places. 1. 2. . A person having a particular lifestyle can influence others in a social group. The same applies to eating habits and other habits as well.

Contd. 4. 3. As one would become richer ones lifestyle changes accordingly. leisure. etc. sexual exploits. Lifestyle implies a certain life interest. A person may have interest in education. which may become their main interest in life. Social changes in society affect lifestyles: For example. . adventure work. as the society becomes more affluent. lifestyles of people change. sometimes drastically.

These were widely used. They look for guarantee and are impulse buyers.Lifestyle Segmentation This is known as lifestyle segmentation and was introduced in 1978 by Arnold Mitchell. . It provides a systematic segmentation of adults into nine segments. Sustainers They are motivated by brand names. and withdrawn. These people are disadvantaged and want to get out of poverty. Their purchases are price dominant and they like to buy products which are economical and suit their pocket. 2. They are not very knowledgeable. They can be described as follows: 1. Survivors They are disadvantaged people who are poor. VALS( value & life style segmentation). depressed.

They are brand conscious and loyal. They are people who are conventional. They go after fads and do not mind taking the lead.Contd. conservative and unexperimental. 3. They are leaders and make things happen. They are careful and brand loyal shoppers. They have high aspirations in life. self engrossed and given to whims. 5. They emulate others. Belongers They buy products which are popular. They want to enjoy a good life. 4. I am me These people are typically young. Achievers They buy top of the line products. and buy products to impress other people. Emulators They are status conscious and upwardly mobile. 6. .

Contd. They want to improve conditions in society. 7. frugal persons. 8. They are conscious of society and social responsibility. who read labels carefully and seek information. Experimental These people pursue a rich inner life and want to directly experience what life has to offer. Societal conscious people They are simple. Integrated These are fully matured people and constitute the best of outer and inner directed. 9. .

Status oriented these individuals are heavily influenced by actions. Principle oriented they are guided by their beliefs and principles. 3. It has identified three primary self orientations: 1.Contd. . which was more activity and interest based. This system has more of psychological base than the original. variety and risk taking. VALS 2 is based on attitudes and values. Action oriented they desire social and physical activity. 2. approval and opinion of others. VALS 2 was introduced in 1989. These segments did not appeal to many marketers and therefore.

Their chief concern is to fulfill their primary needs of physiological security and safety needs. These three orientations determine the types of goals and behaviors that consumers will pursue and the goods they will get interested in.Strugglers These are poor people.Contd. Education is low. 2. low skilled. . 1. This classification is based on Maslow s hierarchy of needs. They are despairing and have a low status in society. They have construction skills and value self sufficiency. without strong social bonds. struggling for existence. They buy stuff which helps them in achieving their purpose. They represent a modest market and are loyal to their favorite brands. Makers They are in the action oriented category.

3. etc. 4. young. conventional people with their needs. Use established brands. strong faiths. and rebellious. food. Strivers They are a status oriented category. . They like to be stylish. Believers They are in the principle oriented category. clothes. They wish to be upwardly mobile and strive for more. social. music. and psychological resources. They have enough resources and experiment in new ventures. They are avid consumers and spend much on entertainment. but have a low income as they are striving to find a secure place in life. impulsive. They see success with money. videos. They are concerned about the opinion of others. They are conservative.Contd. movies. 5. Have modest resources sufficient to meet their needs. and beliefs. enthusiastic. Experiencer s They are action oriented. They are low in economic.

knowledge and responsibility. authority and image is important to them. value order. They look for products which are durable. have value and function properly. They make their dreams come true. Fulfilled They are satisfied and mature people who are well educated. They are active and have high self-esteem. material rewards and prestige. Work provides them with a sense of duty.Contd. They live conventional lives. Actualiser s They have abundant resources and are sophisticated in their taste and habits. . 8. They are practical consumers. 7. 6. Achievers They are also placed high in the Maslow s hierarchy of needs and are career and work oriented.

upper. y Sociocultural Segmentation a. protestant. Catholic. middle. e.oriental. Hispanic. Italian. c. b.American. Muslim. Brahmin SC/OBC Social Class Lower.. Race/Ethnicity . upper Family lifestyle ..Contd. Chinese. Hindu. young married . d. Subculture Religion Jewish. Mexican. lower.bachelor. Culture .

