M.G.

UNIVERSITY
III SEMESTER – B.B.A PROGRAMME

Study Material

MARKETING MANAGEMENT

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 SYLLABUS
BA3CRT12 MARKETING MANAGEMENT
Core Course
No. of credit: 4
No. of contact hour: 1

MODULE I
Introduction- Meaning and definition of different marketing concepts ❖ Functions of
marketing – environmental factors – market segmentation – buying motive and process
❖consumer and customer – factors affecting consumer behaviour – marketing plan.

MODULE II
Marketing mix – Marketing mix: meaning – product, product mix- product life cycle –
importance of branding –packaging and labeling.

MODULE III
Pricing-Pricing policies ❖objectives ❖ factors influencing pricing decisions- different pricing
strategies: skimming- penetration – Market structure ❖ channel of distribution and its
importance.

MODULE IV
Promotion – Advertising ❖ objectives and functions – types of advertising – personal selling and
direct marketing – sales promotion.

MODULE V
Marketing research definition, scope and process. Marketing risk and marketing audit.

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 MODULE 1
INTRODUCTION

Marketing is a customer centered approach which aims at the satisfaction of their wants
through the distribution of valuable products and services. Marketing brings together
customers, products and services. The concept of marketing is based on identification of
customer needs and their satisfaction, The process of marketing is a combination of four
elements;

 Development of Products
 Determination of Price
 Distribution channel to deliver the products at the customer’s Place and
 Promotion (Advertisement) strategy.

Marketing is a significant business activity which contributes greatly to the success of an

organisation. It facilitates firms to understand customer needs and develop products and
services accordingly.
Effective marketing strategies help organisations to differentiate their products and services in
a complex market environment.
The success or failure of an organisation depends on the quality of its marketing strategies.
Firms without a marketing mindset move around their products rather than their customers
which may result in undesirable products.

DEFINITIONS:
The American Marketing Association (AMA) defines marketing as “an organisational junction
and a set of processes for creating, communicating, and delivering value to customers and for
managing customer relationships in ways that benefit the organisation and its stakeholders”.

The Famous marketing guru, Philip Kotler defines marketing as a societal process by which
individuals and groups obtain what they need and want through creating and, exchanging
products and value with others.

FEATURES OF MARKETING
1. Marketing is an organisational function of creating, communicating and delivering value to
the customers.
2. It is a societal process by which people obtain what they want through creating and
exchanging products and value with others.
3. It is a management process which identifies and anticipates customer needs so as to
generate profits by satisfying them.
4. It is a commercial function of transferring goods from producers to consumers.
5. It is a process of manufacturing the right product, in the right place, at the right time, at
the right price. In other words, marketing activities generate place and time utilities
(product/service in the right place, at the right time) which increase the value of a product
or service.

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6. It is a process of utilizing the resources of an organisation in order to meet the changing
needs of the customers.

OBJECTIVES OF MARKETING
1. To identify the target market (group of customers) where the products can be
marketed.
2. To identify the needs and wants of the target market.
3. To develop products sufficient enough to satisfy the needs of the target market.
4. To determine the price of the products on the basis of manufacturing cost, competition,
market condition, and quality of the products.
5. To deliver/distribute the products to the customers with the help of adequate distribution
channels.
6. To follow adequate promotion (advertisement) techniques for the purpose of informing or
influencing the purchasing decision of the customers.
7. To continuously take the effort to satisfy the changing needs of the customers.
8. To use a variety of channels to gain new customers and keep existing customers.
9. To undertake researches for modifying the existing products and developing new products.

EVOLUTION OF MARKETING

Barter Stage

Production Stage

Sales Stage

Marketing Stage

1. Barter Stage:
This stage is considered as the first phase in the evolution of marketing. During this period
people exchanged goods for goods without using any medium of exchange such as money.
The history of bartering can be traced back to 6000 BC. Barter services became during The
Great Depression in the 1930’s, which witnessed a scarcity of money.
2. Production Stage:
Production oriented marketing dominated at the beginning of capitalism to the mid 1950’s.
At that time business enterprises were highly concerned with production issues. The salient
features of production stage are limited lines of products, pricing on the basis of costs of
production and distribution, limited research and low promotion and advertisement
strategies.

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3. Sales Stage:
The sales orientation stage of marketing was estimated from the mid 1950’s to the beginning
of 1970’s. This stage started after the completion of the production orientation. After the
Second World War, the accelerated demand for consumer products led to the development of
this stage. Advertisements and other sales promotion techniques were widely followed during
this period. Packaging and labeling were used for promotional purposes more than product
protection purposes. Pricing was based on comparisons with the price of the competitors.

4. Marketing Stage:
Marketing orientation replaced the previous sales orientation and production orientation of
marketing. It is considered as the modern stage or orientation of marketing. This orientation
of marketing was developed in 1970’s. The needs and wants of consumers govern the
business decisions of a marketing oriented firm. The salient features marketing orientation
are as follows;
 Identification of the needs and wants of consumers.
 Extensive market research.
 Broad product lines.
 Evaluation of the benefits of the products to the consumers.
 After sales services.
 Modification and innovation of products.
 Continuous improvement in the quality of the products.
 Strategies for improving customer satisfaction and customer relations.

