Chapter Questions

Why is marketing important? What is the scope of marketing? What are some fundamental marketing concepts? How has marketing management changed? What are the tasks necessary for successful marketing management?
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What is Marketing?
In simple terms it is indentifying and meeting human and social needs. Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.

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What is Marketing Management?

Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others.

Marketing management is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value.

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Exchange and Transaction

1. 2. 3. 4.

Exchange is the essence of marketing. It can be b/w organisations and or individuals; Marketers and markets. Exchange ,which is the core concept of marketing, is the process of obtaining a desired product form someone by offering something in return Conditions Two or more parties. Voluntary Participation. Each has something of value for the other party. Parties must communicate. When an agreement is reached , we say that a transaction takes place. A gives X to B and receives Y in return. It differs from Transfer, In transfer , A gives X to B but does not receive any thing tangible in return . Gifts, subsidies ,and charitable contributions are all transfers.

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What is marketed? People market ten types of entities Goods: any physical good ; cars, machines Services: airlines, hotels, barbers Events : world cup, Olympics Experiences: amusement parks. Persons: celebrities Places : cities, states ,regions Properties: real property and financial property(stocks & Bonds) Organizations: universities, museums, nonprofit organisations. Information : books Ideas: awareness about AIDS, discouraging smoking.

Who Markets?
Marketers & Prospects A marketer is someone who seeks response ,attention, a purchase, a vote , a donation- from another party called the prospect. If both parties seek to sell something to each other , both are called marketers. What does a marketer do?
Why the product?- Analyze the need Product type?- product plan Which people?- segment What quantity?- demand forecasting Where to sell?- Distribution What to charge?- Price What and how to inform?- Promotion Who will compete?- Analyze competitors What if a problem?- Warranty.

Demand States
Negative : consumers dislike the product and may even pay a price to avoid it. Nonexistent: consumers may be unaware of or uninterested in the product. Latent: consumers may share a strong need that cannot be satisfied by an existent product. Declining: consumers begin to buy the product less frequently, or not at all. Irregular : consumer purchases vary on seasonal, monthly, weekly, daily, or even on hourly basis. Unwholesome: consumers may be attracted to products that have undesirable social consequences. Full: consumers are adequately buying all products put into the market place. Overfull: more consumers would like to buy the product than can be satisfied.

Key customer Markets: Consumer markets: companies selling mass consumer goods &
services. Much of the brand strength depends on developing superior product & packing and ensuring its availability .Ex soft drinks, cosmetics.

Business markets: companies selling business goods and services .

Here the marketer must demonstrate how their product will help the buyer achieve higher profits with lower costs. Business buyers buy the product to either to make or resell a product.

Global markets: companies selling goods and services at global

marketplace, have to decide on which country to enter , how to enter ,how to adapt their product and service feature etc.

Nonprofit/Government markets: companies selling their goods to

nonprofit organisations , which have less purchasing power. Churches, charitable organisations. Lower selling prices may affect the features and quality of the product.
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Core marketing concepts:

Needs, wants, and demand :needs are the basic human requirement like food , air ,water. Needs become wants when they are directed to specific objects that may satisfy the need .Demands are wants for specific products backed by an ability to pay. We can distinguish b/w five types of needs: o Stated needs( the customer wants an inexpensive car) o Real needs( the customer wants a car whose operating cost, not its initial price is , low) o Unstated needs( the customer expects good service from the dealer) o Delight needs(the customer would like the dealer to include an on board navigation system) o Secret need( the customer wants friends to see him as a savvy consumer) Target markets, positioning, and Segmenting: marketers start dividing the markets into segments . He then identifies the segment that present greatest opportunity- which are its target segments. For each segment marketers develop an offering which is positioned in the minds of consumers as delivering some central benefit.

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Offerings and brands: the companies address the needs by putting forth a value proposition that satisfy the consumers needs. The intangible value is made physical by an offering , which can be a combination of products ,services, experiences. A brand is an offering from a known source with a unique brand image. Value and satisfaction: the offering will be successful if it delivers value and satisfaction to target buyers. Value reflects the sum of the perceived tangible and intangible benefits the customer receives. Marketing channels: the marketers use various channels like communication channels, distribution channels, and service channels. Supply chain: the supply chain starts with bring raw materials and moves through a process of production , then the marketing channels to reaching it to customers. Through a supply chain value delivery system. Competition: include all the actual and potential rival offerings and substitutes a buyer might consider Marketing environment: consists of six components that is demographic, economic, physical , technological, political-legal , and social-cultural.

Company orientation toward market place: Production concept: one of the oldest in business, holds that consumers prefer
products that are widely available and inexpensive. In simple it assumes that goods are produced because consumers will need them in their near future. Managers of productionoriented businesses concentrate on achieving high production efficiency, low costs, and mass distribution. This orientation makes sense in developing countries, where consumers are more interested in obtaining the product than in its features. It is also used when a company wants to expand the market. This orientation makes sense in developing countries such as China. Example one Texas Instruments of USA, a firm engaged in the manufacturing of calculators gained sufficient economies of scale that them to bring down prices of their product ranges it resulted to win major share of the American Calculator market.

