Marketing

Management
BBA Syllabus
MBA Syllabus
CASE STUDIES
PRESENTATIONS
What is Marketing?
“Marketing is “the science and art of exploring, creating, and delivering value to satisfy the needs of a
target market at a profit..” – Philip Kotler

It is the practical application of marketing techniques. It is the analysis , planning, implementation and
control of programs designed to create, build and maintain mutually beneficial exchanges with target
market.

Acco. To AMA ,Marketing is the activity, set of institutions, and processes for creating,
communicating, delivering, and exchanging offerings that have value for customers, clients, partners,
and society at large.
What Is Marketed?
GOODS Physical goods constitute the bulk of most countries’ production and marketing efforts. Each
year, U.S. companies market billions of fresh, canned, bagged, and frozen food products and millions
of cars, refrigerators, televisions, machines, and other mainstays of a modern economy.

SERVICES As economies advance, a growing proportion of their activities focuses on the production
of services. The U.S. economy today produces a 70–30 services-to-goods mix. Services include the
work of airlines, hotels, car rental firms, barbers and beauticians, maintenance and repair people, and
accountants, bankers, lawyers, engineers, doctors, software programmers, and management
consultants. Many market offerings mix goods and services, such as a fast-food meal.
PLACES Cities, states, regions, and whole nations compete to attract tourists, residents, factories, and
company headquarters. Place marketers include economic development specialists, real estate agents,
commercial banks, local business associations, and advertising and public relations agencies.

PROPERTIES Properties are intangible rights of ownership to either real property (real estate) or
financial property (stocks and bonds). They are bought and sold, and these exchanges require
marketing. Real estate agents work for property owners or sellers, or they buy and sell residential or
commercial real estate. Investment companies and banks market securities to both institutional and
individual investors.
EVENTS Marketers promote time-based events, such as major trade shows, artistic performances, and
company anniversaries. Global sporting events such as the Olympics and the World Cup are promoted
aggressively to both companies and fan

EXPERIENCES By orchestrating several services and goods, a firm can create, stage, and market
experiences. Walt Disney World’s Magic Kingdom allows customers to visit a fairy kingdom, a pirate ship, or
a haunted house. There is also a market for customized experiences, such as a week at a baseball camp with
retired baseball greats, a four-day rock and roll fantasy camp, or a climb up Mount Everest

PERSONS Artists, musicians, CEOs, physicians, high-profile lawyers and financiers, and other professionals
all get help from celebrity marketers.Some people have done a masterful job of marketing themselves—David
Beckham, Oprah Winfrey, and the Rolling Stones. Management consultant Tom Peters, a master at self-
branding, has advised each person to become a “brand”
ORGANIZATIONS: Organizations work to build a strong, favorable, and unique image in the minds of their target
publics. In the United Kingdom, Tesco’s “Every Little Helps” marketing program reflects the food marketer’s attention to
detail in everything it does, within the store and in the community and environment. The campaign has vaulted Tesco to
the top of the UK supermarket chain industry. Universities, museums, performing arts organizations, corporations, and
nonprofits all use marketing to boost their public images and compete for audiences and funds.

INFORMATION The production, packaging, and distribution of information are major industries. Information is
essentially what books, schools, and universities produce, market, and distribute at a price to parents, students, and
communities. The former CEO of Siemens Medical Solutions USA, Tom McCausland, says, “[our product] is not
necessarily an X-ray or an MRI, but information. Our business is really health care information technology, and our end
product is really an electronic patient record: information on lab tests, pathology, and drugs as well as voice dictation.
IDEAS Every market offering includes a basic idea. Charles Revson of Revlon once observed: “In the
factory we make cosmetics; in the drugstore we sell hope.” Products and services are platforms for
delivering some idea or benefit. Social marketers are busy promoting such ideas as “Friends Don’t Let
Friends Drive Drunk” and “A Mind Is a Terrible Thing to Waste.”
Needs, Wants, and Demands
Needs are the basic human requirements such as for air, food, water, clothing, and shelter. Humans also
have strong needs for recreation, education, and entertainment. These needs become wants when they
are directed to specific objects that might satisfy the need. A U.S. consumer needs food but may want a
Philly cheesesteak and an iced tea. A person in Afghanistan needs food but may want rice, lamb, and
carrots. Wants are shaped by our society. Demands are wants for specific products backed by an ability
to pay. Many people want a Mercedes; only a few are able to buy one. Companies must measure not
only how many people want their product, but also how many are willing and able to buy it.
Some customers have needs of which they are not fully conscious or that they cannot articulate. What does it mean when the
customer asks for a “powerful” lawn mower or a “peaceful” hotel? The marketer must probe further.

