Unit 1
Introduction
Marketing is the action, set of organizations, and cycles for making, conveying, and trading contributions that have an incentive for clients, customers, accomplices, and society at large. Marketing is the way toward getting possible customers or clients keen on your products and services. The catchphrase in this definition is "measure"; marketing including exploring, advancing, selling, and disseminating your products or services.
This discipline focuses on the investigation of market and buyer practices and it examines the business management of organizations to pull in, obtain and hold clients ideally imparting brand dependability by fulfilling their needs constantly.
According to AMA, “Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large”.
Philip Kotler defines marketing as “the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit. Marketing identifies unfulfilled needs and desires. It defines, measures and quantifies the size of the identified market and the profit potential”.
Nature scope and importance of marketing
Nature of marketing
- Marketing is customer oriented: Marketing begins and ends with the customer. Marketing concerns itself not only with the satisfaction of the customer but also objects to delight him/her. All the organizational activities must be targeted and focused towards the customer. Customers must be allowed to decree product specifications and standards regarding quality. And for this, customer’s needs must be examined continuously.
- Marketing is the delivery of value: When a customer is satisfied from a particular product based on its overall performance, then the satisfaction that he has received is known as customer value. Customers consider the product’s value and price before making a decision and make a trade-off between cost and benefit of the product. They will choose a product that gives them more value per rupee. According to De Rose, “Value is the satisfaction of customer requirements at the lowest possible cost of acquisition, ownership and use”. Thus, the organization must aim to deliver greater customer value than that of their competitors.
- Marketing is network of relationships: The focal point of all marketing activities is the customer. The term relationships marketing came into light in1990’s. According to Philip Kotler, “Relationship Marketing is the practice of building long-term satisfying relations with key parties like customers, suppliers and distributors in order to retain their long term preference and business.” So the marketers should aim at maintaining long term relationships by delivering high quality products, better services and fair prices than their competitors.
- Marketing is business: All activities start from marketing i.e. through knowing customer’s needs and wants and ends on the customer i.e. providing after sales service and knowing customer dissonance. The entire business revolves around marketing.
- Marketing is dynamic: The word dynamic means ever changing. The needs and wants of the customer are changing constantly. Since the goal of marketing is to meet customer’s needs and wants by furnishing them with the products they want to buy, therefore, marketing must also change constantly to meet those needs and wants.
Scope of marketing
- Marketing Research: Market Research is a tool used for decision making about the marketing mix’s elements. Research has to be carried out in order to identify the customer’s needs, their tastes and preferences, their interests, economic position, their paying capacity and effectiveness of certain advertisements. For this purpose, data is collected, tabulated, codified, analyzed, and presented through knowledgeable techniques crafted to reveal what customers will buy, why they will buy it, and how much they will pay for it. Market research aims at adapting products to the desires of buyers.
- Pricing: Pricing is extremely important since it directly affects an organization’s sales and profits. While deciding the price of the product a number of factors have to be kept in mind like the cost of production, paying capacity of the customer, industry demand, competitor’s prices and the target profit margin. Price knits together the elements of the marketing mix and pays for their respective contributions. Therefore, the marketing manager must analyze and reconcile the various elements of those variables which influence price, and must then decide on an optimal price policy. A good pricing policy is a significant factor to attract the customers.
- Advertising and Sales Promotion: In this era of tough competition, the sales promotion and advertisements have become almost an inbuilt part of the marketing. It helps to make the customer aware about the product, makes him
- Curious about the product and thus promotes sales. There are ample sources of sales promotion and advertisements taking the decision about which source to be selected is also an imperative part in the sphere of marketing management. Through advertising marketers are able to position their products in the minds of the customer using various media like newspapers, magazines, television, radio, hoardings, window display and internet etc.
- Channels of Distribution: Bringing together the buyer and seller and facilitating their exchange is the essence of marketing. Distribution channels are an integral part of a complex system that has evolved from cultural and social patterns in order to facilitate exchange transactions. Marketers must decide what methods are best for distributing their particular products. There are various media of distribution like the retailers, the wholesalers, department stores, chain stores, super markets etc. Marketers may choose to sell directly to the customers, to the customers through sales agents, to jobbers, directly to retailers, or to retailers through sales representatives.