Product concept:

which holds that consumers favor those products that offer the most quality, performance, or innovative features. Managers in these organizations focus on making superior products and improving them over time, assuming that buyers can appraise quality and performance. A new or improved product will not necessarily be successful unless its priced, distributed, advertised and sold properly. Product-oriented companies often design their products with little or no customer input, trusting that their engineers can design exceptional products. A General Motors executive said years ago: How can the public know what kind of car they want until they see what is available? GM today asks customers what they value in a car and includes marketing people in the very beginning stages of design. Eg Colleges ,department stores, and the post office all assume that they are offering the public the right product and wonder why their sales slip. These organizations too often are looking into a mirror when they should be looking out of the window.
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 Selling concept: This concept holds, the consumers will not buy enough of the
organizations products unless it undertakes a large selling and promotional effort. The selling concept is practiced most aggressively with unsought goodsgoods that buyers normally do not think of buying, such as insurance . The selling concept is also practiced in the nonprofit area by fund-raisers, college admissions offices, and political parties. Most firms practice the selling concept when they have overcapacity. Their aim is to sell what they make rather than make what the market wants. It focuses on creating sales transactions rather than on building long-term, profitable relationships with customers. This can sometimes leads to long term impact on sales because dissatisfied customers do not buy again. Worse yet, while the average satisfied customer tells three others about good experiences, the average dissatisfied customer tells ten others about his or her bad experience.

Marketing concept: The marketing concept holds that the key to achieving organizational
goals consists of the company being more effective than its competitors in creating, delivering, and communicating customer value to its chosen target markets. Theodore Levitt of Harvard drew a perceptive contrast between the selling and marketing concepts: Selling focuses on the needs of the seller; marketing on the needs of the buyer. Selling is preoccupied with the sellers need to convert his product into cash; marketing with the idea of satisfying the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering and finally consuming it. The marketing concept rests on four pillars: target market, customer needs, integrated marketing, and profitability. The selling concept takes an inside-out perspective. It starts with the factory, focuses on existing products, and calls for heavy selling and promoting to produce profitable sales. The marketing concept takes an outside-in perspective. It starts with a well-defined market, focuses on customer needs, coordinates activities that affect customers, and produces profits by satisfying customers. Eg 3M, Motorola have made a practice of researching latent needs and developed the products.

The Holistic Marketing Concept The concept is based on development ,design and implementation of marketing programs , processes, and activities their breadth and interdependencies. Four components include: Relationship Marketing :aims of building mutually satisfying long term relationships with key parties customers, suppliers, distributors, and other marketing partners in order to earn and retain their mutually profitable business relationships. Integrated Marketing : traditional depiction of marketing activities is in terms of the marketing mix i.e.; the 4 ps product, price, place and promotion Internal Marketing: it is the task of hiring , training and motivating able employees who want to serve customers well .It makes no sense to promise excellent service before the company's staff is ready . It takes place at different levels mktg functions- sales force, avtg, custr service , pdt mgmt , mktg research and so on. Social Responsibility Marketing: concerns with ethical, environmental, legal and social context of marketing activities and programs

Marketing environment: The actors and forces outside marketing that affect marketing
managements ability to build and maintain successful relationships with target customers. Microenvironment: Includes the actors close to the company Macro environment: Involves larger societal forces

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Microenvironment

Actors 1. The company 2. Suppliers 3. Marketing intermediaries 4. Customers 5. Competitors 6. Publics The company: Marketing must consider other parts of the organization including finance, R&D, purchasing, operations and accounting. Marketing decisions must relate to broader company goals and strategies. Suppliers: Marketers must watch supply availability and pricing Effective partnership relationship management with suppliers is essential. Marketing intermediaries: Help to promote, sell and distribute goods to final buyers Include resellers, physical distribution firms, marketing services agencies and financial intermediaries Effective partner relationship management is essential
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Customers: The five types of customer markets Consumer Business Reseller Government International Competitors: Conducting competitor analysis is critical for success of the firm A marketer must monitor its competitors offerings to create strategic advantage Publics: A group that has an actual or potential interest in or impact on an organization Seven publics include: Financial Media Government Citizen-action Local General Internal

Macro environmental Forces

Demographic Economic Natural Technological Political Cultural Demographic Environment: The study of human populations in terms of size, density, location, age, gender, race, occupation and other statistics. Changing age structure of the population is the single most important demographic trend Baby boomers, Generation X, and Generation Y are the key groups Baby boomers: Born between 1946 and 1964 Represent 28% of the population; earn 50% of personal income Many mini-segments exist within the boomer group Entering peak earning years as they mature Generation X: Born between 1965 and 1976 Maintain a cautious economic outlook Respond to socially responsible companies Will be primary buyers of most goods by 2010 Generation Y: Born between 1977 and 1994 72 million strong; almost as large a group as their baby boomer parents New products, services, and media cater to GenY Challenging target for marketers

Natural Environment:
Involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities Trends Shortages of raw materials Increased pollution Increased government intervention

Technological Environment
The most dramatic force shaping our destiny. Rapidly changing force which creates many new marketing opportunities but also turns many existing products extinct.