Objective gift. Fun. boss. night. Usage rate Heavy. friend s home. morning. work. light. interested. Awareness status unaware.  a. c. Use-Situational Segmentation Time . personal. . c. aware.Contd. rush. b. b.. d. Brand Loyalty None. strong. snack. non-users. friends. enthusiastic. y Use-Related Segmentation a. Location . some. Person self. medium.home.

y Benefit Segmentation Convenience.. prestige. Demographic / Psychographic Profile Combination of their characteristics. believer. fulfilled. VALS 2 . striver..  Hybrid Segmentation a. economy.young suburbia.Actualizer. value-for-the money. blue estate. achiever. Geodemographics . .Contd.

speed Usage rate light. Behavioral. strong. Different customer groups epect different benefits from the same product and accordingly they will be different in their motives in owning it and their behavior in buying it. Benefits quality. heavy. medium Loyalty status none.Contd. service. economy. medium. absolute. .

 Disaggregating the consumers into suitable segments based on above.  Analyzing whether it is possible to formulate separate marketing program/marketing mix for different segments. .  Finding out by what descriptive characteristics can consumers of a particular disposition be tagged on to a specified segment.Tasks involved in segmentation.  Assessing the difference between one customer group and the other in terms of their needs and their likely responses to the product and other marketing mix elements.

 Selecting those segments which offer higher potential and which will also be amiable to the offerings of the firm.  Finding out which segments will be particularly happy with the offerings of the firm and can.Contd.  Estimating the likely levels of purchase by each of the segments. . therefore. be considered as the natural targets of the firm.

.  Accessible  Sizable  Growing  Profitable  Compatible with the firms resources and capabilities. Attributes of Effective Segmentation.  Measurable(potential of the segments as well as effect of a specific marketing mix on them should be measurable). For segments to be effective they must be  Distinguishable from one another.Contd.

Effective segmentation criteria To be useful. market segments must rate favorably on five key criteria - . This has led some market researchers to advocate a needs based market segmentation approach. it must decide how many and which ones to target. Marketers are increasingly combining several variables in an effort to identify smaller. better defined target groups.Market Targeting Once the firm has identified its market segment opportunities.

Measurable - the size, purchasing power and

characteristics of the segments can be measured.  Substantial - the segments are large and profitable enough to serve. A segment should be the largest possible homogenous group worth going after with a tailored marketing program. It would not pay, for example, for an automobile manufacturer to develop cars for people who are less than four feet tall.  Accessible - the segments can be effectively reached and served.

y Differentiable - the segments are conceptually

distinguishable and respond differently to different marketing mix elements and programs. If married and unmarried woman respond similarly to a sale on perfume, they do not constitute separate segments. y Actionable - effective programs can be formulated for attracting and serving the segments.

Evaluating and Selecting the Market Segments
In evaluating different market segments, the firm must look at two factors, the segment s overall attractiveness and the company s objectives and resources ‡ How well does a potential segment score on the five criteria? ‡ Does a potential segment have characteristics that make it generally attractive- such as size, growth, profitability, scale economics and low risk. ‡ Does investing in the segment make sense given the firm s objectives, competencies and resources?

etc. the firm enjoys operating economies through specializing its production. concentrated marketing. Zodiac on formal shirts. However there are risks. specialty hospitals. the firm gains a strong knowledge of the segment s needs and achieves a strong market presence. A particular market segment can turn sour or a competitor may invade the segment. Mahindra tractors. distribution and promotion. Furthermore. Ex.Contd.through . y Single segment concentration .

Ex. The downside risk is a new technology.a firm selects a number of segments.  Product Specialization . each objectively attractive and appropriate.the firm makes a certain product that it sells to several different market segments. govt. y Selective Specialization . and commercial labs. Fair and lovely both males and females use it. but each promises to be a money maker. Ex.Contd. Microscopes sold to university. There may be little or no synergy between the segments. This multi segment strategy has the advantage of diversifying the firm s risk. .

the firm attempts to serve all customer groups with all the products they might need. y Market Specialization .  Full market coverage . .the firm concentrates on serving many needs of a particular customer group. The downside risk is the customer group may suffer budget cuts or shrink in size. Large firms can cover a whole market in two broad ways through undifferentiated marketing or differentiated marketing.Contd. Ex. An assortment of products only to university labs.

