MARKETING MANAGEMENT

(KMBN 105)
Unit 1

MARKETING

A market is a place where buyers and sellers come together and exchange products and

services. Marketing is a process of determining the needs and wants of consumers. It helps the

customers to provide them with those products that they are looking for. It helps the company

to find out new customers.

According to Cardiff and Still

Marketing is a social process by which products are matched with markets and through which

the consumer is able to use or enjoy the product. It makes goods and services more useful to

society by creating the place, time, and possession utilities.

NATURE OF MARKETING

(i) Customer Focus

Marketing is a customer-centered function of the business. It aims at finding out what

customers want and fulfilling their needs by delivering them the right products.

(ii) Creates Market Offering

Marketing provides offers of various goods and services to potential customers. It is the one

that communicates all information regarding products like its prices, uses, quality, and

technology to customers.

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(iii) Exchange Oriented

It is a process which aims at exchanging products among buyer and seller. Marketing attracts

and influences people to buy the products of the company.

(iv) Continuous Activity

Marketing is a regular and continuous activity of business for selling their products. Businesses

always need to monitor the marketing environment and should accordingly plan, implement,

and control all marketing programs.

(v) Goal-Oriented

Marketing is a goal-oriented business activity that aims at achieving the desired sales and

profitability. It focuses on approaching more and more customers and thereby satisfying their

needs by delivering them the required goods or services.

(vi) Manages 4 P’s

It is a combination of four elements that are product, place, price, and promotion. The whole

marketing system is made up of these variable factors which are influenced by customer

behavior, competition, trade factors, etc.

(vii) Creates Utilities

Marketing creates various utilities such as form utility, time utility, and place utility. It creates

form utility by manufacturing the right product using inputs, time utility by storing goods in

warehouses, and place utility by delivering goods properly to end customers.

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(viii) Economic Process

It is a process that involves exchanges of goods in monetary terms. Marketing is one by means

of which monetary transactions as per the exchange value of goods take place for transferring

goods among buyers and sellers.

SCOPE OF MARKETING

(i) Create Awareness

Informing customers about the company’s products is a must for attracting them to buy

products. Marketing is the medium through which companies communicate with the public and

explain the features or benefits of their products. Marketing helps in creating wide publicity

for goods and services in the market.

(ii) Studies Customer’s Wants

Marketing helps in understanding the needs or wants of customers which enables them to

provide satisfactory services. Business through their marketing programs interacts with

customers and understands their behaviors. Proper understanding of customers’ demands helps

in designing the right product which satisfies their needs.

(iii) Product Planning

A product refers to a bundle of benefits that offers satisfaction to the consumers. Product

planning starts with the generation of the idea and continues until the product is ready to be

launched in the market. To create a successful product the company must understand the needs

of the consumer and the currently available competition in the market.

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(iv) Advertising

Advertising is the best tool for marketing. It makes the consumers aware of the product that is

going to hit the market. Through marketing, big companies are able to condition our

subconscious minds about the goodness of the product. The advertisement also helps to

increase the sale drastically and ultimately the profits. Advertising can be done through various

media sources such as newspapers, television, magazines, hoardings, the internet, etc.

(v) Pricing Policies

Determination of the pricing policies of the product is crucial because good pricing policies

will definitely help in attracting more consumers. Generally, consumers are highly-priced

elastic which means lower the price, higher will be the demand and higher the price, lower will

be the demand. Cost of manufacturing the product, government policies, marketing,

competitors price, etc. are the factors that influence the price of the product.

(vi) Distribution

The selection of the proper distribution channel is very necessary for the product to attract new

consumers towards it. Selecting a distribution channel means defining the route of the goods

they will take while reaching from the producer to the ultimate consumer. Wholesaling and

retailing are the two most popular distribution channels.

(vii) Selling

It refers to the process of selling what is manufactured by the company as a product in the

market. Selling refers to the supply of goods and services directly or indirectly to the targeted

consumers. Selling involves performing and managing various activities simultaneously such

as approaching to the new consumers, distributing free samples, making sales at a huge

discount, and getting feedback.

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(viii) Packaging

The packaging is essential for delivering the product safely and securing a good image in the

consumer’s mind. It also helps in the goodwill formulation. Packaging involves designing and

producing the external covering for the product which will keep the product safe and hygienic.

Packaging is inclusive of the product information which adds to the appeal of the product which

ultimately helps in the sales promotion.

(ix) After-Sales Services

The term marketing includes after-sale services to be provided by the business to its customers.