Political Environment
Consists of laws, government agencies and pressure groups that influence or limit various organizations and individuals in a given society Legislation affecting businesses worldwide has increased Laws protect companies, consumers and the interests of society Increased emphasis on socially responsible actions

Cultural Environment
Made up of institutions and other forces that affect a societys basic values, perceptions, preferences and behaviors. Cultural Environment Includes peoples views of Themselves: Identify with brands for self- expression Others: Recent shift from me to we society Organizations: Trend of decline in trust and loyalty Society: Patriotism on the rise Nature: lifestyles of health and sustainability (LOHAS) consumer segment Universe: Includes religion and spirituality The 4-Ps have evolved into the 4-Cs Consumer wants and needs (vs. Products) You can't develop products and then try to sell them to a mass market. You have to study consumer wants and needs and then attract consumers one by one with something each one wants.

Cost to satisfy (vs. Price) You have to realize that price - what you sell the product for - is only one part of the cost to satisfy. If you sell meals, for example, you have to consider the cost of driving to your restaurant - what if you provided a delivery service? Pricing is one of the most difficult decisions to make selling at the lowest price is not always the best option. If you rely strictly on price to compete you are more vulnerable to competition.

Convenience to buy (vs. Place) You must think of convenience to buy instead of place. You have to know how each subset of the market prefers to buy - on the Internet, from a catalogue, on the phone, using credit cards, etc. Amazon Books and Dell Computers are just a few businesses who do very well over the Internet. Communication (vs. Promotion) You have to consider communication instead of promotion. Promotion is manipulative - its a statement from the seller. Communication requires a give and take between the buyer and seller - This is much more subtle. Be creative and you can make any advertising "interactive". Use phone numbers, your web site address, etc.

Marketing Management Tasks:

Developing marketing strategies Capturing marketing insights Connecting with customers Building strong brands Shaping market offerings Delivering value Communicating value Creating long-term growth

Developing Marketing Strategies and Plans

Part 1: Marketing Value and Customer Value 1) The value delivery process 2) The value chain 3) Core competencies 4) A holistic marketing orientation and customer value Part 2: Corporate and Division Strategic Planning 1) Defining the corporate mission 2) Defining the business 3) Assessing growth opportunities 4) Organization and organizational culture Marketing and Customer Value Marketing involves satisfying consumers' needs and wants. The task of any business is to deliver customer value at a profit. In a hypercompetitive economy with increasingly rational buyers faced with abundant choices, a company can win only by fine-tuning the value delivery process and choosing, providing, and communicating superior value. The traditional view of marketing is that the firm makes something and then sells it. In this view, marketing takes place in the second half of the process. The company knows what to make and the market will buy enough units to produce profits. Companies that subscribe to this view have the best chance of succeeding in economies marked by goods shortages where consumers are not fussy about quality, features, or style for example, with basic staple goods in developing markets. The traditional view of the business process, however, will not work in economies where people face abundant choices.

The smart competitor must design and deliver offerings for well-defined target markets. This belief is at the core of the new view of business processes, which places marketing at the beginning of planning.

The Japanese have further refined this view with the following concepts: Zero customer feedback time: Customer feedback should be collected continuously after purchase to learn how to improve the product and its marketing. Zero product improvement time: The company should evaluate all improvement ideas and introduce the most valued and feasible improvements as soon as possible. Zero purchasing time: The company should receive the required parts and supplies continuously through just-in-time arrangements with suppliers. By lowering its inventories, the company can reduce its costs. Zero setup time: The company should be able to manufacture any of its products as soon as they are ordered, without facing high setup time or costs. Zero defects: The products should be of high quality and free of flaws.

The Value Chain

Michael Porter of Harvard has proposed the value chain as a tool for identifying ways to create more customer value. According to this model, every firm has combination of activities performed to design, produce, market, deliver, and support its product. The value chain identifies nine strategically relevant activities that create value and cost in a specific business. These nine value-creating activities consist of five primary activities and four support activities. The primary activities cover the sequence of: 1) bringing materials into the business (inbound logistics), 2) converting them into final products (operations), 3) shipping out final products (outbound logistics), 4) marketing them (marketing and sales), and 5) servicing them (service). The support activities: 1) technology development, 2) human resource management, 3) firm infrastructureare handled in certain specialized departments, as well as elsewhere. 4) Procurement and hiring

 Core Competencies To be successful, a firm also needs to look for competitive advantages beyond its own operations, into the value chains of suppliers, distributors, and customers. Value delivery network also called A supply Chain To carry out its core business processes, a company needs resources. In the past companies controlled most of the resources Change regarding this concept is changing Many companies today have partnered with specific suppliers and distributors to create a superior value delivery network also called a supply chain. To carry out its core business processes, a company needs resourceslabor power, materials, machines, information, and energy. Traditionally, companies owned and controlled most of the resources that entered their businesses, but this situation is changing. Many companies today outsource less critical resources if they can be obtained at better quality or lower cost. Frequently, outsourced resources include cleaning services, landscaping, and auto fleet management. Kodak even turned over the management of its data processing department to IBM.