It designs a product and a marketing program that will endow the product with a superior image and appeal to the broadest number of buyers. inventory. transportation. . The company can turn its lower costs into lower prices to win the price sensitive segments of the market. y In undifferentiated marketing . advertising and product management.the firm ignores segment differences and goes after the whole market with one offer. and it relies on mass distribution and advertising. marketing research. production. The narrow product line keeps down the cost of research and development.Contd.

. y In differentiated marketing . However. Ex. HUL wide range of products for all segments.Contd. it also increases costs of doing business.the firm operates in several market segments and designs different products for each. Differentiated marketing typically creates more total sales than undifferentiated marketing.

Selecting those segments which are most appropriate for the firm. but not y y y y y y synonymous with market segmentation. Choosing the target market usually follows multi-level segmentation using different bases.Market Targeting/ Choosing Target Market y Choosing the target market is relegated to. . Segmentation can also be viewed as the prelude to target market selection. Choosing the target market involves several other tasks in addition to segmentation. Segmentation is the means or the tool. Looking at each segment as a distinct marketing opportunity. choosing the target market is the purpose.

sizable. y Evaluating the firms resources and checking whether it is possible to put in the marketing programs required for capturing the spotted segments with these resources. y Examining whether it is better to choose whole market or only a few segments and deciding which ones should be chosen. y Evaluating whether the segment is distinguishable. y Looking for segments which are relatively less satisfied by the current offers in the market from competing brands. profitable. y Evaluating the worth of each segment. . compatible with firms resources.Contd. growing. measurable. accessible.

industrial goods. What we buy. motivation. we also consume and buy these products according to our needs. personality. selfconcept. specialty goods or. durable goods. social class and many other factors that are both internal and external to us. how we buy. values. preferences and buying power. We consume things of daily use. in how much quantity we buy depends on our perception. .. where and when we buy. our attitudes. These can be consumable goods. beliefs. All of us are consumers. social and cultural back-grounds and our age and family cycle. all else is overload .Overview of consumer/buyer behavior Customer is profit.

using and disposing of goods and services. . from which source or seller to buy. evaluating. there is a lot of affluence and. we also consider whether to buy or not to buy and. these societies can afford to buy in greater quantities and at shorter intervals.Contd. While buying. In poor societies. the consumer can barely meet his barest needs. In some societies. Consumer behavior can be defined as the decision making process and physical activity involved in acquiring.

Some consumer behavior roles: Initiator The individual who determines that certain need or want is not being fulfilled and purchases a product to fulfill the need.Contd. . Influencer A person who by some intentional or unintentional word or action influences the purchase decision.

Buyer The individual who actually makes the purchase transaction mostly is the head of the family. . User The person or persons who consume or use the purchased product.Contd.

. Reasons for studying consumer behavior.Contd. consumer behavior is said to be an applied discipline. Therefore. This leads to the micro perspective and societal perspective. The most important reason for studying consumer behavior is the role that it plays in our lives. Consumer decisions are affected by their behavior.

.Contd. Societal Perspective It is on the macro level. what reasons will be used and it affects our standard of living. Consumers collectively influenced economic and social conditions within a society. Consumers strongly influence what will be the product. Micro Perspective It involves understanding consumer for the purpose of helping a firm or organization to achieve its objectives.

Contd. They try to find out: . Marketing starts with the needs of the customer and ends with his satisfaction. Management is the youngest of sciences and oldest of arts and Consumer Behavior in management is a very young discipline. When everything revolves around the customer then the study of consumer behavior becomes a necessity. To understand the likes and dislikes of the consumer extensive research studies are being conducted.

4. products and those of its competitors? How can the product be improved in their opinion? How the customers use the product? What is the customer s attitude towards the product and its advertising? What is the role of the customer in his family? . What the consumer thinks of the company s 2.Contd. 3. 1. 5.