Resolving issues of the customers and problems in case of any product failure will help in

developing better relations with customers.

(x) Collects The Feedback

It involves collecting the feedback or suggestions of customers once the product is sold.

Through this, the satisfaction or dissatisfaction level of customers can be easily identified

which helps in improving the service quality using suggestions provided by them.

MARKETING ORIENTATION APPROACHES

An organisation focus is centred around five key categories. These approaches dictate the

priorities and processes existent within the organisation, and perhaps more importantly, the

manner in which the organisation takes its core offering to market and how it empowers its

marketing teams.

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(i) Production Orientation

A production orientated organisation commonly operates a mass production model and

streamlines this production process for its product offering. This orientation approach assumes

that its customers value price, and therefore, it focuses on lowering production costs to meet

such price needs of this customer base. This price is believed to form the main value proposition

of the production orientation organisation’s key offering, focusing its resources towards

operations and positioning its key marketing communications on price-based messages. This

assumption that price is king, however, isn’t always indicative of the needs and wants of the

target audience as the approach does not require learning anything about the customer base. It

assumes that its customers want the cheapest product available and will strive to realise this

price.

Advantages: Economies of scale, efficiency, low cost to customers

Disadvantages: Disregards customer needs, set-up costs are usually high

(ii) Product Orientation

It is sometimes assumed that a product orientation approach is similar to a production

orientation approach. But it is exactly the opposite. This approach to business concerns its

products and continually improving and refining them so that the product can always be

superior to that of its competitors. So, as the previous orientation was centred around price,

product orientation is centred around quality, which often increases the price. Premium

products fall into this category, but the approach does not always offer what its target audience

actually wants or considers the factors that the audience uses to form its purchasing decision.

See a previous post on how to launch a science product for more of product marketing. Quality

– and therefore a product orientated organisation – often does not consider external factors, and

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focuses on manufacturing a high-quality, premium product that is superior within the market it

operates and competes within.

Advantages: Focus on quality, innovation, skills development/outsourcing.

Disadvantages: Potential missed market opportunities, obsolescence.

(iii) Sales Orientation

A sales orientated organisation focuses the majority of its resources on selling its products and

services to its target audience. In a way, it does prioritise its customers but not in a sense of

listening to their needs and wants – it simply wants to sell to them. Existing products are usually

given to the sales and marketing teams and they are tasked to finding buyers to those products,

wherever and whoever they may be. Many organisations will feel they are not selling enough

of their products and will, therefore, adopt sales orientated techniques to focus the organisation

on selling more and building on its profit margins. Disregarding customer needs in this way,

and adopting aggressive outbound sales techniques, is an approach that rarely works in the long

term. This is especially the case now that the general “customer” (regardless of industry) is

more empowered than ever and appreciates relationships within the sales processes, especially

within the B2B pharma sectors. That said, this isn't to say that organisations cannot be

successful with this approach. The inbound sales/marketing approach has emerged as attractive

in modern-day sales orientated organisations.

Advantages: Immediate short-term sales are generated.

Disadvantages: Risks customer confidence, costs, not always sustainable.

(iv) Societal Orientation

As people generally become more aware of their environments, the world and the societies they

live within, the societal orientation approach has emerged, giving organisations a new

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organisational philosophy. The societal orientation organisation, considering its product,

process and its marketing, to an extent, focuses on the impact its organisation and products has

within the societies it operates within, as well as the wider environment. Ethical considerations

in this manner have become highly popular within the pharmaceutical and life science

industries. In competitive markets, however, this approach can be challenging to sustain –

especially for small to medium size organisations where profits and customer satisfaction can

affect how it can execute the environmental and societal orientation approach.

Advantages: Image is enhanced, appeals to upcoming markets, ethical.

Disadvantages: Marketing message is sometimes distorted, limited budget.

(v) Market Orientation

A market orientated organisation looks at the market and its target audience first, before any

production or sales activities takes place, to learn what potential customers want from

organisations. The product or service offering is therefore created with the customer in mind,

resulting in a true customer-first approach. Market orientation, in marketing strategy terms,

commonly revolves around culture, values and other internal behaviours focused on satisfying

customer needs that are usually well-researched prior. Although this clearly has its benefits, it

can also come at a cost to organisations as it usually puts organisations on the back foot, always

reacting to customer demands rather than predicting or shaping them with innovative products

and services. This said, most markets are moving more towards a market-orientated approach

as customers have more and more access to information about what they are looking to buy.