- Financing: It is difficult to perform various marketing activities without the availability of adequate and cheap finance. It has been rightly remarked “Money or Credit is the lubricant that facilitates the operation of the marketing machine as modern marketing requires vast resources.” The term financing includes decisions like budgeting for marketing activities, obtaining the necessary funds needed for operations and providing financial assistance to customers so they can purchase the business products and services. In the era of global competition, financing of customer purchasing has become an important part of marketing. Marketers have to offer different finance schemes to their customers to increase the volume of sales.
- After-Sales Service: The furnishing of after sales service is very critical for the satisfaction of the customers. The free repairs, the return or exchange of the product during the guarantee period if the product proves defective or worthless, etc. are included in after sales service.
Importance of marketing
1. It promotes awareness among the public – Marketing enables the customers to become aware about the various products that are available in the market. A firm’s product must be known to the potential buyers for it to succeed. If there were no marketing or advertising, the customers would not know about the products. A company must capitalize on marketing activities so as not to miss the opportunity of being discovered. Attempts should be made to reach as many customers as possible and tell them what the company has to offer with the help of effective marketing strategies.
2. It helps in boosting sales- Once the prospects become aware about the company’s products or services it boosts up the chances that customers will make a purchase. New customers also start to spread the word, informing their friends and family about the company’s product and consequently company’s sales starts to increase rapidly. No matter what a company is selling, it will generate sales once the people come to know about it through TV advertisements, commercials, newspaper advertisements, etc. The more the people see and hear about a new product, the more inclined they will be to buy it.
3. It builds company reputation – Marketing helps to build brand name recognition or product recall and hence enables the customers to relate the brand name with the images, logos and captions that they see or hear in advertisements. When the company is able to satisfy the expectation of its customers, its reputation stand on a concrete ground. And once a company succeeds in establishing its name, its business will grow and expand and more and more customers will start purchasing its products and services.
4. It helps in fostering healthy competition – Marketing promotes a climate of healthy competition in the marketplace. It helps to position the company as being superior to its rivals so that the customers will prefer its products rather than buying from other firms that sell similar products and services. Competition drives the firms to invest in research and development in order to produce better quality and innovative products and services. Thus marketing also helps to foster innovation.
Marketing as an Activity and Function
The seven elements of marketing are appropriation, statistical surveying, setting costs, account, product the board, limited time channels and coordinating products to shoppers.
1. Finding the Best Distribution Channels: Dispersion is tied in with choosing how you'll get the merchandise or services you need to offer to the individuals who need to get them. Having a thought for a product is extraordinary, yet on the off chance that you're not ready to get that product to the clients you're not going to bring in cash. Conveyance can be as simple as settling in the piece of a city where your objective clients are – yet in an undeniably interconnected world, dispersion as a rule currently implies that you'll have to take your products or services to the clients.
2. Financing an Enterprise: It takes cash to bring in cash. As an entrepreneur, a significant capacity of marketing a product is finding the cash through ventures, advances, or your own funding to back the creation and public relation of your merchandise or services.
3. Profound Market Research: Statistical surveying is tied in with get-together data concerning your objective clients. Who are the individuals you need to offer to? For what reason would it be a good idea for them to purchase from you instead of an adversary business? Responding to these inquiries necessitates that you do some on-the-ground perception of the market drifts and contending products.
4. Setting Prices: Setting the right cost for your product or administration can be a test. On the off chance that you value it excessively high, you may lose clients – yet in the event that you value it too low you may be denying yourself of benefits. The "right" cost regularly comes through experimentation and doing some statistical surveying.
5. Product and Service Management: Whenever you've decided the objective market and set the cost of your product or administration, the objective becomes to successfully deal with the product or administration. This including tuning in to clients, reacting to their needs constantly, and keeping your products and services new and exceptional.