We can distinguish five types of needs:

1. Stated needs (The customer wants an inexpensive car.)

2. Real needs (The customer wants a car whose operating cost, not initial price, is low.)

3. Unstated needs (The customer expects good service from the dealer.)

4. Delight needs (The customer would like the dealer to include an onboard GPS navigation system.)

5. Secret needs (The customer wants friends to see him or her as a savvy consumer.) Responding only to the stated need may
shortchange the customer. Consumers did not know much about cellular phones when they were first introduced, and Nokia and
Ericsson fought to shape consumer perceptions of them. To gain an edge, companies must help customers learn what they want.
Marketing philosophies
The Production Concept
The production concept is one of the oldest concepts in business. It holds that consumers prefer
products that are widely available and inexpensive. Managers of production-oriented businesses
concentrate on achieving high production efficiency, low costs, and mass distribution. This orientation
makes sense in developing countries such as China, where the largest PC manufacturer, Legend
(principal owner of Lenovo Group), and domestic appliances giant Haier take advantage of the
country’s huge and inexpensive labor pool to dominate the market. Marketers also use the production
concept when they want to expand the market.
The Product Concept
The product concept proposes that consumers favor products offering the most quality, performance, or
innovative features. However, managers are sometimes caught in a love affair with their products.
They might commit the “better-mousetrap” fallacy, believing a better product will by itself lead people
to beat a path to their door. A new or improved product will not necessarily be successful unless it’s
priced, distributed, advertised, and sold properly
The Selling Concept
The product will not sell itself alone. The customer needed to be educated about the availiblity of the
product. The selling concept holds that consumers and businesses, if left alone, won’t buy enough of
the organization’s products. It is practiced most aggressively with unsought goods—goods buyers
don’t normally think of buying such as insurance and cemetery plots—and when firms with
overcapacity aim to sell what they make, rather than make what the market wants. Marketing based on
hard selling is risky. It assumes customers coaxed into buying a product not only won’t return or bad-
mouth it or complain to consumer organizations but might even buy it again.
The Marketing Concept
The marketing concept emerged in the mid-1950 as a customer-centered, sense-and-respond
philosophy. The job is to find not the right customers for your products, but the right products for your
customers. Dell doesn’t prepare a perfect computer for its target market. Rather, it provides product
platforms on which each person customizes the features he or she desires in the computer.

The marketing concept holds that the key to achieving organizational goals is being more effective
than competitors in creating, delivering, and communicating superior customer value to your target
markets
The Holistic Marketing Concept
The holistic marketing concept is based on the development, design, and implementation of marketing
programs, processes, and activities that recognize their breadth and interdependencies. Holistic
marketing acknowledges that everything matters in marketing—and that a broad, integrated
perspective is often necessary

Holistic marketing thus recognizes and reconciles the scope and complexities of marketing activities.
Figure provides a schematic overview of four broad components characterizing holistic marketing:
relationship marketing, integrated marketing, internal marketing, and performance marketing. We’ll
examine these major themes throughout this book. Successful companies keep their marketing
changing with the changes in their marketplace—and marketspace.
Relationship Marketing
Relationship marketing aims to build mutually satisfying long-term relationships with key constituents
in order to earn and retain their business. Four key constituents for relationship marketing are
customers, employees, marketing partners (channels, suppliers, distributors, dealers, agencies), and
members of the financial community (shareholders, investors, analysts). Marketers must create
prosperity among all these constituents and balance the returns to all key stakeholders. To develop
strong relationships with them requires understanding their capabilities and resources, needs, goals,
and desires.
Domino’s When two employees in Conover, North Carolina, posted a YouTube video showing
themselves preparing sandwiches while putting cheese up their noses and violating other health-code
standards, Domino’s learned an important lesson about PR and brand communications in a modern era.
Once it found the employees—who claimed the video was just a gag and the sandwiches were never
delivered—the company fired them. In just a few days, however, there had been more than a million
downloads of the video and a wave of negative publicity. When research showed that perception of
quality for the brand had turned from positive to negative in that short time, the firm aggressively took
action through social media such as Twitter, YouTube, and others
Importance of Marketing
1. Marketing helps to understand the requirements of customer.

2. Marketing activity generates employment.

3. Contributes in economic health of the nation.

4. Marketing generates revenue for the company

5. Marketing plans for future course of action

It is instrumental in improving the living standards. Marketing continuously identifies the needs and wants
satisfying products or services which can propel the people to do an extra to earn money which can be
exchanged for the desired products or services.

Marketing generates gainful employment opportunities both directly and indirectly. Directly, marketing
provides employment to the people in various areas like in advertising agency, in the company sales force, in
the distributor’s sales force, in public relation firms etc. Indirectly, marketing is responsible for selling the
offerings of the organisation.

Marketing helps in stabilising economic condition in the sense that marketing helps in selling the products or
services, which keeps the various organizations functioning and gainful employment is available to the
people. With the earnings from the employment, the people will purchase the products and/or services, thus
sustaining the demand.
Marketing sustains the company by bringing in profits. Marketing is the only activity that brings
revenue to the firm, whereas other activities incur expenditure. If the company’s products or services
satisfy the customer’s requirements, then the satisfied customers will keep the company in business

Marketing provides direction for the future course. The marketing oriented company continuously
brings out new product and service ideas which provide the direction for corporate strategic planning
for longer time horizon

Meeting the unmet needs or wants. Marketing identifies those needs or wants which were not satisfied
and helps in developing the product or service which can satisfy those unmet needs or wants of the
people.
Marketing’s broader importance extends to society as a whole. Marketing has helped introduce and
gain acceptance of new products that have eased or enriched people’s lives. It can inspire
enhancements in existing products as marketers innovate to improve their position in the marketplace.
Successful marketing builds demand for products and services, which, in turn, creates jobs. By
contributing to the bottom line, successful marketing also allows firms to more fully engage in socially
responsible activitie
Scope of marketing
1. Functions of exchange

Buying and assembling

Selling and dividing

2. Functions of physical supply

Storage or warehousing

Transportation

3. Facilitating functions

Financing

Risk Taking

Standardisation

marketing Information (when , where , what to sell )

Scope of marketing
(1) Products and Services:

Products and Service are the basic element of marketing. If there is no product there is no
marketing. It is concerned with the nature and type of products, product quality and design,
product planning and development, product decisions relating to branding, labelling,
packaging, trademarks etc.