IMPORTANCE/BENEFITS OF MARKETING

1. Benefits to the Society:

According to Philip Kotler marketing is a societal process by which individuals and groups
obtain what they need and want through creating and exchanging products and value with
others. The definition clearly explains the significant role played by marketing in the society.

 Developing goods and services to meet the needs of the society and thereby improves
its quality of life.
 Act as a connecting link between the producers of goods and services and consumers.
 Help people to obtain products at stable and fair prices by creating a competitive
market environment.
 Increased marketing activities generate more employment opportunities for the people.
 The distribution function of marketing makes the products available in different
geographic regions. People can buy products from all over the world.
 The promotion function of marketing educates people about different products and
services available in the market.
 Marketing offers a wide range of products and services to people and thereby helps
them to choose on the basis of their tastes and preferences.

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2. Benefits to the Firms:

1) Helps to identify the target market (right customers).

2) Develops suitable (right) products and services.
3) Determines the demand for products.
4) Gives adequate information to the customers about the products.
5) Delivers the products to the customers by establishing suitable distribution channels.
6) Identifies competitors and analyzes the competitive advantage of the firm’s products in the
market.
7) Identifies new product areas.
8) Identifies new target market or potential customers.

ROLE OF MARKETING IN ECONOMIC DEVELOPMENT

1. Marketing increases the entrepreneurial activities in a nation which result in the

productive utilisation of natural resources such as land, labour, capital and organisation.
An effective utilisation of these economic resources increases the national income of the
country.

2. Marketing promotes the development of basic industries of a country such as agriculture,

mining and plantation by distributing their outputs to the customers. These industries are
considered as the back bone of economic development of a nation.
3.Marketing increases the foreign exchange earnings of the nation through exporting products
and services in which it enjoys competitive advantage over other nations.
4. Marketing helps in the growth of industrial sector of an economy by distributing industrial
raw materials, machines, equipments and tools.

5.Marketing earns capital for business projects through creation of demand and increased
consumption. Increase in business activities increases the pace of economic development of
a nation.
6. Increased marketing activities generate more employment opportunities for the people
which increase their purchasing power leading to the economic development of the country.

MARKETING UTILITIES

1. Form Utility:
utility Offers products to the customers in a usable form. This utility covers the physical
characteristics and shape of a product. For example, toilet soap in bar form or liquid form is
most convenient for the users.
2. Place Utility:
It offers products at the place of customers so as to ensure the easy availability.
3. Time Utility:
Time utility ensures the availability of the products and services and when, required by the
customers. For example, ATM services open for 24 hours.

4. Possession Utility:
It is the utility which gives the buyer the right to own and use a or service at his own will. As
a result of marketing, the ownership and possession of a commodity is transferred from the
seller to the buyer.
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 SCOPE OF MARKETING

1. Identify and Select the Target Market:

This involves locating and selecting the most favourable customer group for marketing from a
large population of customers. Marketing firms may have to face many problems in
addressing the needs and wants of a large customer population. So identification of a target
market help firms to formulate and implement suitable marketing strategies for the selected
customer group.

2. Identify and Select the Customer Value:

Each market expects certain benefits in the form of services. After locating and selecting the
target market the specific needs and wants of that market are identified for the purpose of
creating, communicating and delivering products and services.
3. Creation of Value:
The major areas in this phase are product planning, designing, packaging, branding and
pricing.
4. Communicate the Value:
This involves product promotion strategies such as advertisement, personal selling, direct
marketing and other promotion methods.

5. Deliver the Value:

Establishing the channels of distribution, warehousing, Transportation and all activities
related with-the flow of point of origin to consumption are completed during this phase of
marketing.

6. Customer Relationship:
This is the most important dimension of marketing. It is nothing but maintaining long lasting
relationship with the customers by clearly identifying their expectations and giving more than
what they expect. All the efforts of marketing are waste if the firm lacks customer support. So
customer relationship is the critical element of marketing process.
7. Marketing Research:
This is a pervasive function of marketing. It is through systematic marketing research a firm
identifies the target market, needs and wants of customers, develops, communicates and
delivers products and services. The nature of market environment, competition and the
competitive advantage of a firm in a market are revealed through marketing research.

Marketing Process

Step I-Market Analysis:

A detailed analysis of the market give a clear picture of the unfulfilled customer needs and
wants to a marketing firm. In addition to needs and wants, the firm gets information related
with the market conditions, competitors, existing products, market regulations etc. through
market analysis. A proper market analysis helps a marketing firm to understand the problems
and prospects of the market.

Step II – Formulation of Marketing Strategy:

Strategy refers to a plan of action aim at achieving the desired goal. After identifying the
opportunities in the target market through market analysis, the next step is formulation of
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adequate marketing strategies to select the target market and positioning the product in the
target market.

Step III – Decision regarding the 4 P’s (Product, Price, Place and Promotion):
In this phase, the firm arrives at serious decisions regarding the type of product to be
produced/marketed, its price, distribution channels to move the product from the Place of
production to the Place of consumers and finally the Promotional measures.