What is Holistic Marketing?

Holistic marketing sees itself as integrating the value exploration, value creation, and value delivery activities with the purpose of building long-term, mutually satisfying relationships and co prosperity among key stakeholders. The holistic marketing framework is designed to address three key management questions: 1. Value exploration - How can a company identify new value opportunities? 2. Value creation- flow can a company efficiently create more promising new value offerings? 3. Value delivery- How can a company use its capabilities and infrastructure to deliver the new value offerings more efficiently? VALUE EXPLORATION Because value flows within and across markets that are themselves dynamic and competitive, companies need a well-defined strategy for value exploration. Developing such a strategy requires an understanding of the relationships and interactions among three spaces: (1) the customer's cognitive space; (2) the company's competence space; and (3) the collaborator's resource space. The customer's cognitive space reflects existing and latent needs and includes dimensions such as the need for participation, stability, freedom, and change VALUE CREATION To exploit a value opportunity, the company needs value-creation skills. Marketers need to: 1. identify new customer benefits from the customer's view; 2. utilize core competencies from its business domain; and 3. select and manage business partners from its collaborative networks. To craft new customer benefits, marketers must understand what the customer thinks about, wants, does, and worries about. Marketers must also observe who customers admire, who they interact with, and who influences them

VALUE DELIVERY Delivering value often means substantial investment in infrastructure and capabilities. The company must become proficient at customer relationship management, internal resource management, and business partnership management. Customer relationship management fallows the company to discover who its customers are, how they behave, and what they need or want. It also enables the company to respond appropriately, coherently, and quickly to different customer opportunities

The Central Role of Strategic Planning

Companies should have the capabilities for: 1) understanding customer value, 2) creating customer value, 3) delivering customer value, 4) capturing customer value, and 5) sustaining customer value. Only a handful of companies stand out as master marketers: Procter & Gamble, Southwest Airlines, Nike, Disney, Nordstrom, Wal-Mart, McDonald's, Marriott Hotels, and several Japanese (Sony, Toyota, Canon) and European (Electrolux, Nokia, Tesco) companies These companies focus on the customer and are: 1)organized to respond effectively to changing customer needs. 2)have well-staffed marketing departments, and 3) all their other departmentsmanufacturing, finance, research and development, personnel, purchasingalso accept the concept that the customer is king.

Part 2: Corporate and Division Strategic Planning 1) Defining the corporate mission 2) Defining the business 3) Assessing growth opportunities 4) Organization and organizational culture What is Strategic Planning? It is the managerial process that helps to develop a strategic and viable fit between the firms objectives, skills, resources with the market opportunities available. It helps the firm deliver its targeted profits and growth through its businesses and products. 1. 2. 3. Strategic Planning calls for Action in three key areas? managing a company's businesses as an investment portfolio. assessing each business's strength by considering the market's growth rate and the company's position and fit in that market. establishing a strategy For each business.

To understand marketing management, we must understand strategic planning. Most large companies consist of four organizational levels:

1)
2) 3) 4)

the corporate level,

the division level, the business unit level, and the product level.

Corporate headquarters is responsible for designing a corporate strategic plan to guide the whole enterprise; it makes decisions on the amount of resources to allocate to each division, as well as on which businesses to start or eliminate. Each division establishes a plan covering the allocation of funds to each business unit within the division.

Each business unit develops a strategic plan to carry that business unit into a profitable future. Finally, each product level (product line, brand) within a business unit develops a marketing plan for achieving its objectives in its product market.

planning, implementation, and control cycle

Part 3: Business Unit Strategic Planning 1) The business Mission 2) SWOT analysis 3) Goal Formulation 4) Strategic Formulation 5) Program Formulation and Implementation 6) Feedback and Control Corporate Mission This seeks to embody the entire goals of the organization and the objective of its existence. It seeks to provide a sense of purpose, direction and opportunity Defining the Corporate Mission According to Peter Drucker, it is time to ask some fundamental questions. What is our business? Who is the customer? What is of value to the customer? What will our business be? What should our business be? Successful companies continuously raise these questions and answer them thoughtfully and thoroughly. 5 questions that the firm must ask itself What is our business? Who is our customer? What does our customer need? What will our business be? What should our business be?

Defining the corporate mission Organizations develop mission statements to share with managers, employees, and (in many cases) customers. A clear, thoughtful mission statement provides employees with a shared sense of purpose, direction, and opportunity. The statement guides geographically dispersed employees to work independently and yet collectively toward realizing the organization's goals.

Good mission Statements Mission statements are at their best when they reflect a vision, an almost "impossible dream" that provides a direction for the company for the next 10 to 20 years. focus on a limited number of goals. The statement, "We want to produce the highest-quality products, offer the most service, achieve the widest distribution, and sell at the lowest prices" claims too much. stress the company's major policies and values. define the major competitive spheres within which the company will operate
Dimensions that Define a Business Customer groups Customer needs Technology Strategic Business Units The purpose of identifying the company's strategic business units is to develop separate strategies and assign appropriate funding.