(2) Marketing Research:

Though products and services were the starting point under traditional marketing, modern
marketing starts with an analysis of the various aspects of market and related areas. It includes
an analysis of nature and types of customers, size of market, customer attitude, buyer behaviour
etc. 
(3) Channel of Distribution:

The pathway through which the goods move from producer to consumer is the channel of
distribution. It includes a number of intermediaries like wholesaler, retailers, jobbers etc.
Channels by moving the goods help in transferring the ownership of goods from seller to
buyer.

4) Physical Distribution:

The physical movement of the goods from producer to consumer is physical distribution. It
includes transportation, warehousing, inventory control and management, order processing
etc.
(5) Promotional Decisions:
Howsoever good a product is, it has no value if it is not properly promoted. Promotion has the basic objective of
informing the market about product availability and creating a demand for it. Different promotional tools are
there like advertising, sales promotion, personal selling, publicity, public relations.

(6) Pricing Decisions:

This is the only element of marketing which generates revenue for the firm. Pricing is concerned with
pricing policies and strategies, price determination, discounts, commissions etc.

(7) Environmental Analysis:

An analysis of the environment in which the business is to be carried out is the first step for any
organisation. The various macro and micro factors should be studied beforehand only to develop an
understanding of the strength, weaknesses, opportunities and threats, for an organization.
Steps of
marketing
Process
Step 1: Understanding The Marketplace And Customer Needs And Wants

It is important to understand customer needs, wants, and demands to build want- satisfying market
offerings and building value-laden customer relationships. This increases long-term customer equity
for the firm.

Step 2: Designing A Customer-Driven Marketing Strategy

Focus areas for designing a marketing strategy:

•Selecting customers to serve -defining the target market

•Deciding how to serve customers in the best way – choosing a value proposition
Step 3: Constructing an integrated marketing plan that delivers superior value

The company’s marketing strategy outlines which customers the company will serve and how it will create
value. Then the marketer develops integrated marketing plans that will the intended value to target customers.

Step 4: Build Profitable Relationships

Customer relationship management is the overall process of building and maintaining profitable customer
relationships by delivering superior customer value and satisfaction.

Customer relationship management aims to produce high customer equity, the total combined customer
lifetime values of all of its customers. The key to building lasting relationships is the creation of superior
customer value and satisfaction.
Step 5: Capturing Value From Customers

Customer relationship management’s ultimate aim is to produce high Customer equity – total
combined lifetime values of all of the company’s current and potential customers.

The more loyal to the company’s profitable customers, the higher are the customer equity. Customer
equity may even be a better way to measure its performance than market share or current sales.
Marketing Mix
Case study
The world leader in beauty, L'Oréal is present in 150 countries on five continents. For 28 years, the
Brandstorm competition has played a central role in L’Oréal’s employer brand strategy, engaging
hundreds of thousands of students worldwide in innovation challenges. With nearly 48,000 participants
and an inspiring theme of building a plastic-less future for the beauty industry, Brandstorm 2020 was set
to be the biggest competition yet. L’Oréal was determined that it would continue to be, despite the
COVID-19 pandemic. 

The Challenge
•  Recreate the Brandstorm 2022 final as a digital event
•  Drive engagement and views among students, employees, schools and other sources of talent
•  Maximise reach and engagement

As a marketer , suggest solutions to Loreal to overcome the challenges.

Example
Kodak With the advent of the digital era and the capacity to store, share, and print photos using PCs,
Kodak faces more competition than ever, in-store and online. In 2004, after being bumped from the
Dow Jones Industrial Average where it had held a spot for more than 70 years, the company started the
painful process of transformation. It began by expanding its line of digital cameras, printers, and other
equipment, and it also set out to increase market share in the lucrative medical imaging business.
Making shifts is not without challenges, however. The company eliminated almost 30,000 jobs
between 2004 and 2007 and acquired a string of companies for its graphics communications unit. In
2006, Kodak announced it would outsource the making of its digital cameras. Not only must Kodak
convince consumers to buy its digital cameras and home printers, but it also must become known as
the most convenient and affordable way to process digital images. So far, it faces steep competition
from Sony, Canon, and Hewlett-Packard
Example
Movie Industry

The success of Netflix and the ease of watching longer-form entertainment or playing games on broadband Internet
helped produce a 6.8 percent decrease in DVD sales—one that experts believe will continue. The recent emergence of
Redbox and its thousands of kiosks renting movies for $1 a day poses yet another threat to the movie business and DVD
sales. Film studios clearly need to prepare for the day when films are primarily sold not through physical distribution but
through satellite and cable companies’ video-on-demand services. Although studios make 70 percent on a typical $4.99
cable viewing versus 30 percent on the sale of a DVD, sales of DVDs still generate 70 percent of film profits. To increase
electronic distribution without destroying their DVD business, studios are experimenting with new approaches. Some,
such as Warner Bros., are releasing a DVD at the same time as online and cable versions of a movie. Disney has
emphasized its parent-friendly Disney-branded films, which generate higher DVD sales and are easy to cross-promote at
the company’s theme parks, on its TV channels, and in its stores. Paramount chose to debut Jackass 2.5 on Blockbuster’s
site for free to create buzz and interest. Film studios are considering all possible scenarios as they rethink their business
model in a world where the DVD no longer will reign as king.
Macro Environmental Analysis

Demographic Environment

Factors relating to population, such as size, growth rate, age distribution, religious composition and
literacy levels and aspects like composition of workforce, household patterns, regional characteristics,
population shifts etc., need to be studied as they are all part of the demographic environment. The
points to be considered here are

1. What demographic trends will affect the market size of the industry?

2. What demographic trends represent opportunities or threats?

Economic Environment

Economic environment determines the strength and size of the market. The purchasing power in an economy
depends on current income, prices, savings, circulation of money, debt and credit availability. Income
distribution pattern determines the marketing possibilities. The important point to consider is to find out the
effect of economic prospects and inflation on the operations of the firms.