Step IV - Implementation and Control:

This is the last point in the marketing in where the product has been launched. The firm is
required to closely monitor the movement of the product in the market at this stage. This is
necessary to understand the strengths and weaknesses of the marketing efforts taken by the
firm in the target market. It also helps the firm to know the deficiencies of the product, price,
and distribution network and promotion measures and take adequate steps to correct the
deficiencies

CONCEPTS/ORIENTATIONS OF MARKETING

1. Production Concept:
This concept focuses on reducing costs by way of mass production, The firm believes that by
attaining economies of scale the business can maximize profits and reduce costs.
2. Product Concept:
A firm following this concept tries to introduce the best product, based on quality and
features. It believes that customers can be better influenced by designing and marketing
excellent products. The firm utilizes its fullest energy and efforts in the continuous
improvement of the product. The concern for the improvement of the product precedes other
factors of marketing.
3. Sales Concept:
The focus of this concept is to manufacture the product, and then take maximum efforts to
sell it in the target market. The concept holds the view that sales volume cannot be increased
by introducing superior product. Aggressive sales efforts by means of effective distribution
channels and advertisements are highly essential to increase sales volume. Firms which
uphold this concept concentrate on intense sales promotion efforts.

4. Market Concept:
This concept views customer as the key element of the marketing process. Firms attempt to
know the needs and wants of the customers through market surveys and research. All
marketing activities revolve around customers and they are considered as the king of the
business.

5. Societal Concept:
The societal marketing concept holds that a firm should make good marketing decisions by
considering consumers’ wants firm’s requirements, and the society’s long-term interests. The
concept highlights social responsibility of a marketing firm. It states that a firm should
balance customer satisfaction, profits and long term welfare of the society. The concept
emphasizes that marketing activities should not harm the interests of the society.

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 APPROACHES OF MARKETING

1. Functional Approach
2. Institutional Approach
3. Commodity Approach
4. Decision Making Approach
5. Legal Approach
6. Systems Approach
7. Economic Approach
8. Management Approach

1. Functional Approach:
The functional approach was a leading approach to the study of marketing from the beginning
of 1920’s -1960. This approach studied marketing on the basis of the large number of
functions/activities performed by marketing. The concept focuses on the functions performed
by the middlemen or participants in the marketing process. Functions of marketing are
financing, sharing of risks, assembling, assorting, transporting and selling. A major drawback
of this approach is that it gives great importance to the functions of marketing without giving
much importance to their applications in different marketing situations.

2. Institutional Approach:
This approach focuses on the specific marketing agencies, institutions and middlemen who
are engaged in the marketing process. Wholesalers and retailers in the marketing process,
departmental stores, chain stores, supermarkets, warehousing agencies, financial institutions
which funds marketing activities and all other agencies and institutions which take part in
the movement of goods from manufacturers to consumers are covered under this approach.

3. Commodity Approach:
This approach studies the demand and supply of different commodities in marketing-The
subject matter of the study is products and services exchanged during the course of
marketing. The commodity approach studies marketing by investigating the different products
the market It is defined as an approach to marketing phenomena where a product or class of
products is a major focus of the study.

4. Decision Making Approach:

This approach views marketing as a process of decision making. It studies marketing on the
basis of decisions in connection with product, price, place and promotion. As per this
approach, the success of marketing depends on the quality of decisions arrived at various
stages of marketing.

5. Legal Approach:
This approach studies marketing on the basis of rules and regulations involved in the process
of marketing. It studies the legal issues in the designing of products, production, pricing,
transfer of ownership and possession of goods, advertisements rights of customers etc. The
approach studies the various laws and regulations governing the field of marketing.
6. Systems Approach:
Marketing is studied as a system comprising of several sub systems. According to William J.
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Stanton, marketing is a total system of interrelated organized activities designed to plan,
develop, promote and distribute want satisfying products, services and ideas. Systems
approach considers marketing as the main system and the different elements of marketing
like product, price, place and promotion are considered as the sub systems of marketing.

7. Economic Approach:
This approach views marketing as an economic process. It studies the play of demand, supply
and price factors in Marketing. The cost, price, demand and supply are the major areas of
study in economic approach of marketing.

8. Management Approach:
This approach studies marketing in a management perspective. It is considered as the
modern approach in the study of marketing. It is of the view that a marketing firm has to
perform the management functions of planning, organising, directing, staffing and controlling.
So management approach studies marketing by studying the management functions
performed in connection with the Marketing of goods and services.

MARKETING ENVIRONMENT

The marketing environment is a group of factors comprised of both controllable and

uncontrollable forces that affect the ability of a firm generate value and attract and serve
consumers. Certain factors in the marketing environment are internal and specific to the firm
whereas certain factors are outside the marketing enterprise. The internal and organisation
specific factors affecting the marketing activities are collectively known as micro factors. The
societal forces that affect the micro environment are commonly referred to as macro factors.

MARKETING ENVIRONMENT

Micro Environment Macro Environment

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Micro Environment includes:

1. The Company:
The type of organisation, its objectives, structure, management, vision and mission are
important factors influencing the marketing policies and programmes. The marketing
department of an organisation is not independent. It has to work in co-operation with
the top management and other departments of the organisation. Therefore the entire
organisation influences the marketing activities.
2. Suppliers:
Suppliers are parties who deliver the raw materials for the production of goods or
services. The quality, quantity, cost and availability of the raw materials depend on the
type of suppliers. Therefore suppliers critically influence the marketing activities of an
organisation.