SBU has three characteristics: It is a single business or collection of related businesses that can be planned separately from the rest of the company. It has its own set of competitors. It has a manager who is responsible for strategic planning and profit performance and who controls most of the factors affecting profit. Assessing Growth Opportunities 1. planning new businesses, 2. downsizing, or 3. terminating older businesses.

Intensive growth : managements first action is to review of opportunities for improving existing businesses , for this Ansoff proposed a useful framework for detecting new intensive growth opportunities called a product market expansion grid

a. Market-penetration strategy The company first considers whether it could gain more market share with its current products in their current markets .
a. Market-development strategy the company considers whether it can find or develop new markets for its current products. b. Product-development strategy the company considers whether it can develop new products of potential interest to its current markets c. Diversification strategy the company will also review opportunities to develop new products for new markets.

1.

2. 3.

Integrative Growth : A businesss sales and profit may be increased through backward, forward , or horizontal integration within the industry. Ex A co , may form a joint venture with some co so as to market its product over the country's market. Diversification Growth Downsizing and Divesting Older Business

Business Unit Strategic Planning Strategic planning: Developing a strategic fit between organizational goals and capabilities, and changing marketing opportunities

SWOT Analysis Internal Environment Strengths Weaknesses External Environment Opportunities Threats Market Opportunity Analysis (MOA) Can the benefits involved in the opportunity be articulated convincingly to a defined target market? Can the target market be located and reached with cost-effective media and trade channels? Does the company possess or have access to the critical capabilities and resources needed to deliver the customer benefits? Can the company deliver the benefits better than any actual or potential competitors? Will the financial rate of return meet or exceed the companys required threshold for investment? Goal Formulation Once the company has performed a SWOT analysis, it can proceed to develop specific goals for the planning period. Units objectives must be hierarchical Objectives should be quantitative Goals should be realistic Objectives must be consistent

Assignment
Does marketing create or satisfy needs? Marketing has often been defined in terms of satisfying customers needs and wants . Critics, however , maintain that marketing goes beyond that and creates needs and wants that did not exist before . According to these critics , marketers encourage consumers to spend more money than they should on goods and services they really do not need. Take a position : Marketing shapes consumer needs and wants versus marketing merely reflects the needs and wants of consumers.

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consumer Behaviour The behavior that consumers display in searching for, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs. Personal Consumer: The individual who buys goods and services for his or her own use, for household use, for the use of a family member, or for a friend. Organizational Consumer: A business, government agency, or other institution (profit or nonprofit) that buys the goods, services, and/or equipment necessary for the organization to function. What influences consumer behavior? Cultural factors Social factors Personal factors What is Culture? Culture is the fundamental determinant of a persons wants and behaviors acquired through socialization processes with family and other key institutions. Subcultures: Nationalities Religions Racial groups Geographic regions
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Social Classes

Upper uppers Lower uppers Upper middles Middle class Working class Upper lowers Lower lowers
Characteristics of Social Classes
Within a class, people tend to behave alike Social class conveys perceptions of inferior or superior position Class may be indicated by a cluster of variables (occupation, income, wealth) Class designation is mobile over time
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Social Factors

1. Reference groups: consist of all groups that have direct (face-to-face) or indirect
influence on his/her attitudes or behavior. Membership groups: having direct influence on a person. a. Primary groups: family, friends, neighbors', co-workers those with whom the person interacts fairly continuously and informally. b. Secondary groups: religious , professional , and trade union groups which tend to be more formal and requires less continuous interaction. Asp rational groups: persons are influenced by the groups to which they do not belong to . Dissociative groups: are those whose values or behavior an individual rejects.

2.Family: constitute the most influential primary reference group

Family Distinctions Affecting Buying Decisions Family of Orientation: consist of parents and siblings ,from where a person acquires an orientation towards religion ,politics and a sense of personal ambition , self worth and love. Family of Procreation : namely ones spouse and children.

3. Social roles and statuses: A role consists of activities a person is expected to perform . Each role
carries a status Ex president , sales manager and so on. Personal Factors Age and life cycle Personality and Self-concept Lifestyle and Values Occupation and Economic circumstances
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Model of Consumer Behavior

Key Psychological Processes Motivation Learning Perception Memory

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Maslows Hierarchy of Needs

motive a need that is aroused to a sufficient level of intensity drive to satisfy biological or psychological needs internal or external stimuli

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Freuds Theory: Sigmund Freud assumed that the psychological forces shaping behavior are largely unconscious (i.e.)he cannot fully understand his /her motivations. When a person examines specific brands he/she will react not only to their stated capabilities but also to other, less conscious cues like shape, size , weight, brand name which trigger certain associations and emotions. A technique called laddering can be used to trace a persons motivations from the stated instrumental ones to more terminal ones. Herzbergs Theory: Frederick Herzbergs developed a two factor theory that distinguishes dissatisfies and satisfiers . The absence of dissatisfiers is not enough satisfiers must be present to motivate a purchase. The factors are called the hygiene factors Ex , a computer that does not come with a warranty would be a dissatisfier. Yet the presence of product warranty would act as a satisfier or motivator of purchase. Perception process by which people select, organise and interpret stimuli into a meaningful and coherent picture. we use our five senses people perceive things differently because of three perceptual processes