6. Limited time Channels: Most entrepreneurs know about the possibility of advancement. Marketing your products and services is fundamental to drawing in new clients and continuing existing clients returning. As the commercial center changes, you'll need to react properly by fitting your advancement messages to web-based media, by staying with more customary sources, or by utilizing a blend of the old and new.
7. Coordinating Products to Customers: While we will in general consider selling and marketing being firmly connected, selling is keep going on the rundown of the seven elements of marketing. This is on the grounds that selling can happen simply after you've decided the needs constantly of your client base and can react with the perfect products at the perfect value point and time period.
Marketing concept: Traditional and modern
“Today's marketing capabilities are very complex. The domestic market is now a cheerful hunting ground for huge global companies. Great advances in technology have significantly reduced time and distance.”
Decades ago, companies faced variety of tough decisions to plug their products. They determine the functionality and quality of products, establish ancillary services, set prices, determine distribution channels, determine the quantity of cash to spend on marketing, advertising, sales today's marketing functions are very complex.
The domestic market is now a cheerful hunting ground for huge global companies. Great advances in technology have significantly reduced time and distance. New products are launched at an alarming pace and are available worldwide during a short time. Communication and transport systems are very developed.
In the midst of these economic developments, busy consumers are changing their lifestyles. To save lots of time, they're shopping in catalogs, phones, and computers. Today's consumers can look for the simplest prices on the web. You’ll handle almost any bank needs by phone or by phone. They will buy insurance and conduct financial transactions without cooperating with agencies and brokers. Consumers don't got to visit supermarkets, they will place orders on the web and have the products delivered to their homes. The planet is additionally characterized by an amazingly rich information environment. Consumers can access objective information about competing brands, prices, features and quality without counting on individual manufacturers or retailers. Customers are going to be ready to specify the worth they're willing to pay and even await the foremost enthusiastic sellers to reply.
The results of all economic development and technological progress may be a dramatic shift in economic power from seller to buyer. Companies have a marketing vision and marketing know-how for his or her success in responding to the mentioned areas. Consumers don't got to visit supermarkets, they will place orders on the web and have the products delivered to their homes. The planet is additionally characterized by an amazingly rich information environment. Consumers can access objective information about competing brands, prices, features and quality without counting on individual manufacturers or retailers. Consumers are going to be ready to specify the worth they're willing to pay and even await the foremost enthusiastic sellers to reply.
The results of all economic development and technological progress may be a dramatic shift in economic power from seller to buyer. Companies have a marketing vision and marketing know-how for his or her success in responding to the mentioned areas.
Marketing Vs Selling
- Marketing and selling are viewed as analogs; be that as it may, there is a colossal qualification among marketing and selling. Both make exact changes in accordance with the business; in this way, the administrator is foreseen to follow a different unmistakable category of systems for the achievement of their business.
- Selling has a product target and is frequently producer driven. It is the main operational bit of the marketing and has a break goal of accomplishing a specific degree of pay, gain or piece of the overall industry. Greater need is given to "value variety" to bring a deal to a close where the point can be outlined as "I should at any rate offer the product to the customer".
- This restricted center doesn't foresee enough for practical arranging and brand creation. There is no impact to assemble systems for making exhaustive contending advantage. The conclusion of any business task is heightening benefits through sales acceleration.
- At the point when the point consideration is on selling, the money managers accept that sales must beginning straightforwardly after the advancement program is finished up and furthermore the elements of the business division to sell at all the creation unit has delivered.
- Forceful sales techniques are legitimized to fulfill this point. Buyer's real cravings and satisfaction are underestimated. Selling transforms the product into cash for the organization briefly.
- Be that as it may, Marketing has an expansive methodology than selling and is beneficial in nature. Its accentuation is on the buyer rather than the product. In spite of the fact that selling relies upon the necessities and interest of the maker or advertiser, marketing relies upon the need of the client.
- It is just a system of tolerating and satisfying the customer needs, Manufacturing and selling are compassed to satisfy the purchaser at an addition. Marketing including every one of those activities that are identified with arranging, evaluating, advancing and administering the product or administration.