3. Marketing Intermediaries:
Marketing intermediaries are parties assisting in the and distribution of goods and
services of an organisation to wholesalers, retailers and physical distribution firms are
some of Marketing intermediaries.

4. Competitors:
The competitors are rival firms marketing products and services similar to that of a
firm. In a market situation all firms have to set their marketing strategies in
accordance with the nature and degree of competition they face, Competitor analysis
and monitoring is crucial for an organisation to maintain or improve its position
within the market. So competition is an important factor influencing the marketing
activities of a firm.
5. Publics:
Public in the micro environment of marketing means any party who maintains an
interest in the marketing activities of a firm. Publics can help, or hinder the ability of a
firm to market its products or services. The major types of publics are;
1) Financial Publics:
Individuals or institutions who grant financial assistance to an organisation for its
marketing activities. For example, banks and other financial institutions.
2) Government Publics:
Central and state governments introduce and implement and legislations which
monitor, regulate and control the marketing activities.
3) Media Publics:

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Agencies that publish information, features and news about the products and services
of a firm. Media includes newspapers, paper and online magazines, blogs, social
media, radio and television.

4) Citizen Publics:
The marketing activities of organisations are influenced by the needs and interests of
the different citizen groups such as the consumer organisations and environment
associations. The citizen publics usually raise the various concerns of the consumers,
environment and society at large.

5) Local Publics:
People and households in the proximity and vicinity of a marketing firm who are
directly or indirectly exposed to the benefits and shortcomings of the marketing
activities of a firm are referred to as local publics. Firms usually appoint community
relations officer to address and resolve the problems of the local publics.
6) General Publics:
Public at large or the mass population comes under the purview of general publics. A
firm has to understand the attitude and perception of the general publics towards its
products and services. The perception and attitude of the public directly influence the
consumers buying habits.
7) Internal Publics:
People inside the organisation come under internal publics. Internal publics include
employees, managers board of directors. The attitude and behaviour of internal
publics influence the marketing activities of an organisation. Use newsletters, memos,
company meetings, intranets and other means to motivate and educate the internal
publics.

6. Customers:
Firms have to examine the needs and interests of their target market. If the products
and services fail to address the needs of the customers in the target market, firms
cannot survive in the market. The characteristics of customers exercise considerable
influence over the marketing strategies of a firm.

Macro Environment includes:

The macro environment consists of a large number of unpredictable and

uncontrollable external factors that affect the environment as a whole. These outside
forces greatly influence the marketing decisions of an organisation. The following are
some of the important macro environment factors of marketing.

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1. Demographic Factors:
Demography refers to the characteristics of the population chosen for marketing. It
includes the size, location, age, gender, race, and occupation of the population. These
characteristics of a population critically influence the buying habits of people. So a
marketing firm has to study in detail the demographic variables of the population.

2. Economic Factors:
The economic environment consists of factors that influence the purchasing power of
consumers in the market. Income, savings, expenditure and consumption pattern are
some of the important elements that influence the buying decisions of people.

3. Cultural Factors:
Cultural factors include values, norms and traditions of the society. The marketing
decisions of firms are greatly influenced by these factors in the cultural environment.
4. Natural Factors:
Natural factors include the utilisation of natural resources for the manufacturing of
products. Wastages of raw materials and finished goods can cause harm to the
environment. Surplus production and environment pollution due to production and
marketing activities are some of the other issues affecting the nature. Natural
environment is a decisive factor of the marketing operations.

5. Technological Factors:
Innovations and modifications in production and marketing are the outcomes of
advancements in technology. Marketing activities are subject to changes in
technology.
6. Political Factors:
Political factors include government policies and various rules and legislations
affecting the marketing operations. Companies have to frame their marketing activities
in accordance with the laws of the country.

FUNCTIONS OF MARKETING

1. Functions of Exchange
2. Functions of Physical Supply
3. Facilitating Functions.

1. Functions of Exchange:
This category of functions covers buying and assembling and functions during the
course of marketing goods and services. Short review of these functions is as follows;
a) Buying and Assembling:
guying is the first stage in the process of marketing. A manufacturer has to purchase raw
materials for producing goods. Similarly a wholesaler is required to buy goods from the
manufacturer to sell them to the retailer. A retailer has to buy goods from the wholesaler to
sell it to the consumers. Assembling is the process of bringing together similar goods
purchased from different sources for the purpose of selling. Assembling starts after the buying
of goods.

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b) Selling:
It is the stage where ownership and possession of the goods and services are transferred from
the seller to the buyer. It is the act of offering products and services to the buyer in return for
money.