Advantages: Customer satisfaction, loyalty, continual investment in research.

Disadvantages: Reactive, not always innovative, market always changing.

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NEEDS, WANTS, AND DEMANDS IN MARKETING

Needs, wants and demands are three important terms in marketing. No matter how similar they

might seem, there are more differences in these terms that you might think. There are many

layers within them and they play a vital role in arriving at segmenting the TG, targeting a

particular target group and most importantly defining a sharp positioning for a brand.

(i) Needs

“Needs” is the basic human requirements like shelter, clothes, food, water, etc. which are

essential for human beings to survive. If we extend this further, other needs are education,

healthcare or even a social thing, for example, belonging to a certain society or self-expression.

One can say that the products which fall under the needs category of products do not require a

push. Instead the customer buys it themselves. But it’s actually not true. in today’s world with

thousands of brands competing in the same categories with identical offerings satisfying the

same needs, even the “needs category product” has to be pushed in the consumers’ mind.

Example of needs category products / sectors – Agriculture sector, Real Estate, Healthcare etc.

We all know about Maslow’s hierarchy of needs which categorizes needs into 5 levels starting

from physiological needs at the bottom and going up to self-actualization needs. But what’s

important as a marketer to know which level of need is your brand targeted to. Let’s look at

some of the examples of brands which are targeting different levels of needs.

(i) Physiological Needs – Food companies (Nestle, Pepsi, Coca-Cola)

(ii) Safety Needs – Insurance companies (ICICI Prudential, Tata AIG, HDFC Life)

(iii) Social Needs – Social networking sites (Facebook, Twitter, Instagram)

(iv) Esteem Needs – Luxury brands (iPhone, Mercedes, Estee Lauder)

(v) Self-actualization needs – Non-Profit organizations and NGOs (UNICEF, Teach for India)

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In marketing, there is another way to categorize needs. There are basically five types of

consumers’ needs:

1. Stated Needs

As the name suggests, in this case, the consumer explicitly states what he wants. For eg. “I

need a phone”.

2. Real needs

This is more specific. So when the consumer wants a phone to remain connected to his friends,

family and colleagues, the actual need be a phone with high battery backup and not high camera

resolution.

3. Unstated needs

The consumer also expects warranty and other sorts of after sales service when buying a phone

which he might not say explicitly.

4. Delight needs

The consumer would like the phone manufacturer or the dealer to give him some free gift or a

promotional item (phone case, tempered glass, free SIM etc.), but he doesn’t clearly express

that he wants something with the phone.

5. Secret Needs

These are the needs which the consumer feels reluctant to admit; for example the consumer

wants the phone for his status symbol but he feels uncomfortable to admit that status is

important to him.

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In the above example, responding to only stated need ie., “I need a phone” doesn’t help in

arriving at a right product proposition. As a marketer, it is important to dig deeper and uncover

not only the real, but also his other needs: unstated need, delight need and secret needs.

(ii) Wants

"Wants" are a step ahead of needs Wants aren’t essential for humans to survive, but it’s

associated with needs. Simply put, a want is a product desired by a customer that is not required

for us to survive. So, want is the complete opposite of need, which is essential for our survival.

Wants aren’t permanent and it regularly changes. As time passes, people and location change,

wants change accordingly.

Wants are directed by our surrounding towards reaching certain needs. Therefore, human’s

wants can be varied depending on each individual’s perception, environment, culture, and

society. For example, an Indian needs food but he may want a Dosa or Paratha while an

American may want Burger or Sandwich. Example of wants category products / sectors –

Hospitality industry, Electronics, FMCG, Consumer Durables etc.

(iii) Demands

Wants turn to be Demands when a customer is willing and having the ability to buy that needs

or wants. The basic difference between wants and demands is desire. A customer may desire

something but he may not be able to fulfill his desire. Consequently, for people, who can afford

a desirable product are transforming their wants into demands. In other words, if a customer is

willing and able to buy a need or a want, it means that they have a demand for that need or a

want. You might want a BMW for a car or an iPhone for a phone. But can you actually buy a

BMW or an Iphone? You can, provided you have the ability to buy them. Example of demands

–Luxury cars, 5 star hotels etc.

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Many people want a BMW, but only a few can buy one. So, it’s very crucial that one must

measure not only how many people want their product, but also how many are willing and have

the ability to buy it.

So, its not only important to discover different consumer needs, but also to figure out what

consumer actually wants and how much is he able to pay ie. how much demand can be created

for the product or service.