- In marketing, the strategy started with the acknowledgment of client needs and won't be closed before client's criticism is taken, to assess their fulfillment. It is perceived as a long arrangement of activities which comprise of assembling, packaging, advancement, assessing, scattering and afterward selling.
- Client needs are the coordinating power liable for every one of these activities. Benefits are not dismissed, however in the technique, the advertiser is capable to build up a greater client establishment and makes benefit for the organization. Psyche share is more pertinent than piece of the pie in marketing.
Marketing mix
Meaning
Neil Borden in the year 1953 presented the term Marketing mix, an augmentation of the work done by one of his partners James Culliton in 1948. The way toward advertising or conveyance of merchandise requires specific consideration of the executives since creation has no significance except if products are sold. Marketing mix is the way toward planning and coordinating different components of advertising in such a manner to guarantee the achievement of big business destinations. The components of marketing mix have been grouped under four heads—product, price, place and promotion. That is the reason marketing mix is supposed to be a combination of four P's.
Choices identifying with the product incorporates product planning, bundling and marking, and assortments of the product. Choice on cost is significant on the grounds that business depend to a huge degree on product valuing. Regardless of whether uniform cost will be charged or various costs will be charged for similar product in various business sectors are instances of choice relating to the cost of the product. The third significant component is place, which alludes to choice with respect to the market where products will be offered available to be purchased. Promotion includes choices bearing on the available resources of expanding deals.
Various instruments or strategies might be received for this reason. The overall significance to be connected to the different strategies is chosen while focusing on the component of promotion in marketing mix. So, marketing mix includes choices with respect to products to the made accessible, the cost to be charged for the equivalent, and the motivation to be given to the shoppers in the business sectors where products would be made ready to move. These choices are taken keeping in view the impact of marketing powers outside the association e.g., shopper conduct, contenders' technique and government strategy.
In this way, the advertising mix demonstrates the fitting mix of four P's—product, price, promotion, and place—for accomplishing marketing targets. The parts are otherwise called marketing mix factors or controllable factors as they can be utilized by business necessities. In 1960, E. Jerome McCarthy in his book, Basic Marketing, advocated a four-factor order, the supposed four P's Product, Price, Place and Promotion. Marketing Mix - A combination of a few thoughts and plans followed by an advertising delegate to advance a specific product or brand is called marketing mix. A few ideas and thoughts joined together to detail last systems accommodating in creation a brand famous among the majority structure marketing mix.
Elements of Marketing Mix
Product: Product is a decent, (for example, music players, shoes and so forth) or administration, (for example, hotels, airlines, and so on) that is offered as an answer for fulfill the necessities of your client.
When building up the product, you need to consider its life cycle and plan for various difficulties that may emerge during its phases. When the product arrives at its last stage (deals decrease stage), it's an ideal opportunity to rethink the thing to win the interest of the clients once more.
Merchandise fabricated by associations for the end-clients are called products. Products can be of two kinds - Tangible Product and Intangible Product (Services). An individual can see, contact and feel substantial products when contrasted with theoretical products. A product in a commercial center is something which a merchant offers to the purchasers in return of cash.
Price: The following component of the advertising mix is the price your client is happy to pay for your product. This decides the benefit you will have the option to create. When setting a cost for your product, consider the amount you have spent on delivering it, the price scopes of your rivals, and the apparent product esteem.
The cash which a purchaser pays for a product is called as cost of the product. The cost of a product is by implication relative to its accessibility on the lookout. Lesser its accessibility, more would be its cost and bad habit a versa. Retail locations which stock remarkable products (not accessible at some other store) provide a greater expense estimate from the purchasers.
Place: This is about the dissemination focus of the product and the strategies utilized in dispersing it to the client. Any place this is, it should be effectively available to the client. For instance, on the off chance that you have an actual store, it should be situated in a place that can be effectively found by the client. In the event that you own a site to advertise your product, ensure it is effectively safe.
Place alludes to the area where the products are accessible and can be sold or bought. Purchasers can buy products either from actual business sectors or from virtual business sectors. In an actual market, purchasers and dealers can genuinely meet and associate with one another though in a virtual market purchasers and venders meet through web.