Consumer behavior is a complex, dynamic, multi-dimensional process, and all marketing decisions are based on assumptions about consumer behavior. Marketing strategy is the game plan which the firms must adhere to, in order to outdo the competitor or the plans to achieve the desired objective. In formulating the marketing strategy, to sell the product effectively, costbenefit analysis must be undertaken.

Applying consumer behavior knowledge

2) 3) 4) 5)

Consumer behavior knowledge is applied in Marketing Management. A sound understanding of the consumer behavior is essential to the long term success of any marketing program. Consumer behavior is also important in non-profit and social organization. Consumer behavior is applied to improve the performance of govt. agencies as well. Consumer behavior also helps in marketing of various goods which are in scarcity. Consumer benefit from the investigation of their own behavior.

Marketing strategy and consumer behavior
y Marketing Analysis a) Consumer b) Company c) Competition d) Condition.

. Marketing Segmentation a) Identify product related needs. b) Group customers with similar need sets. c) Describe each group. d) Select target market.

f) Evaluation. e) Use. Outcomes a) Customer satisfaction b) Sales c) Product / Brand image. c) Distribution.Contd. d) Communication. b) Price. b) Information search internal. e) Service. Consumer Decision Process a) Problem recognition. external. . y Marketing Strategy a) Product. c) Alternative evaluation. . d) Purchase. .

A customer is always defined in terms of a specific product or company.Is one who actually purchases a product or service from a particular organization or shop. Conditions. Competitor and Company. Consumer . using or disposing of goods and services.Is anyone who engages himself in physical activities of evaluating. Customer .Market Analysis Market analysis requires an understanding of the 4 Cs which are: Consumer. acquiring. .

they are homogenous in themselves. Target Segment the target customer group known as the target segment is chosen. Such segments are identified with similar needs. An automobile.Market Segmentation The market is divided into segments which are a portion of a larger market whose needs are similar and. Demographic and psychographic characteristics these groups are identified and they are described in terms of their demographic and psychographic characteristics. Different target segments require different marketing strategies. Ex. . The company finds out how and when the product is purchased and consumed. Need sets It is meant that there are products which satisfy more than one need.

Product .Marketing strategy Strategies are formulated to provide superior customer value. the 4 Ps are directed at the Target market.product is any thing that is offered to the consumer which is tangible and can satisfy a need and has some value.Price is the amount of money one must pay to obtain the right to use the product. In formulating marketing strategies. Price . .

wholesalers. so that it becomes favorable towards the company s products.Is the means of changing the attitude of the consumer. Car service . Ex.The goods can be distributed by many channels. personal selling. sales promotion and publicity. These can be retailers.It refers to the auxiliary service that enhances the value of the product or the service.Contd. Various means of promotion are advertising. Promotion . agents. or by direct selling. Service . Distribution ( Place ) .

Buyer s skills come from an innate selfishness that when we are spending money we should get the money s worth. which they derive from the product.Contd. If the benefits outweigh the cost the buyers have paid then they have received value for money. They buy the benefits. . It is said that no one buys a product. The term Value for money is born out of this desire.

Contd. .  Product perceived value The difference of total customer value and total customer cost represents the customer s idea of the usefulness of the product.  Total customer cost The sum of money the customer is to spend while selecting. buying. using and disposing off the product. Let us define Customer Value as follows:  Total customer value The sum total of all the benefits the customer is likely to derive from the product.

 Intrinsic value of the product.  The above add-up to the total customer value of the product. .  Buyer s usage value.  Value of the service provided with the product.Contd. The product purchase decisions are taken on the basis of :  Product brand image / brand equity.

.  Product search expensive.  Cost while using the product.Contd.  The above add-up to total customer costs for the purchase of the product.  Decision time delay cost. The other aspect of decision to buy comes from the following :  Product price.

 Benefits derived as compared to those obtained from a competitive product. .Contd. Customer satisfaction from the usage of the product is measured as follows :  Actual benefit derived as compared to the benefit perception the customer had before the product was purchased.  Customer s delight also comes from being known as an intelligent buyer among the peer group. which in today s marketing technology is stated as customer delight.  Benefits get enlarged if the product cost are in consonance with the perceived benefits and in such cases the customers derive a sense of pride besides satisfaction.