2. Functions of Physical Supply:

Physical supply function of marketing aims at ensuring that goods and services are offered at
the right place at the right time. The two important methods adopted in the physical supply
are;
a) Transportation:
In marketing, transportation means the movement of goods from the place of origin to the
place of customers. Place and time utilities are not possible in the absence of adequate
transportation facilities. Road, water and air are the important modes of transportation used
for transporting goods from one place to another.
b) Storage and Warehousing:
Storage and warehousing facilities are used by the manufacturers, wholesalers and retailers
for preserving the materials and finished products to ensure an uninterrupted and smooth
supply of goods to consumers. Sufficient storage and warehousing facilities are necessary to
meet the seasonal changes in the demand of products. More volume of commodities should be
stored for marketing during the periods of high demand.
3. Facilitating Functions:
Facilitating functions are subsidiary functions which are considered as the supporting
functions of marketing. These functions are highly essential for conducting the whole process
of marketing. The major facilitating functions are;
a) Financing:
Marketing is an economic process which requires money to perform all its functions. The
effectiveness of marketing functions depends on the availability of funds. So procurement of
money for financing different activities is a major function of marketing.
b) Risk Bearing:
Risk is inherent in every business. It is not avoidable in marketing also. Risk starts from the
first stage of a marketing process. An efficient marketer can adopt certain measures to reduce
or minimize the risk factors but it is not possible to keep away from risk elements completely.
There are risks like loss of goods in transit, theft, natural calamities like fire, flood etc. in
marketing. So a marketer has to be always prepared to face all the risks inherent in the
marketing process and risk taking is considered as an important function of marketing.

c) Standardisation and Grading:

Standardisation refers to fixing and maintaining the standards for quality, quantity, size and
other features of the product, Standard is a description of a product by authority. It is
declaration by the acceptable level of quality, features, size and shape of the product.
Standardisation involves two phase;
a) Fixing the standards and
b) Manufacturing the products as per the standards fixed. Standardisation an important
marketing function which makes the buying and selling easy.

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 Grading is a part of standardistion. It is a process of classifying the products on the basis of
quality, size, shape, colour, weight etc. Grading helps to determine the value of the product as
the best grade commands the highest price.

4) Market Information:
Collection of relevant market information is an important functions of marketing. A marketer
requires information regarding the needs wants of the customers, market condition,
competitors’ products etc. to formulate adequate marketing strategies for his products, etc. to
formulate adequate marketing strategies for his products.

MARKET AND MARKETING

MARKET MARKETING
It is the total demand of a product or service. It is an organisational function aims at effectively
meeting the needs and wants of the customers.
In market, exchange of goods and services takes It performs all functions related with the physical
place. movement of goods from the manufacturer to the
consumer. The functions include functions of
exchange physical supply and facilitating functions.

The ultimate objective of market is the The ultimate objective of marketing is customer
physical flow of goods from the buyer to the seller. satisfaction.

Price, demand, supply and purchasing power are Planning, designing, pricing, advertising, storing and
the major forces of market. distribution are the important elements of
marketing.
It is a system of existing and potential buyers of a It is a process of making the market
product service.

MARKET SEGMENTATION

The objective of marketing is satisfaction of customer needs. Buyers in a market differ in their
tastes. A firm cannot address the needs of a market with a particular marketing mix. The
need for market segmentation arises in this situation.
Market segmentation is a process of identifying the areas of dividing the market on the basis
of different needs and characteristics. A market can be segmented or divided on the basis of
age, sex, income, education, occupation etc. There are different ways of market segmentation
adopted by the firms. Market segmentation is highly essential to attain success in the
marketing efforts.

Features

1. It is a process of dividing a market into different sections or groups on the basis of

consumer needs and behaviours.
2. The aim of market segmentation is to identify and select the suitable target market for the
firm.
3. It is a process which narrows down a large market into small accessible segments.
4. It is a process of dividing a heterogeneous (diverse) market into different homogeneous
(uniform) segments. There are differences between different market segments but there is
uniformity in the behavioural pattern of consumers in a particular segment.
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5. It leads to market targeting and product positioning. It is popularly known as STP
(Segmenting, Targeting and Positioning) process.
6. Segmentation is usually adopted by the firms when it is difficult to carry out mass
marketing which addresses the needs of the whole market with the same marketing mix.

NEED AND IMPORTANCE

1. It is essential to learn and understand the behavioural pattern of different consumers in

a market.
2. It identifies a market/consumer segment which a firm can effectively manage.
3. It gives information inputs to marketing mix decisions (product, price, place and
promotion).
4. It helps to study the nature and degree of competition prevailed in a particular market.
5. It helps to identify and concentrate on the special needs of a particular segment of the
market.

ADVANTAGES/BENEFITS

1. It helps in better understanding of the customers’ needs and wants.

2. It helps firms to differentiate their products and services to address the customer needs
and desires.
3. Firms can design or redesign products and services to meet the market needs.
4. It may give firms excellent new market opportunities by identifying unexplored segments of
a market.
5. Helps firms to select and focus on the most approachable market segments and to avoid
the tough market segments. Finding, understanding and focusing on the needs of the best
suited market segment help a firm to become a market leader.
6. Helps firms to study the behaviors and buying motives of the consumers in a market.
7. Helps firms to classify the most profitable and least profitable market segments.
8. Helps firms to avoid unprofitable markets.

DISADVANTAGES/LIMITATIONS

I. Increase in marketing expenses – large amount of money is required to conduct systematic

market segmentation.
2. It is difficult to carry out segmentation when there are great differences in the consumer
behavior and buying practices in a market.
3. A firm has to bear additional costs and expenses to formulate different marketing mixes for
different market segments.
4. Segmentation is not beneficial or practical in the case of a market where the buyers are
small in number.
5. Products get a limited coverage if it is marketed only in a particular segment of a large
market.