Government Environment

Business is highly guided and controlled by government policies. Hence the type of government running a
country is a powerful influence on business and marketing gets affected. 1. What changes and regulations are
possible and what will be their impact? 2. What are the political risks of operating in a governmental
jurisdiction? 3. What are the incentives the government may offer that might affect business? 4. What are the
taxes and duties that may be levied and might affect business?
Legal Environment

Firms prefer to operate in a country where there is a sound legal system such as in US. Marketers
must have a good working knowledge of the major laws protecting consumers, competitions and
organisations. Laws like MRTP, Consumer Protection Act, Intellectual Property Right, FEMA, Labour
Laws etc., can considerably affect business operations.

Political Environment

Political pressure groups influence and limit organisations e.g., the case of Enron in Maharastra and
KFC in Karnataka. Special interest groups and political action committees put pressure on business
organisations to pay more attention to consumer’s rights, minority rights, and women’s rights.
Cultural Environment

The beliefs, values and norms of a society determine how individuals and organisations relate to each other. The
core beliefs of a particular society tend to be persistent, as the American value system of work, charity and
honesty. It is difficult for marketers to change these core values, which have a major bearing on marketing
operations in as much as they set the stage for marketing activity and consumer response.

Technological Environment

The most important factor, which is controlling and changing the human society and even impacting the future,
is technology. Technology has literally transformed the way people think, work and relax. Man could realise his
dream of putting an astronaut on the lunar surface, the moon, going to the other side of the globe within a few
hours, and even exploring the mysteries of the solar system. With the latest developments in genetic engineering,
man is extending the
human life span.

Technology has changed the way people communicate with the advent of Internet and
telecommunication system, and with the revolution in communications have come new ways of doing
business. This is opening up new business opportunities while consumers reap the rewards of cutthroat
competition among manufacturers. The following factors are to be considered for the technological
environment: 1. The pull of technological change 2. Opportunities arising out of technological
innovation 3. Risk and uncertainty of technological development 4. Role of R&D in a country and
government’s R&D budget.
Global Environment

The global environment is also rapidly changing. The new concept of global village has changed how
individuals and organisations relate to each other. The advent of worldwide terrorism has the power to
turn a booming economy into a stagnant one within no time. The new migratory habits of the
workforce as well as increased offshore operation are changing the dynamics of business operation,
while in the background, the WTO initiatives have changed the way nations do business with each
other, opening up markets and heralding the coming of a new global economic order.
Micro Environmental Analysis

This is also known as the task environment and affects business and marketing at the daily operating
level. While the changes in the macro environment affect business in the long run, the effect of micro
environmental changes are noticed almost immediately. Organisations have to closely analyse and
monitor all the elements of microenvironment in order to adapt to rapid change and stay competitive.
Consumer

According to Peter Drucker, the aim of business is to create and retain the customer. Hence consumer
occupies the central position in the marketing environment. The marketer has to closely monitor and
analyse changes in consumer tastes and preferences and cater to (if not try and anticipate) their buying
habits

1. What constitutes the consumer value system?

2. What benefits is the consumer looking for?

3. Who are the consumers?

4. What are their buying patterns?

Competitors

Competition shapes business. A study of the competitive scenario is essential for the marketer,
particularly threats from competition.

1. Who are the competitors?

2. What are their present strategies and business objectives? 3. Who are the most aggressive and
powerful competitors?
Market

The market is to be studied in terms of its actual and potential size, its growth prospect and also its
attractiveness. The marketer should study the trends and development and the key success factors of the
market he is operating. Important issues are:

1. Cost structure of the market

2. The price sensitivity of the market

3. Technological structure of the market

4. The existing distribution system of the market

5. Is the market matured?

Suppliers

Suppliers form an important component of the microenvironment. With their own bargaining power they
affect the cost structure of the industry. They constitute a major force, which shapes competition in the
industry. Also organisations have to take a major decision on “outsourcing” or “in-house” production
depending on this supplier environment.