Individual behavior What motivates? What induces? Why does he buy a specific brand? Why does he buy from a specific shop? Why does he shift brand or shop? How does he react to a new product? What are the stages he travels through before making a buying decision? .Buyer Behavior Buyers are of two types  Individual consumer. attitude and purchase behavior are different.  Business buyer. In the two buyers motivation.

Influence of social sciences on buyer behavior. Price is regarded as the strongest motivation for the economic man s behavior. Maslow has categorized it as Physiological needs Safety needs Social needs Esteem needs Self-actualization needs.Contd. Influence of economics As per economists man is a rational buyer. . All these need to be understood that there is no unified. tested established theory to study buyer behavior. Influence of psychology Any human activity is directed towards meeting certain needs.

. pressure is the motive force behind buying. 1. 2. Buyer Behavior Models.Contd.buyer is a rational man and buying decisions are totally governed by the concept of utility. Maslow s hierarchy of needs. The economic model .  Influence of sociology and anthropology According to scholars group.

it draws mainly from Freudian psychology.this takes it cue from the Pavlovian stimulus-response theory.Contd. Buyer behavior can be influenced by manipulating the drives. 4. forgetting and discriminating. . The sociological model the buyer is influenced by society. stimuli. by intimate groups as well as social classes. he has a desire to emulate. The learning model . The model rests on man s ability at learning. 5. follow and fit in with his immediate environment. and responses of the buyer. His buying decisions are not totally governed by utility. 3. The psychoanalytical model . The individual customer has a complex set of deep seated motives that drive him towards certain buying decisions.

The Nicosia Model . It groups the activity of buying into four basic fields. Field One has two sub fields the firms attributes and the consumers attributes.  Depending on the way the message is received by the customer a certain attitude develops and this becomes input for field two.  An advertising message from the firm reaches the consumers attributes.this model was developed by Nicosia in 1966.Contd. . 6. It establishes a link between the firm and the buyer.

 Field four consists of the use of the product item.  Field Two is the area of search and evaluation of the advertised product and other alternatives.Contd.  Field three consists of act of purchase. There is an output from field four feedback of sales results to the firm. If the process results in a motivation to buy it becomes input for field three. .

The Howard Sheth Model John Howard and Jagdish Sheth put forward this model in 1969.Contd. there are variables affecting perception and learning. . 6. In between the inputs and the outputs. These variables are considered Hypo ethical since they cannot be measured at the time of occurrence. The logic of the model is There are inputs in the form of stimuli and there are outputs beginning with attention to a given stimuli and ending with purchase.

etc. etc.Factors that are part of the buyer as an individual  We have three categories a. status. Psychological factors beliefs. b.age. They can be grouped under three broad categories 1. attitudes. education. language. 2. Cultural factors religion. 3. Information from a variety of sources - . Personal factors .  Influence of broad social class. etc.Factors influencing Buyer Behavior A number of factors influence buyer behavior. c. Buyer social environment ( group influence)  Influence if intimate group.

Buying Motives
Buying motives can be defined as all the impulses, desires and considerations which induce a buyer to purchase a given product. Why does a person buy? What are his motives? Product motives and Patronage motives. It is often said that dissatisfaction of human beings creates new products and new markets. Those impulses, desires and considerations that make people buy a given product are called product motives. The influences that explain why they buy from particular shops/firms are called patronage motives.

Product motives two categories  Emotional product motives.  Rational product motives. Emotional motives are those that appeal to the buyers pride or ego, his urge to imitate others, or his desire to be distinctive. Rational product motives involve a logical analysis of the intended purchase.

Alternative classification Operational and Psychological product motives. This is a more meaningful classification of product motives. Products have a utility dimension as well as a prestige dimension. A buyer can gain satisfaction from the functional or physical utility of a product and/or the socio-psychological significance he attaches to the product. The former is the operational product motive and the latter the socio-psychological product motive.

shoes. ornaments. Patronage motives Why does the buyer patronize specific shops? What are the considerations or impulses that persuade him to do so? Here also they can be grouped into Emotional Rational categories. etc.  Specialty goods cars. etc. Consumer goods are classified as  Convenience goods daily consumption type  Shopping goods clothes. .Contd. Buying Habits Buying habits vary depending on types of goods ex.