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selective exposure notice stimuli that relate to our current needs screen out some messages selective distortion interpret message to fit our mind-set and to reinforce what we already believe selective retention remember (rehearse) what supports our attitudes and beliefs

Learning changes in the behavior arising from experience . Learning theorist believe that learning is produced through the interplay of drives , stimuli , cues, responses and reinforcement Drive is a strong internal stimulus impelling action , cues are minor stimuli that determines when , where, and how a person responds . Ex suppose you buy a Nokia mobile., if your experience is rewarding , your response to mobiles and Nokia will be positively reinforced. Memory: all information and experiences individual encounter as they go through life can end up in long-term memory. Short- term memory ( STM) Long term memory (LTM)

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Memory Processes:

Encoding : refers to how and where information gets into the memory , it is characterized by the amount of processing that information receives at encoding i.e. how much a person thinks about the information. The more attention placed on the meaning of information during encoding , the stronger the resulting associations in memory will be .

Retrieval : refers to how information gets out of memory . Successful recall of the brand information by consumers does not depend only on the initial strength of that information in the memory. Three factors are particularly important first the presence of other product information in memory can produce interference which can cause the information to be either overlooked or confused . Second the time since exposure to info at encoding affects the strength of a new association the longer the time delay , the weaker the association third the information available in memory ,but not accessible without proper retrieval cues or reminders . The effectiveness of retrieval cues is one reason why marketing inside the supermarket or any retail outlet is so critical in terms of the actual product packing the use of in store mini billboards displays and so on . The information they contain and the reminders they provide of advertising or other info already conveyed outside the store will be prime determinants of consumer decision making.

Consumer Buying Process or decision making process

Post-purchase behaviour Purchase decision

Evaluation of alternatives Information search

Need recognition

Problem Recognition : The process starts when the buyer recognizes a need or a want , it may be triggered by internal or external stimuli . Marketers need to identify the circumstances that trigger a particular need by gathering info from a number of consumers . They can then develop marketing strategies that trigger consumer interest . Information search: An aroused consumer will be inclined to search for more info there are two levels of arousal Heightened attention : this level a person simply becomes more receptive to info about a product. Active info search :looking for reading material , phoning friends, going online and visiting stores to learn about the product

The info sources fall into four groups Personal: family, friends, neighbors Commercials: advertising, websites, salespeople, dealers Publics : mass media, consumer-rating organizations. Experiential: handling, examining, using the product.

Evaluation of alternatives: the consumer uses info to evaluate the alternative brands in the choice set . Evaluating purchase alternatives depend on consumers careful calculation , logical thinking and specific buying situation. Ex Cameras: picture sharpness, camera speeds, price. Hotels: location, ambiance, price. The market for a product can often be segmented according to attributes that are important to different consumer groups. Beliefs and attitudes: Evaluation often reflect beliefs and attitudes. A belief is a descriptive thought that a person holds about something, beliefs about the attributes and benefits of a product or a brand influence their buying decision . An attitude is a persons enduring favorable or unfavorable evaluation, emotional feeling and action tendencies towards some object or idea.

Expectancy-value model: The consumer arrives at attitudes towards various brands through an attribute evaluation procedure. The model of attitude formation poses that consumers e valuate products and services by combining their brand beliefs the positives and negatives according to importance.
Purchase Decisions :In evaluation stage , the consumer ranks brands and forms purchase intentions . Generally the consumers purchase decision will be to buy the most preferred brand , but two factors can come b/w purchase intention and the purchase decision.

 Stages between Evaluation of Alternatives and Purchase

Attitudes of others: If someone important to you thinks that you should buy the lowest-priced car, then the chances of your buying a more expensive car is reduced. Unexpected situational factors: the consumer may form a purchase intention based on factors such as expected income ,expected price, and expected product benefits . However unexpected events may change the purchase intention for ex a close competitor may reduce price , or a friend might report being disappointed in your preferred car . Thus , preferences and even purchase intentions do not always result in actual purchase choice. Post purchase Behavior: the marketers job does not end when the product is bought . What determines whether the buyer is satisfied or dissatisfied with a purchase lies in the relationship b/w the consumer expectation and the products perceived performance. If it exceeds the expectations the consumer in delighted. All major purchases result in cognitive dissonance , or a discomfort caused by post purchase conflict . After the purchase, consumers are satisfied with the benefits of the chosen brand are glad to avoid the drawback of other brands not bought. However every purchase involves compromise . Consumers feel uneasy about acquiring the draw backs of the chosen brand and about loosing the benefits of the brands not purchased . thus, consumers feel a least some post purchase dissonance for every purchase. The buyers decision process for new products New Product: is a good or service or an idea that is perceived by any potential customer as new . It ma have been around for a while , but our interest is in how a consumer learns about products for the first time and make decisions on whether to adopt them . Adoption process: the mental process through which an individual passes from first hearing about an innovation to final adoption.