Promotion: Promotion alludes to the techniques a business uses to pick up the consideration of the clients to their product. These incorporates deals promotions, client assistance, advertising, marketing and so on While making your promotion system, consider the strategies utilized by your rivals, the channels that are best in arriving at your clients, and whether they coordinate the apparent estimation of your product.
Promotion alludes to the different procedures and thoughts executed by the advertisers to make the end - clients mindful of their image. Promotion incorporates different procedures utilized to advance and make a brand famous among the majority.
Advertising: Print media, Television, radio are compelling approaches to tempt clients and make them mindful of the brand's presence. Boards, hoardings, flags introduced astutely at key areas like substantial traffic zones, intersections, railroad stations, transport stands draw in the passing people towards a specific brand. Slogans likewise increment the review estimation of the brand among the clients.
Marketing environment
The marketing environment refers to all internal and external factors, which directly or indirectly influence the organization’s decisions related to marketing activities. Internal factors are within the control of an organization; whereas, external factors do not fall within its control. The external factors include government, technological, economical, social, and competitive forces; whereas, organization’s strengths, weaknesses, and competencies form the part of internal factors.
A marketing environment mostly comprises of the following types of environment:
1. Micro Environment
2. Macro Environment
The discussion of these environments are given below:
- Micro Environment:
Micro environment refers to the environment, which is closely linked to the organization, and directly affects organizational activities. It can be divided into supply side and demand side environment. Supply side environment includes the suppliers, marketing intermediaries, and competitors who offer raw materials or supply products. On the other hand, demand side environment includes customers who consume products.
Let us discuss the micro environment forces in the following points:
- Suppliers: It provides raw material to produce goods and services. Suppliers can influence the profit of an organization because the price of raw material determines the final price of the product. Organizations need to monitor suppliers on a regular basis to know the supply shortages and change in the price of inputs.
- Marketing Intermediaries: It helps organizations in establishing a link with customers. They help in promoting, selling, and distributing products.
Marketing intermediaries include the following:
- Resellers: It purchases the products from the organizations and sell to the customers. Examples of resellers are wholesalers and retailers.
- Distribution Centers: It helps organizations to store the goods. A warehouse is an example of distribution center.
- Marketing Agencies: It promotes the organization’s products by making the customers aware about benefits of products. An advertising agency is an example of marketing agency.
- Financial Intermediaries: It provides finance for the business transactions. Examples of financial intermediaries are banks, credit organizations, and insurance organizations.
Iii. Customers: Customers buy the product of the organization for final consumption. The main goal of an organization is customer satisfaction. The organization undertakes the research and development activities to analyze the needs of customers and manufacture products according to those needs.
Iv. Competitors: It helps an organization to differentiate its product to maintain position in the market. Competition refers to a situation where various organizations offer similar products and try to gain market share by adopting different marketing strategies.
2. Macro Environment:
Macro environment involves a set of environmental factors that is beyond the control of an organization. These factors influence the organizational activities to a significant extent. Macro environment is subject to constant change. The changes in macro environment bring opportunities and threats in an organization. Let us discuss these factors in details:
- Demographic Environment:
Demographic environment is the scientific study of human population in terms of elements, such as age, gender, education, occupation, income, and location. It also includes the increasing role of women and technology. These elements are also called as demographic variables. Before marketing a product, a marketer collects the information to find the suitable market for the product.
Ii. Economic Environment:
Economic environment affects the organization’s costs structure and customers’ purchasing power. The purchasing power of a customer depends on the current income, prices of the product, savings, and credit availability. The factors economic environment is as follows: a
- Inflation: It influences the customers’ demand for different products. For example, higher petrol prices lead to a fall in demand for cars.
- Interest Rates: It determines the borrowing activities of the organization. For example, increase in interest rates for loan may lead organizations to cut their important activities.
- Unemployment: It leads to a no income state, which affects the purchasing power of an individual.
- Customer Income: It regulates the buying behavior of a customer. The change in the customer’s income leads to changed spending patterns for the products, such as food and clothing.