As a result of his awareness and comprehension. . Attitude it is the sum total of the individuals faith and feelings towards the product. These two stages constitute the cognitive field of the purchase process. Comprehension( evaluation) This comes out of his ability to reason with information. 2. Cognition refers to acquisition of knowledge. Problem recognition( Need recognition).The Buying Process 1. Awareness for the product. 3. 4. The consumer develops an attitude favorable or unfavorable. The purchase process will continue only if he develops a favorable attitude or a liking. The awareness and comprehension stages represent the information processing stage.

. Legitimization the buyer must be convinced that the purchase of the product is the legitimate course of action. Trial conviction leads to try the product on a small scale. 7. Attitude and legitimization constitute the attitude field of the purchase process. Trial and adoption stages constitute the behavioral field in the buying process. 8. He will seek by himself all means to recover his conviction and poise. Adoption successful trial leads him to buy/adopt the product. Stages in buying process may vary depending on buyers personality. 5. Post purchase behavior usually creates restlessness in the mind of the individual.Contd. 6. He is not sure about the product and feels other brands are better.

Five Adopter Categories Everett Rogers in his book Diffusion of Innovations discusses how new products spread through societies and how at what rate different segment of people adopt them. . He classifies people into 5 categories  Innovators  Early adopters  Early majority  Late majority  Laggards.

Researchers have uncovered many fascinating influences and outcomes in consumer decision making often challenging predictions from economic theory and assumptions about rationality.How consumers really make decisions One of the most active academic research areas in marketing is behavioral decision theory(BDT).  Consumers are most likely to choose an alternative( a home bread bakery) after a relatively inferior option( a slightly better but significantly expensive bakery) is added to the choice set  Consumers are more likely to choose an alternative that appears to be a compromise in the particular choice set under consideration. .

y Shifting attention to one of two considered alternatives tends to enhance the perceived attractiveness and choice probability of that alternative.Contd. y The manner in which consumers compare products that vary in terms of price and perceived quality( features. y The choices that consumers make influence their assessment of their own tastes. . brand name) and the way those products are displayed in the store( by brand or by model type) affect their willingness to pay more for additional features or a better known brand.

y Consumers choices are influenced by subtle and theoretically inconsequential changes in the way alternatives are described. y Consumers for whom possible feelings of regret are made more relevant are more likely to choose a product that is currently on sale rather than wait for a better sale or buy a higher priced item. y Consumers who think about the possibility that their purchase decision will turn out to be wrong are more likely to choose well known brands. y Consumers who make purchases for later consumption appear to make systematic errors in predicting their future preferences.Contd. .

especially if there is limited availability( which may explain why mangoes have higher sales when availability is limited to several months per year than they are offered year round).Contd. financial windfalls. out-comes of sporting events). y Consumers often overestimate the duration of their overall emotional reactions to future events( movies. . y Consumers often overestimate their future consumption. y Consumers predictions of their future tastes are not accurate they do not really know how they will feel after consuming the same flavor of yogurt or icecream several times.

. y In anticipating future consumption opportunities consumers often assume they will want or need more variety then they actually do. even when these features and premiums are optional( like the opportunity to purchase a collector s item) and do not reduce the actual value of the product in any way. y Consumers are less likely to choose alternatives with product features or promotional premiums that have little or no value.Contd.

Understanding how these effects show up in the market place can be crucial for marketers. y Consumers are less likely to choose products selected by other consumers for reasons that they find irrelevant. y Consumers interpretations and evaluations of past experiences are greatly influenced by the ending and trend of events. A positive event at the can end of a service experience can color later reflections and evaluations of the experience as a whole.Contd. What all these and other studies reinforce is that consumer behavior is very constructive and that the context of decisions really matter. . even though these other reasons would not suggest anything positive or negative about the products values.

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