Stages in adoption process Awareness: The consumer becomes aware of the new product, but lacks information about it Interest: consumer seeks info about the new product. Evaluation: the consumer considers whether trying the new product makes sense. Trial: the consumer tries the new product on small scale to improve his or her estimate of its value Adoption: the consumer decides to make full and regular use of the new product. Adopter categorization on the basis of relative time of adoption of innovations Innovators: are technology enthusiasts ; they are venturesome and enjoy tinkering with new products . Early adopters: are opinion leaders who carefully search for technologies that might give them a dramatic competitive advantage. Early majority: adopt the new technology when is benefits are proven and a lo of adoption has already taken place.

Late majority: are skeptical conservatives who are risk averse, technology shy, and price sensitive.
Laggards: are tradition bound and resist the innovation until they find that the status quo is no longer defensible.

Levels of consumer involvement Elaboration likelihood model: describes how consumers make evaluations in both low and high involvement circumstances . There are two means of persuasion the central route , where attitude formation or change involves much thought and is based on rational consideration of the most important product or service information. Peripheral route where attitude formation or change involves comparatively much less thought and is a consequences of the association of a brand with either positive or negative cues. Consumers follow the central route only if they possess sufficient motivation , ability and opportunity. If one of the three factors are missing consumer tend to follow the peripheral route and consider less central ,more extrinsic factors in their decisions. Low-involvement marketing strategies: many products are bought under conditions of low involvement and the absence of significant brand differences. Consider toothpaste , consumer has little involvement , consumer goes to the store and reach for the brand that is available and may reach out to the same brand frequently do to the habit and not coz of brand loyalty. Marketers first link the product to some involving issue like avoiding cavities second they link the product to some involving personal situation like adding on certain vitamins and then finally through an advertisement. Variety-seeking buying behavior: here the consumer often do a lot of brand switching ,which occurs for the sake of variety rather than dissatisfaction. The market leader and minor brands in this product category have different marketing strategies . The market leader will try to encourage habitual buying behavior by dominating the shelf space with a variety of related but different product versions .

Discussion Questions:

Marketing Information System

MIS consists of: people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers. MIS has three components: 1. internal records system, which includes information on the order-to-payment cycle and sales reporting systems; 2. marketing intelligence system, a set of procedures and sources used by managers to obtain everyday information about pertinent developments in the marketing environment. 3. marketing research system that allows for the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation.

Marketing Information System A Marketing Information System (MIS) consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers. Information Needs Probes What decisions do you regularly make? What information do you need to make these decisions? What information do you regularly get? What special studies do you periodically request? What information would you want that you are not getting now? What are the four most helpful improvements that could be made in the present marketing information system? Internal Records Marketing managers rely on internal reports on: 1. orders, 2. sales, 3. prices, 4. costs, 5. inventory levels, 6. receivables, 7. Payables 8. By analyzing this information, they can spot important opportunities and problems.

Internal Records and Marketing Intelligence

Order-to-Payment Cycle :
1. 2. 3. Customers and sales representatives fax or e-mail their orders. Computerized warehouses quickly fill these orders. The billing department sends out invoices as quickly as possible. using the Internet and extranets to improve the speed, accuracy, and efficiency of the order-to-payment cycle.

Sales Information System:

Marketing managers need timely and accurate reports on current sales. Wal-Mart knows the sales of each product by store and total each evening. enables it to transmit nightly orders to suppliers for new shipments of replacement stock. Wal-Mart shares its sales data with its larger suppliers such as P&G and expects P&G to resupply Wal-Mart stores in a timely manner. Wal-Mart has entrusted P&G with the management of its inventory. Outsourcing Databases, Data Warehousing, and Data Mining : companies organize their information in databases: 1. customer databases, 2. product databases, 3. salesperson databases Organizations combine data from the different databases.

customer database: customer database will contain every customer's: 1. name, 2. address, 3. past transactions, 4. demographics and 5. psychographics (activities, interests, and opinions) in some instances. Marketing Intelligence System :A Marketing Intelligence System is a set of procedures and sources used by managers to obtain everyday information about developments in the marketing environment. The goal is to improve strategic decision making, assess and tracks competitors actions and provide early warning of opportunities and threats.

Sources of Information Marketing managers collect marketing intelligence by: 1. reading books, 2. newspapers, and trade publications; 3. talking to customers, suppliers, and distributors; and 4. meeting with other company managers.

Steps to Improve Marketing Intelligence Train sales force to scan for new developments Motivate channel members to share intelligence Network externally Utilize a customer advisory panel Utilize government data resources Purchase information Collect customer feedback online Marketing Research : is a process that identifies and defines marketing opportunities and problems, monitors and evaluates marketing actions and performance, and communicates the findings and implications to management . Who Is Responsible for Marketing Research Most large companies have their own marketing research departments. At much smaller companies, marketing research is often carried out by everyone in the company. Business Organizations normally budget marketing research at 1 to 2 percent of company sales.