- Monetary and Fiscal Policy: It affects all the organizations. The monetary policy stabilizes the economy by controlling the interest rates and money supply in an economy; whereas, fiscal policy regulates the government spending in various areas by collecting the revenue from the citizens by taxing their income.
Iii. Natural Environment:
Natural environment consists of natural resources, which are needed as raw materials to manufacture products by the organization. The marketing activities affect these natural resources, such as depletion of ozone layer due to the use of chemicals. The corrosion of the natural environment is increasing day-by-day and is becoming a global problem.
Following natural factors affect the marketing activities of an organization in a great way:
- Natural Resources: It serves as raw material for manufacturing various products. Every organization consumes natural resources for the production of its products. Organizations are realizing the problem of depletion of resources and trying best to use these resources judiciously. Thus, some organizations have indulged in de-marketing their products.
- Weather: It leads to opportunities or threats for the organizations. For example, in summer, demand for water coolers, air conditioners, cotton clothes, and water increases while in winter, the demand for woolen clothes and room heaters rises. The marketing environment is greatly influenced by the weather conditions of a country.
- Pollution: It includes air, water, and noise pollution, which lead to environmental degradation. Now-a-days, organizations tend to promote environment friendly products through its marketing activities. For example, the organizations promote the usage of jute and paper bags instead of plastic bags.
Iv. Socio-Cultural Environment:
Socio-cultural environment comprises forces, such as society’s basic values, attitudes, perception, and behavior. These forces help in determining that what type of products customers prefer, what influences the purchase attitude or decision, which brand they prefer, and at what time they buy the products. The socio-cultural environment explains the characteristics of the society in which the organization exists. The analysis of socio-cultural environment helps an organization in identifying the threats and opportunities in an organization.
For example, the lifestyles of people are changing day-by-day. Now, the women are perceived as an active earning member of the family. If all the members of a family are working then the family has less time to spend for shopping. This has led to the development of shopping malls and super markets, where individuals could get everything under one roof to save their time.
v. Technological Environment:
Technology contributes to the economic growth of a country. It has become an indispensible part of our lives. Organizations that fail to track ongoing technological changes find it difficult to survive in today’s competitive environment. Technology acts as a rapidly changing force, which creates new opportunities for the marketers to acquire the market share. Marketers with the help of technology can create and deliver products matching the life style of customers. Thus, marketers should observe the changing trends in technology.
Key takeaways
- Marketing including exploring, advancing, selling, and disseminating your products or services.
- The marketing environment refers to all internal and external factors, which directly or indirectly influence the organization’s decisions related to marketing activities
- Micro environment refers to the environment, which is closely linked to the organization, and directly affects organizational activities.
- Macro environment involves a set of environmental factors that is beyond the control of an organization.
The term consumer behavior, individual buyer behaviour, end user behaviour and consumer buying behavior all stands for the same. Consumer behaviour is the study of how individuals, groups and organization select buy, use and dispose of goods and services, ideas or experiences to satisfy their needs and wants.
Consumer behaviour may be defined as the decision process and physical activity individuals engage in when evaluating, acquiring, using or disposing of goods and services.
According to Belch and Belch "consumer behaviour is the process and activities people engage in when searching for, selecting, purchasing, using, evaluating and disposing of products and services so as to satisfy their needs and desires".
Nature of Consumer Behaviour
1. Complex Nature: Since every individual has different needs and desires, and marketers have to target customers as per their needs. Therefore, it becomes a complex task for the marketers to find the pattern of every individual.
2. Varies for different consumers: Different consumers have different needs and desires. Hence, It is impossible for marketers to target each and every consumer for their products. Therefore, Marketers try to identify their target consumers for the products and services.
3. Dynamic Nature: The behaviour and mentality of each consumer evolves with the time. Therefore, the marketers may find any potential customer for their products and services who once hated them.
4. Influenced by various factors: Consumer behaviour is also influenced by certain factors like friends, family, culture, lifestyle etc.
5. Important for Marketers: Consumer Behaviour is very important for marketers as they have to develop their products as per the behaviour of consumers that whether they are willing to purchase it or not.