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 MARKET SEGMENTATION PROCESS/STEPS IN MARKET SEGMENTATION

1- Identification of a Market (Defining the Market):

The first step in segmentation is to identify a market so as to select the most appropriate
target markets and develop a marketing accordingly. A market comprises of large volume of
consumers, consumer preferences and interests which offers numerous market opportunities
for a firm. The heterogeneities (differences) in a market enable a firm to divide it into small
homogeneous market segments. For example, a firm has identified and selected travel service
market for its marketing efforts.

2. Identification of the Market Needs:

In this stage, the needs of the potential customers on a given product in the identified market
are closely examined. A firm is required to interact with the potential customers to know more
about their interests and demands. The example given above, a firm has selected travel
service as its market. After selecting this market, the firm is required to conduct a detailed
study of the needs and wants of the consumers of this market.
3. Division/ Segmentation 01 tie Market (Segmenting Stage):
On the basis of the identified needs of the market, the firm has to divide the selected market
into different sub markets or segments. The travel service market can be divided into different
sub markets such as Air, Bus, Taxi, Train and Ship services. A division of the selected market
or consumers can be made on the basis of these four modes of travel.
4. Study of the different Market Segments (Segmenting Stage) :
It is essential for the marketer to closely examine and study the needs, preferences, buying
behaviour and size of the identified segments. A detailed study of the needs, behaviour and
size of the segments enables firms to make a further break down of the segments into
different homogeneous sub segments. For example consumers prefer different classes of travel
in a mode of transport. In Airlines it can be First class, Business class and Economy class.

5. Selection of a particular Market Segment (Targeting Time) :

After studying the needs of the different market segments, the firm has to select an
appropriate market segment. Selection of a particular market segment depends on the
marketing resources possessed by the firm and its ability to address the needs of that
segment. This is the targeting phase of segmentation. A firm identifies its target market
during this phase. For example, a firm has selected Economy class air travel service as its
market segment/target market.

6. Formulation and Implementation of Marketing :

This stage of segmentation is known as the “positioning During this stage a firm formulates
and implements adequate strategies to market its products in the selected market segment. Is
necessary to create an identity or image of the product in the of the consumers. In the case ot
multiple target markets different strategies are required in different market segments.
Positioning stage is usually followed by an Evaluation (Monitoring) and Correction phase
which helps firms to find out the deficiencies of the marketing strategies implemented and
make suitable corrections and modifications.

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 BUYING MOTIVES

Consumers purchase goods and services due to certain motives. The term motive means an
emotion, desire, physiological need, or that acts as a stimulus for an action. Motive is inner
urge that prompts a person to perform some action. A buying motive is the why the customer
purchases the goods. A consumer have different motives for buying a product. The buying
motive consumer is entirely different from another.

TYPES OF BUYING MOTIVES

1. Primary Buying Motives and

2. Secondary Buying Motives.

1. Primary Buying Motives:

buying motives are the basic needs of human beings such as hunger, thirst, sleep etc. As a
result of these needs people get motivated to buy goods.
2. Secondary Buying Motives:
Secondary buying motives are those, which are influenced by the society where a person is
born and lives. It is created after fulfilling basic needs. These motives are curiosity, comfort,
security, love affection.

(1) Emotional Buying Motives:

Buying motives based on feelings or passions are known as emotional buying motives. These
motives cover the feelings of the consumers associated with the use of a product. Some of the
important elements of emotional buying motives are as follows;

a) Fashion:
It is an important motive that can change the mind of the generally, customers try to imitate
film stars, sportsmen athletes. So, all the producers advertise their products with the of these
popular personalities.

b) Curiosity
Curiosity is the desire for new experience which motivates the people to buy the specific
goods. For example, people usually buy products which are newly introduced in the market as
a result of Thus, to get the new experience, customers purchase the goods.
c) Fear:
People are always concerned about their health, wealth and life. These feelings motivate them
to purchase products such as insurance policy, safe lockers, membership of health club etc.
These goods and services help them to reduce fear.

d) Love and Affection:

It is an important buying motive which prompts the buyers to purchase the goods. Due to love
and affection to the children, people toys,-dress biscuits etc. A husband may buy saris and
cosmetics his wife due to the love and affection.
e) Pride and prestige:
Pride and prestige persuade customers to purchase expensive luxuries goods. They feel that
luxury goods will help to maintain status in the society. People usually purchase Benz cars,
LCD television, Air conditioners etc. to get a high position in the society.

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f) Sex and Romance:
Sex and romance is another important emotional buying motive that stimulates the
customers to purchase goods. Purchase of trendy wears, cosmetic items, perfumes, shaving
lotions etc. are usually purchased as a result of sex and romance motives.