MARKETING MIX

The marketing mix is “the set of marketing tools that a company utilizes to achieve its

marketing goals in the target market environment.” According to marketers, it’s what makes

your product unique and different from the competition.

Marketing Mix is a blanket term that covers the actions implemented for sales enhancement

and brand promotion. The marketing mix includes crucial factors: Price, Product, Promotion,

and Place, together known as the 4 Ps of the marketing mix. A marketing mix is vital for

interpreting the product or service that helps prepare potent marketing strategies.

4 Ps of The Marketing Mix

1. Product

The company manufactures or designs the item or service to fulfill consumer needs. The

product ought to be promising, productive, and effective. Customers won’t buy an inefficient

product even when you promote it heavily. Your audience will acknowledge the marketing

investments and strategies if the product has potential.

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Example

In the case of the iPhone, the product will include every feature and design. The cellular

structure, variety of colors, touchpad, and so on will fall under the “‘product mix” part.

2. Price

The consumer pays the value to access or receive the product. Most marketing promotions

stress the cost-effective pricing of the product. Pricing depends on the various costs incurred

during the development phase and the profit margins desired by the stakeholders.

For setting the price, you should consider a few factors:

(a) The worth of your product

From the user’s perspective, is the product worth the money spent on buying it. Is it equipped

to serve most of the user’s needs? And is it better than the other brands?

(b) Compare the market prices

If another brand’s product provides the same service as yours, it comes down to the price

difference. The customer will buy the more cost-effective product, and marketing promotions

attract the customer by price comparison.

(c) Over or underpricing

You should price the product based on its features, the number of needs it fulfills, and the prices

offered by competitors. Also, sometimes, the brand image aids the pricing.

Therefore, a product shouldn’t be so overpriced that the customer won’t buy it. It also should

be too underpriced that you don’t meet the profit margins even if the sales are high.

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Example

Apple is a classic example of a premium pricing strategy. That means the product’s prices are

marked high owing to its high quality and value.

3. Place

Place refers to the areas of distribution. As the site’s culture, needs, and market environment

change, marketing strategies vary depending on the location.

Example

Apple invests a lot in advertising, marketing, and appealing promotional techniques. As

marketing has evolved, we have also seen new, more innovative, and creative ads for the

iPhone. They are now also involved in social media marketing.

4. Promotion

Promotion helps communicate with the potential customers and promote product benefits to

convince or attract them to buy. It involves advertising, incentive, discounts, word of mouth,

or anything that promotes a good image. All these are interrelated such that you can focus on

no factor individually. That’s why it is a mixture or a ‘mix.’

Example

You can easily find iPhones on online and offline platforms. They are always available on giant

e-commerce stores like Amazon.

CUSTOMER VALUE

Customer value measures a product or service's worth and compares it to its possible

alternatives. This determines whether the customer feels like they received enough value for

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the price they paid for the product/service. We can look at customer value as insight into buyer's

remorse. If customers feel like the total cost of an item outweighs its benefits, they're going to

regret their purchase. Especially if there's a competitor who's making a better offer than yours

for a similar product or service. Understanding customer value and how to calculate it can help

your business price products fairly and reduce friction within the customer experience.

For some businesses, customer value boils down to dollars and cents. However, it's important

to remember that customers give more to your company than just what's listed on the price tag.

There are also time costs, energy costs, and emotional costs that customers weigh when making

a buying decision. Similarly, there are different types of benefits that influence customer

decisions. Some examples include tangible benefits--like how the product will help them

achieve goals--as well as image benefits — like how owning this product or service will change

one's social status in the eyes of their peers and colleagues. To measure customer value, we

first need to recognize these different types of costs and benefits. Table below can help by

summarizing the factors you should be addressing when calculating customer value.

Customer Perceived Value

Total Customer Benefit Total Customer Cost

Personnel Benefit Monetary Cost

Product Benefit Psychic cost

Service Benefit Energy Cost

Image Benefit Time Cost

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MEASURING CUSTOMER VALUE

Customer value can be measured in the following ways:

(i) Identify customer benefits

While the graphic above highlights some general benefits, here are some specific one you can

consider:

 The quality of your product or service

 The ability to provide a better solution

 Your brand's reputation

 Your unique customer experiences

 The quality of your customer service team

 The social advantages of partnering with your business

(ii) Total customer costs

When measuring customer costs, it helps to differentiate between tangible and intangible. That

way you can calculate the total of your monetary costs and compare it to your other costs.