6. Brand Loyalty: Consumers have a tendency to buy products and services from a certain organization which they may like due to certain reasons. They develop a brand loyalty towards these organizations and tends to buy only their products even if their rival is performing better in the market.
Scope of Consumer Behaviour
1. Demand Forecasting: Marketers can estimate the demand of their product if they know how would a consumer behave and react after seeing their product.
2. Marketing: Consumer Behaviour helps to identify the need, expectations and problems of the consumers. Therefore, they can easily build the product having those functions which the consumers exactly want.
3. Advertising: Different consumers may have different opinions and reactions on certain form of advertisement. Therefore, Marketers can target the customers with most prominent form of advertisement as per their behaviour.
4. Human Behaviour: If marketers are aware about the human behaviour of there consumers and which factors influence their behaviour, then they can make their product 100% compatible with the requirement of consumer.
Significance of Consumer Behaviour
- Implementation of the marketing concept: Consumer behaviour helps to implement the modern marketing concept. The Modern marketing concept is customer driven which focuses on solving the problems of customers and satisfying their needs. Consumer behaviour identifies the the same problems and needs and hence, helps is developing the product as per customer requirement.
2. Planning product differentiation and Market Segmentation: After identification of consumer behaviour, the product developed will the only one of its kind, because it has been developed through proper research and consumer behavior analysis, so the product will automatically be different from all the products available in the market while satisfying the consumer needs. Again, to divide the target market into different segments to focus better on different consumers, proper study of consumer behaviour is necessary.
3. Selection of distribution channels: Consumer Behavior Analysis not only tells what consumers want to buy but also from where they prefer to buy. There may be different categories of consumers. First category only shops online, Second category only want products from prestigious offline stores and the third category may settle for the ordinary stores. Therefore, consumer behaviour also inform us how much we should focus on a certain distribution channel.
4. Designing promotional techniques: Promotional techniques include advertisement messages, media, direct selling, online selling etc. Proper study of consumer behaviour will show the psychology of consumer towards different promotional formats. It will tell how much a consumers is influenced from a certain form of advertisement and promotion.
Concept of Market Segmentation
Companies cannot connect with all customers in large, broad, or diverse markets. But they can divide such markets into groups of consumers or segments with distinct needs and wants. A company then needs to identify which market segments it can serve effectively. This decision requires a keen understanding of consumer behavior and careful strategic thinking. To develop the best marketing plans, managers need to understand what makes each segment unique and different. Identifying and satisfying the right market segments is often the key to marketing success.
Market segmentation is a process of dividing the market of potential customers into smaller and more defined segments on the basis of certain shared characteristics like demographics, interests, needs, or location.
The member of these groups share similar characteristics and usually have one or more than one aspect common among them which makes it easier for the marketer to craft marketing communication messages for the entire group.
Importance of Market Segmentation
1. Advantage over competitors: With deep study of product, policies, strategies of competitors in different market segments, we can develop a product which is different from our competitors and satisfy the needs of consumers.
2. Opportunity to expand market: With market segmentation, marketer is able to create a new market opportunity within the existing one.
3. Discovery of marketing opportunity: Market segmentation provides the opportunity to create and study a deep segment from the existing target markets. With extensive research, marketers are able to create a different marketing strategy for different segment.
4. Awareness of consumer needs: With market segmentation, the marketers are already aware of why the customer wants to purchase the product. All marketing activities are directed towards customer satisfaction. With the help of segmentation, it becomes easy to measure the level of segmentation of each segment and also to make improvement in the segmentation level.
Manager can easily get to know why customer do or do not buy certain products or services. All marketing activities are directed towards the customer s
5. Adjustments in products: Due to market segmentation, marketing manager can easily make adjustments in the product as per the needs of concerned segment.
6. Effective advertising: The advertising appeal is designed to create a positive impact in the buyer's mind. The message conveyed through advertisement influences the purchasing decisions of different buyer groups which are recognized with the help of market segmentation.