Intermediaries

Intermediaries exert a considerable influence in the marketing environment. They can also be considered
as the major determining force in the business. In many cases the consumers are not aware of the
manufacturer and buy the product from the renowned intermediaries as for example Wal-Mart in US,
Pantaloons in India.
Public

Public constitute a major force in the micro environment and marketers have to very carefully study
their opinion, values, beliefs and attitudes in order to design a proper marketing strategy for goods
carefully tailored to meet the needs of the target consumer segment. In a sort of reverse engineering,
marketers also use the media to shape consumer tastes and preferences.
Allrecipes.com
Allrecipes.com has cooked up a winning online formula by blending recipes posted by individuals
with those provided by corporations promoting their own products like Kraft cheese or Campbell’s
Soup. After almost a 50 percent increase in site visits and unique visitors in 2009, the Web site
overtook the Food Network’s recipe site as the market leader. With tens of thousands of posted recipes,
it thrives on people’s willingness to share recipes and the satisfaction they feel if their recipe becomes
popular with others. The viral nature of the site’s success is obvious—it doesn’t spend any money on
advertising! Users tend to think of it as “their” site—not something with a big company behind it
Consumer Decision Process
Buyers or customers can get information about goods from different sources.
•Personal sources: This includes family, friends, neighbors, acquaintance, etc.
•Commercial source: This includes advertising, salespeople, dealers, packaging, display,
etc.
•Public sources: This includes mass media, consumer rating organizations, etc. they also
become confidential to provide information.
•Experimental sources: This includes handling, examining, using, etc. Such information
becomes decisive and confidential.
Example
Domino’s Known more for the speed of its delivery than for the taste of its pizza, Domino’s decided to
address negative perceptions head on. A major communication program featured documentary-style TV ads
that opened with Domino’s employees at corporate headquarters reviewing written and videotaped focus
group feedback from customers. The feedback contained biting and vicious comments, such as, “Domino’s
pizza crust to me is like cardboard” and “The sauce tastes like ketchup.” After President Patrick Doyle is
shown on camera stating these results were unacceptable, the ads proceeded to show Domino’s chefs and
executives in their test kitchens proclaiming that its pizza was new and improved with a bolder, richer
sauce; a more robust cheese combination; and an herb-and garlic-flavored crust. Many critics were stunned
by the admission of the company that their number 2 ranked pizza, in effect, had been inferior for years.
Others countered by noting that the new product formulation and unconventional ads were addressing a
widely held, difficult-to-change negative belief that was dragging the brand down and required decisive
action. Doyle summed up consumer reaction as “Most really like it, some don’t. And that’s OK
Burger King
The key points in customer decision journey are the four stages that are: consider,
evaluate, buy and advocate, bond and enjoy. Under the proposed key points, Burger
King has already made good brand equity and image in the mind of consumers; which
indicates that Burger King has established itself as the one that is in the circle of
consideration. However, the funnel technique is somewhat applicable to this case
scenario in a sense that Burger King is not chosen as an outset brand from which
customers may go outright. There are also other brands that are comparable to the
standard of Burger King but yet, it is maintaining its brand image in the mind of
consumers through regular advertisements.
The next stage in the voyage of consumer journey in order to make a decision is evaluation. A
consumer hears about a particular product or brand and then gathers reviews on it, in terms of
its attributing features. For example in the case of Burger King, a consumer will like to know from
the peers who have tried it about its taste, the economical factors, the ambience and the
specialty or its best selling product in the fast food chain. Burger King’s evaluation then ends into
a positive direction; consequently it has gone through the evaluation stage which precedes the
buy stage. The buy stage is one that is in accordance to the action stage in the AIDA plan. Once
the attention span of the consumer is in your court and the interest as well as desire to buy is
created; then the action stage is executed by that consumer in which he intends to purchase the 
product based on his evaluation. Here the model talks about the point of sale, which is a stage in
the journey where the company presents itself. It is the point where the efforts of consideration
and evaluation are to be tested and justified through sales and quality of the product.
This is where one retains an image, and is more of a first and last impression scenario in
the mindset of consumers. Burger King has retained its image by maintaining its quality
yet the pricing structure seems to be a bit uneconomical but the quality justifies the price
of the product and hence it stands out on the buy stage. Once the customer has gone
through the buy stage, then the next stage that follows reflects consumer retention and
loyalty. After having a personal experience with the product offering, the customer then
decides whether to try it again or not. Therefore, if the consumer gets through the buying
stage and is pleased with the firm’s offering, then that consumer retains his loyalty to it.
But consumer’s preference can change and therefore it is the duty of the firm to follow the
market trends before its offering becomes mature. Burger King has shown a lot of
potential on this end by providing seasonal food at different time horizons. 
Factors affecting consumer
Behaviour
(A) Cultural Factors:

Cultural factors have the broadest and deepest impact on consumer behaviour. This set of
factors mainly includes broad culture, sub-culture, and culture of social classes.
Culture is a powerful and dominant determinant of personal needs and wants. Culture can be
broadly defined as: The way of living, way of doing, and way of worshiping. Culture
determines the total patter of life. Culture has a tremendous effect on needs and preference.
People react according to the culture to which they belong.

Every culture has its values, customs, traditions, and beliefs, which determine needs,
preference, and overall behaviour. The child acquires a set of values, perception, attitudes,
interest, preference, and behaviour from family and other key social institutions that control
his/her behaviour. Every member is bound to follow cultural values to which he belongs.
These cultural factors determine the way of reacting toward product and marketing strategies.
Culture is reflected in terms of
followings:
. Family life/social system

ii. Role of women

iii. Woman education

iv. Approach to work and leisure

v. Approach to life

vi. Ethics in economic dealings

vii. Residence pattern

viii. Geographic factors

x. Impact of other cultures, and so on.

These all factors affect what, when, where, how much, from whom, and how many times the
product should be purchased and used. Marketer must be aware of the relevant cultural
aspects, and marketing programme should be designed accordingly.