(2) Rational Buying Motives:

Rational buying motives are based on sound judgment. In this case, consumers purchase the
goods through proper testing, comparing and observing the goods on the basis of price,
quality, after sales services etc. This motive is helps them to save unnecessary cost. The
following are some of the important motives rational buying motive.

a) Economy
In this motive, customers prefer products which are inexpensive. Get more profit and
discount, customers purchase goods which are cheap in price. Reasonable price attracts and
encourages the customers to buy goods in large quantities.
b) Utility
People purchase those goods which are highly useful and give more utilities. Utility is the
want satisfying capacity of a product.
c) Durability
Durability is the ability to exist for a long time. This motive requires customers to purchase
those goods which have long usable life.
d) Comfort and Convenience
is the desire of all human beings to live in a comfort and convenient way. As a result they get
motivated to purchase such goods which provide more comfort and convenience. Customers
purchase T.V., DVD, Air conditioner, washing machines, etc. for their pleasure comfort.
e) Security:
It is the degree of protection against danger, damage and loss. This motive induces people to
examine the amount of security offered by the products at the time of purchase. On the basis
of this motive people purchase safe and secure products.

(3) Patronage Buying Motives:

buying motive drives a person towards selection of a particular shop or supplier of goods and
services. The choice of a particular shop depends on the factors such as quality of goods
offered, location, fair attitude of the sales personnel, special discounts offered reputation etc.
Following are the major motives under patronage buying motive;
a) Service Motive
Service is an important motive which encourages the consumers to purchase the goods.
People purchase goods to get services, such as credit facility, home delivery facility, free
installation, free repair and maintenance services.
b) Quality
Quality motivates customers to purchase certain goods or services. If the products are of
good quality, customers are ready to give higher price for such goods.
c) Location
Location is an important motive to purchase goods. People prefer to buy those goods which
are easily available near their place of residence.

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d) Store loyalty
Store loyalty is a major element of buying motive. People purchase goods due to their loyalty
towards certain shops. Loyalty develops as a result of the trustworthiness and fair dealings of
the shop. A trustworthy store offer best quality goods at fair prices without any irregularities
in weight and quantity.
e) Friendliness Behaviour
Friendly behaviour of sales personnel inspires customers to purchase goods from a particular
supplier or store.

CONSUMER BUYING PROCESS/STAGES IN A BUYING PROCESS

1. Recognition of a Need:
Recognition of a need occurs when a consumer understands the difference between a desired
situation and actual situation. For example, a bank employee owns a bike and learns that he
needs a car to travel along with his family. Here, he realizes that a difference exists between
the desired state (having a car) and the actual situation. The speed of the need recognition
may be rapid or slow. In certain cases, the consumer may not be aware of his need. But the
promotional measures (advertisements etc. of the marketing firms arouses his need.

2. Information Search:
After recognizing the need, a consumer searches for product related information. For example,
after recognizing the need for a car, the above mentioned bank employee may search for
different models )of cars. The search for product information occurs in two ways; one is
internal search and the other is external search. In the case of internal search a person
gathers information from his existing knowledge about product that might satisfy his need.
External search refers to acquiring information related with the product from outside sources
such as friends, family members, product dealers, advertisements, company websites and
various other external links.

3. Evaluation of Alternatives:
After searching and obtaining adequate information related with the product, a potential
buyer identifies the available product choices or alternatives so as to select the best product
to satisfy his need. The specialized features each brand. The features of different brand
specialized features each brand. The features of different brands compared with the desired
features to select a brand which perfectly matches with the desired product features.
4. Purchase Decision:
brand to be bought. Selection depends on the outcome of the brand to be bought. Selection
depends on the outcome of the phase. Where to buy (selection of the seller) and when to (time
of purchase) are the two major issues of the purchase decision stage. A seller who gives the
best services and discounts influences a buyer.
5. Post-purchase Evaluation:
After making a purchase, a consumer starts evaluating the product to know whether its
actual performance meets the expected levels. He mentally ranks the benefits of his purchase.
The outcome of this stage is either satisfaction or dissatisfaction which greatly influences his
repurchase (next time purchase) behaviour. Evaluation determines whether the customer will
purchase the product or brand again and whether it would be from the same dealer.

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 FACTORS AFFECTING CONSUMER BEHAVIOR

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

1. Personal Factors

Personal factors include the unique personal characteristics of consumers which determine
their behaviour in a market. The following some of the major personal/individual
determinants of consumer behaviour.

a) Age
Age has considerable influence over the consumer buying It is an established fact that the
tastes, preferences, and of people change with the passage of time.

b) Sex
are certain physiological differences between men and women which result in their having
different consumption needs. Women need cloths and cosmetics which is different from that
of men. Each sex thus has its own need for specific products and services.

c) Education
The level of education of consumers is a major factor influencing buying behaviour. Many
studies on consumer behaviour have those higher levels of education lead to increased search
and election activities. The level of education is associated with the ability a consumer to
identify, locate and understand relevant information regarding a product or service.

d) Occupation
The occupation of a person has significant impact on his buying behavior. The designation
and status of the occupation determine the purchasing behaviour of a person.

e) Income
The financial background of the consumer is a major factor which affects his buying
behaviour. If the income and savings of a buyer is then he will purchase costly/luxury
products, whereas low income consumers will purchase low-cost products.

f) Lifestyle
Lifestyle refers to the way of living of a person in a society. Every person has his own lifestyle.
A person may be rich; still he may prefer to lead a simple and inexpensive life. So his lifestyle
does not permit to purchase luxury products and services. A person’s life style is reflected in
his buying behaviour.