Bases of market segmentation
Segmenting is dividing a group into subgroups according to some set bases. These bases range from age, gender, etc. to psychographic factors like attitude, interest, values, etc.
Gender
Gender is one of the most simple yet important bases of market segmentation. The interests, needs and wants of males and females differ at many levels. Thus, marketers focus on different marketing and communication strategies for both. This type of segmentation is usually seen in the case of cosmetics, clothing, and jewellery industry, etc.
Age Group
Segmenting market according to the age group of the audience is a great strategy for personalized marketing. Most of the products in the market are not universal to be used by all the age groups. Hence, by segmenting the market according to the target age group, marketers create better marketing and communication strategies and get better conversion rates.
Income
Income decides the purchasing power of the target audience. It is also one of the key factors to decide whether to market the product as a need, want or a luxury. Marketers usually segment the market into three different groups considering their income. These are
- High Income Group
- Mid Income Group
- Low Income Group
This division also varies according to the product, its use, and the area the business is operating in.
Place
The place where the target audience lives affect the buying decision the most. A person living in the mountains will have less or no demand for ice cream than the person living in a desert.
Occupation
Occupation, just like income, influences the purchase decision of the audience. A need for an entrepreneur might be a luxury for a government sector employee. There are even many products which cater to an audience engaged in a specific occupation.
Usage
Product usage also acts as a segmenting basis. A user can be labelled as heavy, medium or light user of a product. The audience can also be segmented on the basis of their awareness of the product.
Lifestyle
Other than physical factors, marketers also segment the market on the basis of lifestyle. Lifestyle includes subsets like marital status, interests, hobbies, religion, values, and other psychographic factors which affect the decision making of an individual.
Types of market segmentation
Geographic Segmentation
Geographic segmentation divides the market on the basis of geography. This type of market segmentation is important for marketers as people belonging to different regions may have different requirements. For example, water might be scarce in some regions which inflates the demand for bottled water but, at the same time, it might be in abundance in other regions where the demand for the same is very less.
People belonging to different regions may have different reasons to use the same product as well. Geographic segmentation helps marketer draft personalized marketing campaigns for everyone.
Demographic Segmentation
Demographic segmentation divides the market on the basis of demographic variables like age, gender, marital status, family size, income, religion, race, occupation, nationality, etc. This is one of the most common segmentation practice among marketers. Demographic segmentation is seen almost in every industry like automobiles, beauty products, mobile phones, apparels, etc and is set on a premise that the customers’ buying behaviour is hugely influenced by their demographics.
Behavioural Segmentation
The market is also segmented based on audience’s behaviour, usage, preference, choices and decision making. The segments are usually divided based on their knowledge of the product and usage of the product. It is believed that the knowledge of the product and its use affect the buying decision of an individual. The audience can be segmented into –
- Those who know about the product,
- Those who don’t know about the product,
- Ex-users,
- Potential users,
- Current Users,
- First time users, etc.
People can be labelled as brand loyal, brand-neutral, or competitor loyal. They can also be labelled according to their usage. For example, a sports person may prefer an energy drink as elementary (heavy user) and a not so sporty person may buy it just because he likes the taste (light/medium user).
Psychographic Segmentation
Psychographic Segmentation divides the audience on the basis of their personality, lifestyle and attitude. This segmentation process works on a premise that consumer buying behaviour can be influenced by his personality and lifestyle. Personality is the combination of characteristics that form an individual’s distinctive character and includes habits, traits, attitude, temperament, etc. Lifestyle is how a person lives his life.
Key takeaways –
- A market segment needs to be homogeneous. There should be something common among the individuals in the segment that the marketer can capitalise on.
- Consumer behaviour is the study of how individual customers, groups or organizations select, buy, use, and dispose ideas, goods, and services to satisfy their needs and wants.
References:
- Basic Marketing- Concepts, Decisions and Strategies- Cundiff, Edward, W. & Still, R.R.
- Marketing Management - Kotler, Phillip
- Principles of Marketing - Kotler, Phillip & Armstrong, Gray
- Marketing Management - Mamoria, C.B,Mamoria Satish & Suri, R.K.