2. Subcultures:

Each culture consists of smaller subcultures. Each subculture provides more specific
identification of members belong to it. Product and marketing programme should be
prepared in light of subcultures to tailor their needs.
Subculture includes:
i. Nationality:

Every nation has its own unique culture that shapes and controls behaviour its citizens. For
example, Indian culture, American culture, Japanese culture, Chinese culture, African culture,
etc. Consumers of different nations hold different behaviour toward the company’s products and
strategies. The company can concentrate on one or more nations to serve.

ii. Religion:

It is a powerful determinant of consumer needs and wants. Every religion has its culture in terms
of rules, values, rituals, and procedures that have impact on its followers. Commonly, consumer
behaviour is directly affected by religion in terms of products that are symbolically and
ritualistically associated with the celebration of various religious events and festivals/holidays.
iii. Racial Groups:

In each culture, we find various racial groups; each of them tends to be different in terms of
needs, roles, professions, habits, preference, and use of products. Each group responds
differently to marketing offers due to different cultural backgrounds.

For example, in our country, we find a number of racial groups like Kshatriya, Banya, Patel,
Brahmin, Scheduled Caste, Scheduled Tribe, Shepherded, and so forth. These racial groups
have their cultural values, norms, standards, habits, etc., that govern their overall response
toward the company’s products.
iv. Geographical Regions:

Each geographic region represents specific culture and differs in terms of needs, preference,
habits, usage rates, and uses of products. Clothing, residence, food, vehicle, etc., are
determined by regional climate and culture.
3. Culture of Social Classes:

Philip Kotler defines: “Social classes are relatively homogeneous and enduring divisions in a
society, which are hierarchically ordered and whose members share similar values, interest,
and behaviour.” In many cases, social classes are based on caste system. Members of different
castes have their cultures and, accordingly, they perform certain roles.

Social classes reflect differences in income, occupation, education, their roles in society, and
so on. Every social class has its culture that affects behaviour of its members. Social classes
differ in their dress, speech patterns, recreational preferences, social status, value orientation,
etc.
They show distinct product and brand preferences in many areas like clothing, home furniture, education,
leisure activities, and automobiles. Kotler identifies following social classes, each of them differs significantly
in term of income, skills, needs, habits, preference, career orientation, approach toward life, etc.

i. Upper-upper

ii. Lower upper

iii. Upper middle

iv. Middle class

v. Working class

vi. Upper lower

(B) Social Factors:

Here, we examine the effect of social factors on consumer needs and preferences (behaviour). Social
factors affect consumer behaviour. Consumer response to product, brand, and company is notably
influenced by a number of social factors – family, reference groups, and roles and statuses. Marketer
needs to analyze these social factors of his target market to cater its needs effectively.

Let’s briefly comment on some dominant social factors influencing consumer behaviour:

1. Family:

Family is one of the most powerful social factors affecting consumer behaviour. This is more significant
where there is joint family system, in which children use to live with family for longer time. Values,
traditions, and preferences are transmitted from parents to children inherently.
2. Reference Groups:

Philip Kotler states: “A person’s reference group consists of all the groups that have a direct
(face-to-face) or indirect influence on the person’s attitudes or behaviour.” Groups having a
direct influence on the person are called membership groups.

Normally, following reference groups affect behaviour of their members:

i. Primary Reference Groups:

They are informal groups such as family members, friends, neighbors, relatives, and co-
workers with whom the person interact fairly continuously. Habits, life-style, and opinions of
these groups have direct impact on the person.

ii. Secondary Reference Groups:

They tend to be more formal groups such as religious groups, professional groups, trade
unions or associations, etc., that affect buying decisions of an individual buyer.
3. Roles and Statuses:

A person plays various roles in many groups throughout his life. He has to play different roles
in family, club, office, or social organisation. A role consists of the activities that a person is
expected to perform. For example, a person is father for his children, husband for his wife,
son for his parents, friend for his friends, boss for his department, and a member of social
organisation.
4. Social Customs and Traditions:

Social customs, beliefs or traditions can be associated with religion, caste, or economic
aspects. Such customs determine needs and preference of products in different occasions and,
hence, affect consumer behaviour.

5. Income Level:

Income affects needs and wants of consumers. Preference of the rich consumers and the poor
consumers differ notably. In case of quality, brand image, novelty, and costs, there is wide
difference between the rich and the poor buyers. Marketer must be aware of expectations of
different income groups of his target market.
(C) Personal Factors:

Along with cultural and social factors, personal factors also affect one’s buying decision. Personal
factors are related to the buyer himself. These factors mainly include age and stage in life cycle,
occupation, economic circumstances, life style, personality, and self-concept. Let us briefly examine
the effect of personal factors on consumer behaviour.

i. Age and Stage in Life Cycle:

A man passes through various stages of his life cycle, such as infant, child, teenager, young, adult, and
old. Need and preference vary as one passes through different stages of life cycle. For example, child
and adult differ to a great extent in terms of needs and preference. Marketer may concentrate on one
or more stages of his target consumers’ life cycle. Use of different product depends on age and stage of
buyers’ life cycle.
ii. Occupation:

Buying and using pattern of consumer, to a large extent, is affected by a person’s occupation. For
example, industrialist, teacher, artist, scientist, manager, doctor, supervisor, worker, trader, etc.,
differ significantly in term of need, preference, and overall buying pattern. Company can
specialize its products according to needs and wants of special professional groups.

iii. Economic Circumstances:

Product preference, frequency of buying, quality, and quantity are largely affected by consumers’
economic circumstances. Economic circumstances consist of spendable income, income stability,
level of savings, assets, debts, borrowing power, and attitudes toward saving versus spending.
People buy products keeping in mind these economic circumstances.
iv. Life Style:

People with the same culture, social class, and occupation may differ in term of their life style. Knowledge
of life style of the target market is essential for marketer to design more relevant marketing programme.
Kotler defines: “Life style is the person’s pattern of living in the world as expressed in the person’s
activities, interest, and opinions.”

v. Personality:

Personality is a distinguished set of physical and psychotically characteristics that lead to relatively
consistent and enduring response to one’s environment. Personality characteristics, such as individualism,
difference, self-confidence, courage, firmness, sociability, mental balance, patience, etc., have a strong
influence on needs and preferences. Every person buys that product which suits his personality. In case of
clothing, automobiles, shoes, perfumes, etc., products are influenced by users’ personality characteristics.
vi. Self-concept:

It is also referred as self-image. It is what person believes of him. There can be actual self-concept,
how he views himself; ideal self-concept, how he would like to view himself; and others-self-concept,
how he thinks other see him. Person purchases such product that matches with his/her self-image.
Marker must identify self-concept of his target buyers and must try to match the products with them.

vii. Gender:

Gender or sex affects buying behaviour. Some products are male-dominated while some are female-
dominated. Male customers react to those products which are closely suit their needs and styles.
Cosmetics products are more closely related to female customers than male. Marketer must be aware
of gender-effect on buying behaviour of the market.
viii. Education:

Education makes the difference. Highly educated, moderately educated, less educated, and
illiterates differ considerably in terms of their needs and preferences. In the same way, stage
of education (like primary, secondary, college, etc.) affects buyers’ behaviour.

Education factor seems more relevant to academic institutes, book publishers, magazines,
and newspapers. Education affects one’s mindset. Buyers’ colour choice, quality-orientation,
services, and other aspects have more or less educational significance.
(D) Psychological Factors:

Buying behaviour is influenced by several psychological factors. The dominants among them
include motivation, perception, learning, and beliefs and attitudes. It is difficult to measure the
impact of psychological factors as they are internal, but are much powerful to control persons’
buying choice. Manager must try to understand probable role the factors play in making buying
decisions.

i. Motivation:

It has a significant impact on consumer behaviour. Motivation is closely related to human

needs. One has many needs at a given time. Some needs are biogenic or physiological in nature
arising from physiological states of tension, such as hunger, thirst, or discomfort.
ii. Perception:

Person’s motivation to act depends on his perception of situation. It is one of the strongest
factors affecting behaviour. The stimuli – product, advertising appeal, incentives, or anything –
are perceived differently by different people due to difference in perception. Marketer should
know how people perceive marketing offers.

iii. Learning:

Most human behaviour is learned. Learning is basically concerned with experience of an

individual. Learning can be defined as: Relatively permanent changes arising from experience.
If an individual has satisfactory experience of buying and using the products, he is more likely
to talk favourably or repeat the same.
iv. Beliefs:

People hold beliefs about company, company’s goods or services, and they act accordingly.
Beliefs of the buyers affect product and brand image. We can define the term as: Belief is a
descriptive thought that a person holds about something. Beliefs may be based on knowledge,
opinion, or faith. Note that beliefs have nothing to do with facts or reality. People may have
wrong beliefs for the superior product, or they hold positive beliefs for inferior product.
v. Attitudes:

An attitude is a person’s enduring favourable or unfavorable evaluations, emotional feelings,

and action tendencies toward some object or idea. These emotional feelings are usually
evaluative in nature. People hold attitudes toward almost everything, such as religion,
politics, clothes, music, food, product, company, and so on.

Attitudes decide liking or disliking of object. People can judge good or bad, beautiful or ugly,
rich or poor, or desirable or undesirable about an object, a product, or a person. Attitudes
play a vital role in accepting or rejecting, appreciating or criticizing the product or brand.
People do not react to every object in a fresh way. Object is evaluated by attitudes.
ii. Aspiration (Aspired) Groups:

A person is not the member of such groups. But, he likes to belong to those groups. He imitates
habits, preference and buying pattern of such groups. For example, college students
imitate/like to belong to film stars, sportsmen, or professional groups.

iv. Dissociative (Disliked) Groups:

Theses reference groups include such groups whose values or behaviour a person rejects or
dislikes. He tends to behave differently than those groups. A marketer should identify reference
groups of his target market and should try to influence those groups. In case of television,
automobile, clothing, home furniture, books and magazines, cigarettes, etc., the reference
groups have more direct impact on buyers’ purchase decision.
Case Study
Hindustan Lever Limited (HLL), the Indian arm of Unilever, the multinational
FMCG major, tried to increase its market share in the Indian oral care market
through the launch of its toothpaste brand Pepsodent. The caselet speaks about
the methods the company adopted to position Pepsodent as a toothpaste aimed
at providing the oral health benefit. The caselet examines the campaigns
undertaken by the company to promote the brand among its target market
Issues:

» The role of product differentiation in making a consumer try out a new product
» How competitive advantages get eroded quickly in a marketplace
» The need to align oral care awareness programs with promotional campaigns for
developing the market for oral care

Colgate-Palmolive (India) Pvt. Ltd. (CPPL) was the company which introduced
toothpaste in India with the launch of Colgate Dental Cream (CDC) in 1937.