The Marketing Research Process

Defining the Problem and Research Objectives Exploratory research gather preliminary information to help define the problem and suggest hypotheses Descriptive research describe the size and composition of the market Causal research tests hypotheses about cause and effect relationships Developing the Research Plan Determining Specific Information Needs translate research objectives into specific information needs Gathering Secondary Information collect information that is already in existence Planning Primary Data Collection information being collected for the specific purpose at hand

Research Approaches Observational research: involves gathering primary data by observing relevant people action s, situations. Ex a consumer packaged goods marketer might visit supermarkets and observe shoppers as they browse the store , pick up and examine packages, and make buying decisions. It is best suited for exploratory research. Survey research: the approach is best suited for gathering descriptive information. A company that wants to know about peoples knowledge ,attitudes, preferences, or buying behavior can often find out by asking them directly .it is best suited for descriptive research. Experimental research: is best suited for causal information. It involves selecting matched groups of subjects ,giving them different treatments ,controlling unrelated factors , checking for differences in group responses .thus it explains the cause and effect relationships. Ex Mc Donald

Data sources
Data sources: Primary data can be collected in five main ways: Observation, Focus groups, Surveys, Experiments.

Behavioral Data: Customers leave traces of their purchasing behavior in store scanning data, catalog purchases, and customer databases.
Survey Research: Companies undertake surveys to learn about people's knowledge, beliefs, preferences, and satisfaction, and to measure these magnitudes in the general population. Focus Group: is a gathering of six to ten people who are carefully selected based on certain demographic, psychographic, or other considerations and brought together to discuss at length various topics of interest. Experimental Research: The most scientifically valid. The purpose of experimental research is to capture cause-and-effect relationships by eliminating competing explanations of the observed findings. Experiments call for selecting matched groups of subjects, subjecting them to different treatments, controlling extraneous variables, and checking whether observed response differences are statistically significant.

Contact Methods in Research

Mail Telephone Personal Interview Individual interview In-depth interview Internet surveying Electronic mail Web page Sampling Plan A sample is a segment of the population selected to represent the population as a whole To design a sample four decisions must be made: Who will be surveyed? How many people will be surveyed? How will the sample be chosen? Probability or non probability samples When will the survey be given? A. Probability Sample : Simple random sample: Every member of the population has an equal chance of selection. Stratified random sample: The population is divided into mutually exclusive groups (such as age groups), and random samples are drawn from each group. Cluster (area) sample: The population is divided into mutually exclusive groups (such as city blocks), and the researcher draws a sample of the groups to interview.

B. Non-probability Sample Convenience sample: The researcher selects the most accessible population members. Judgment sample: The researcher selects population members who are good prospects for accurate information. Quota sample: The researcher finds and interviews a prescribed number of people in each of several categories. Research Instruments The interview structured e.g questionnaires unstructured Mechanical devices Structured models eg. test markets

closed-ended and open-ended questions? Collect the Information 1) 2) 3) 4) Getting the right respondents is critical. In the case of surveys, four major problems arise. Some respondents will not be at home and must be contacted again or replaced. Other respondents will refuse to cooperate. Others will give biased or dishonest answers. Finally, some interviewers will be biased or dishonest.

Analyze the Information The next-to-last step in the process is to extract findings from the collected data. The researcher tabulates the data and develops frequency distributions. Averages and measures of dispersion are computed for the major variables. The researcher will also apply some advanced statistical techniques and decision models in the hope of discovering additional findings. Present the Findings As the last step, the researcher presents the findings. The researcher should present findings that are relevant to the major marketing decisions facing management. Make the Decision The last step is decision-making process Evaluating the decision made The decision process itself Two questions should be asked: 1) Was the decision made (analyst do not make decisions) 2) Was a decision right

The Characteristics of Good Marketing Research 1. Scientific method Effective marketing research uses the principles of the scientific method: careful observation, formulation of hypotheses, prediction, and testing 2. Research creativity At its best, marketing research develops innovative ways to solve a problem: a clothing company catering to teenagers gave several young men video cameras, then used the videos for focus groups held in restaurants and other places teenagers frequently visited. 3. Multiple methods Marketing researchers shy away from overreliance on any one method. They also recognize the value of using two or three methods to increase confidence in the results. Qualitative research explores attitudes, behavior and experiences through such methods as interviews or focus groups. It attempts to get an in-depth opinion from participants. As it is attitudes, behavior and experiences which are important, fewer people take part in the research, but the contact with these people tends to last a lot longer. Under the umbrella of qualitative research there are many different methodologies. Quantitative research generates statistics through the use of large-scale survey research, using methods such as questionnaires or structured interviews. If a market researcher has stopped you on the streets, or you have filled in a questionnaire which has arrived through the post, this falls under the umbrella of quantitative research. This type of research reaches many more people, but the contact with those people is much quicker than it is in qualitative research.

Assignment Many market researchers have their favorite research approaches or techniques , although different researchers often have different preferences . Some researches maintain that the only way to really learn about consumers or brands is through in-depth qualitative research .others contend that the only legitimate and defensible form of marketing research involves quantitative measures . Take a position :Marketing research should be quantitative Vs Marketing research should be qualitative.