2. Psychological Factors

Every person has distinguishing psychological characteristics which influence his buying
behaviour. The important psychological affecting the consumer behaviour are as follows;

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a) Personality
It refers to a combination of emotional, attitudinal, and behavioral response patterns of a
person. Personality is made up of the characteristic patterns of thoughts, feelings and
behaviors that make person unique. It covers number of characteristics which arise from an
individual. Personality differs from person to person. There different types of personalities on
the basis of the unique personal characteristics of an individual. The behavioural pattern of a
consumer depends on the nature of his personality.

b) Motivation
It refers to the driving force behind a particular behaviour of an individual. The term is used
to describe the cause of a particular human behaviour. It is defined as the process that
initiates, guides and maintains goal-oriented behaviours of individuals. In a consumer
behaviour context, it is the drive to satisfy needs and wants, both physiological and
psychological, through the purchase and use of products and services.

c) Perception (Awareness)
It is a process by which an individual attains awareness or understanding of his environment
through his senses (vision, hearing, smell, taste, and touch) or his mind. People observe the
world around them through a process of perception. Through perception, people gain
information about properties and elements of their environment. Perception differs from
person to person. In the context of consumer behaviour, different consumers have different
perception regarding a Particular product.

d) Learning
It is an ongoing process of transforming information and experience into knowledge, skills,
behaviours and attitudes. Learning acquiring information leading to a quantitative increase in
knowledge. The important aspect of learning is that it leads to changes the behaviour of a
person (increase in knowledge results in behavioural changes). Thus learning process is a
major determinant of the consumer behaviour.

3. Social factors
Social factors have considerable influence over the buying behaviour of consumers. Social
factors include consumers’ reference family and their roles and status in the society.
a) Reference Groups
A Person’s reference groups are those groups that have a direct or indirect influence on the
person’s attitudes or behavior. For example, a student purchases a shirt on the taste and
preferences of his friends his peer group. So the role of the reference group is a significant
affecting the buying behaviour of consumers.
b) Family
Family has significant influence over the consumer behaviour. Family size and family
structure are the two important elements that determine the behaviour of consumers. If the
size of the family is large, then the purchase requirements will be high. Family structure
refers to the constitution of the family. It means the different categories of members in the
family such as elders, children, youth, male, female etc. Each category of members has its
own purchase requirements which are totally different from other categories.

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c) Roles and Status
A person in a society is associated with different groups such as family, workplace, clubs and
other social and political groups. Position and role played by a person in the society and his
group greatly influences his buying behaviour.
4. Cultural Factors
Cultural factors exert significant influence over the purchasing decisions and buying
behaviour of consumers. The major cultural determinants of consumer behaviour are as
follows;
a) Culture
It means a set of shared values, goals, customs, habits, attitudes and beliefs of a community
and transmitted from generation to generation within that community. The purchase decision
of a consumer is greatly influenced by the culture uphold by him and his society.
b) Religion
Religions put forward certain value systems and principles for believers. These principles and
values influence the purchase decisions of consumers. People belonging to different religions
have different likings, dressing styles and food, habits.

MARKETING PLAN

Marketing planning guides an organisation for selecting a target market and choosing
and implementing suitable marketing activities marketing objectives of an enterprise
are decided and marketing objectives of an enterprise are decided and marketing
programmes, policies and procedures are determined for the of different marketing
activities such as marketing research, sales forecasting, product planning and
development, pricing, advertisement and sales promotion, physical distribution and
sale services.

A marketing plan is a blueprint of marketing activities of an organisation. It gives a

sketch of the proposed marketing activities within a time period for achieving the
specified marketing objectives. A marketing plan is a business document which
specifies the marketing programmes and strategies over a period of time.

OBJECTIVES OF MARKETING PLAN

1. To effectively accomplish the marketing objectives of the organisation.

2. To give guidelines and directions for the marketing activities of an organisation.
3. To effectively communicate the marketing personnel about the marketing activities
to be performed over a period of time.

4.To facilitate proper control over marketing activities. Unnecessary marketing

activities can be avoided through a systematic marketing plan.
5. To estimate the costs of marketing activities.
6. To prepare and equip the marketing staff in accordance with planned marketing
activities.
7. To make people accountable. Marketing plan formulates the future course of
actions and allots work to marketing staff accordingly.

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 IMPORTANCE/BENEFITS OF MARKETING PLAN

1. It reduces the chances of failures of the marketing activities of an organisation.

2. It brings clarity in the marketing activities. The marketing personnel get a clear idea
about the actions to be performed in a marketing segment.
3. It avoids wrong and unnecessary activities during the course of marketing.
4. It helps to mobilize the resources for marketing activities.
5. It gives valuable inputs for the preparation of a proper budget for the marketing
activities.

CUSTOMER vs. CONSUMER

Basis of Difference Customer Consumer

Meaning The person or oganisation that The person who ultimately uses
purchases a product or service. or consumes a product or service
Purpose The goal of a customer may be The goal of the consumer is
consumption or resale consumption.
Payment of Price The price of the product or May or may not
the consumer.
service is paid by the customer.Far paid by the consumer. For
example, parents pay the college
fees of their children.
Party A customer may be an A consumer may be an
individual or an organisation individual or group of
individuals.
Other Terms | Client, buyer and purchaser are A consumer is also referred to
some terms used in the place of as the end user or simply as the
Customer. user of a product or service

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