Till the 1980s, the company faced very little in the way of competition and enjoyed
the position of market leader. The early 1980s saw the launch of Promise by the
Balsara Group...
Question
Close-Up was one of the earlier toothpastes to be launched in India. It also had a
clear positioning - offering the freshness benefit to the consumer. Yet the market
share of the brand came down. What are the possible reasons for the decline in
the share of Close-Up over the 
Segmentation ,
Targeting and
positioning
Market segmentation 

Market segmentation is the process of dividing a market of potential

customers into groups, or segments, based on different characteristics.
The segments created are composed of consumers who will respond
similarly to marketing strategies and who share traits such as similar
interests, needs, or locations
Objectives of Market
Segmentation
• Grouping of customer on the basis of their homogenous characteristics, such as nature, tastes, habits,
income, behavior, qualities and needs etc.

• To locate or identify the tastes, buying motives, needs, priorities and preference of the customer

• To determine marketing strategies, target and goals

• To make the activities of the firm customer-oriented. Customer orientation makes marketing segment
an important pillar of the marketing concept

• To identify the areas or sectors where the customer may be created

Market Segmentation
1. Geographic : Hilton hotels

2. Demographic

Age : TV Channels

Gender : Automobiles

Income : D’paul

Social Class : Cars segment

3. phychographic

Loreal : Because you worth it

Hallmark : When you care enough to send the very best

Kellogs wishes to become Indian breakfast.

4. Behavioural segmentation

Benefits : One may purchase to save money , one to purchase from others.

Dettol : antiseptic and then cleansing agent

Occasion : IGP , F&P , Cadbury , Archies

 Market targeting Strategies
1. Undifferentiated Marketing Strategy

It is used by companies that produce everyday products for common use. Campaigns created with this
strategy don’t require in-depth research to reveal the needs and preferences of your target audience.
The strategy aims at influencing and reaching as many people as possible. To achieve this goal,
marketers use radio, TV, and newspapers as product promotion channels. As a result, the company
exposes the product to a wider audience, which directly correlates with the number of sales and total
revenue

This approach makes the most sense for widely consumed items like gasoline, soft drinks, dairy
products, bread, personal hygiene products, etc. Companies selling these kinds of products should
always monitor the values, attitudes, and behaviors of customers since they are constantly evolving.
 2. Differentiated Marketing

Differentiated market targeting offers us a little more depth and clarity. It’s otherwise known as
‘segmented’ marketing and entails isolating a number of (generally two or more) primary target
segments that have the most potential value for the company.

Once a brand has defined those few targets, the plan is then to develop separate marketing strategies
 for each.

This type of market targeting is one of the most common. It makes sense for brands to identify several
market segments and then design separate, concentrated strategies for each. In this way, companies
don’t just constantly churn out products that are all the same, with no uniqueness, in the hope that
consumers will just eat up whatever is offered to them. Segmented market targeting understands that
consumers fit into different groups that require, and respond well to, personalisation.
Take the iconic sportswear brand Nike, for example. In terms of footwear, they mostly sell
trainers. But they wouldn’t get very far simply advertising one, single brand ‘trainers’. Like most
other clothing brands, Nike offers different products for different segments.

They love selling trainers, and they love selling trainers to you. But who are you? Are you a
runner, weightlifter, cyclist, gym-goer, golfer, outdoorsy-type, or someone who simply loves
sports footwear fashion? Well if you answered yes, or even ‘no’, to any of those options, Nike
will have the footwear you’re after.
3. Concentrated Marketing

Concentrated marketing is often called ‘niche marketing’. If we’re keeping with the cake
metaphor, concentrated marketing doesn’t take the whole cake, half or even quarter-slices. It
takes just one, small, exact slice which has some kind of specific, desired attribute on top. Like
a piece of chocolate or a nut.

Essentially, niche marketing puts all of its focus on one, or a few, narrow, 
specific consumer groups. Brands channel all of their marketing efforts towards their uniquely
defined segment of the population, with the aim of owning this particular segment over their
competitors. This way, the brand aims to reach its growth potential and create thriving brand
loyalty and long-lasting relationships with its ideal consumer group.
Take Lush, for example. This
eco-friendly cosmetics retailer
sets itself apart from the
competition by seeping its
strong, undying ethical message
from every physical and digital
pore available. This is clear
when looking at their website’s
homepage alone:
Positioning
Market is highly competitive in nature. Therefore every product manager has to take care of his
product in comparison with other products in the market.

Thus product positioning consists two important things. i.e. i. What is the image of the product in he
minds of customers ii. What image product will get in relation to other products Product Positioning
can be defined as effort of creating and maintaining intended image of the product in the minds of
target customers.

Philip Kotler defines product positioning as, “ the act of designing the company’s offering and image
to occupy a distinctive place in the mind of the target market.”
Importance of product
positioning:
1. Helps to face competition

2 Creates demand

3. Develops brand image

4. Adds to product value

5. Helps to charge premium pricing

6. Facilitates consumer choice

Approaches of positioning &
Differentiation
1. Customer benefit approach

Proctor &v Gamble : Head & Shoulder

2. Price Quality Approach

Rado , Times Quality Watch

3. Use & Application approach

4. Product user approach

Dabur chyvanprash
5. The product Class /technology approach

LG : Food guard technology , LG erasing “low price , low –tech image & bets on technology.

Gillette : Mach 3 turbo , Trac II

6. Service/customer care

Dell computers 24*7 customer support

7. Product indegrients

Red label natural care

Close up with gel

8. Packaging : ITC sunfeast Dark Fanatsy

9. Positioning by competitor:

BPL says ‘Believe in the best’ whereas Videocon says ‘Better than the best.’