Tangible Costs

 The price of your product or service

 Installation or onboarding costs

 The cost of accessing your product or service

 Maintenance costs

 Renewal costs

Intangible Costs

 Time invested in buying your product or service

 A poor customer experiences

 Physical or emotional stress induced from buying or installing your product

 A poor brand reputation

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  Time spent understanding how your product or service works

(iii) Find the difference between customer benefits and customer costs

To calculate customer value, we can use the equation below.

Customer Value Formula

The formula for customer value can be written as:

(Total Customer Benefits - Total Customer Costs) = Customer Value

OR

(B - C = CV)

You'll need to determine how much benefits like brand reputation, social status, and service

convenience are worth compared to costs like time investment, emotional stress, and physical

commitment.

Additionally, customer value is going to vary depending on the segment of customers you're

analyzing. Since each person is different and has specific needs, goals, and expectations, you

might find the definition of "good value" is inconsistent. If you do, try segmenting your

customer base into different buyer personas, then calculate customer value for each group.

Now that we're familiar with customer value and how to calculate it, let's look at some ways

you can generate it through customer service.

WAYS TO INCREASE CUSTOMER VALUE

The ways to increase customer value are:

(i) Evaluate your customer experience

When increasing customer value, the best place to start is by analyzing your customer

experience. Create a customer journey map that outlines each step your customers take when

buying something from your business and look for interactions that might cause friction within

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the experience. Once you can visualize every action your customers are taking, it's easier to

identify opportunities to add value.

(ii) Focus on more than price

For some businesses, it's tough to compete through price alone. Sometimes the cost to make a

product is static, and there's not much room for a business to lower its price tag. But that doesn't

mean you can't create a competitive offer in your industry. This is where you should look for

alternative ways to add value to your customer experience. Keep in mind that customer needs

range from convenience to performance and there are plenty of non-monetary benefits that can

convince people to buy your product.

(iii) Collect customer data

It's hard to make effective changes if you're only looking at customer value from the business

perspective. Instead, you should be centering your focus on the customer's perceived value of

your product or service. To do that, you'll need access to quantitative and qualitative customer

data. With it, management teams will have facts and statistics that justify their proposed

changes. Leadership can make decisions confidently knowing their perception of customer

value aligns with your customer base. Additionally, it's important to collect both quantitative

and qualitative data as this will give you a diverse data set that includes insightful statistics and

captures the voice of the customer.

(iv) Target your most loyal customers

You might think that because a customer is loyal, they're already receiving value from your

business. And, you'd be right. However, just because someone is loyal to your business, that

doesn't mean you can't--or shouldn't--outsize their customer value. Encompassing additional

benefits through customer loyalty programs can generate even more value for these customers.

While this approach not only retains your most valuable audience, it acquires new customers

as well. For example, you can leverage benefits in exchange for customer advocacy. Have

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customers submit feedback or write a testimonial that shares their positive experience with

potential leads. Since 93% of consumers use reviews when making buying decisions, this will

add another benefit to your customer value equation.

(v) Segment your customer base

As we mentioned earlier, customer value can vary depending on who you're surveying, and a

customer's needs and goals will influence their definition of "value." Since not all customers

are alike, this creates discrepancies when measuring value at your business.

That's why it's important to segment your customer base into specific target audiences. Start

with your buyer personas and use customer data to identify specific purchasing behaviors. Once

your groups are established, you can measure customer value for each. Customer value is

important to track, but it's not as easy as inputting numbers into a simple formula. It's all about

measuring tangible benefits and perceived value in addition to the actual cost of a product.

BUYING MOTIVE

Buying motive is the urge or motive to satisfy a desire or need that makes people buy goods or

services. Behind every purchase there is a buying motive. It refers to the thoughts, feelings,

emotions and instincts, which arouse in the buyers a desire to buy an article. A buyer does not

buy because s/he has been persuaded by the salesman, but s/he buys for the aroused desire in

him or her. Motives should be distinguished from instincts.

A motive is simply a reason for carrying out a particular behaviour and not an automatic

response to a stimulus, whereas instincts are pre-programmed responses, which are inborn in

the individual and involuntary. Thus hunger is an instinct whereas desire to purchase pizza is

a buying motive. According to Prof. D. J. Duncan, “Buying Motives are those influences or

considerations which provide the impulse to buy, induce action and determine choice in the

purchase of goods and services.”

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CLASSIFICATION OF BUYING MOTIVES

Buying motives can be divided by the following way:

(I) PRODUCT BUYING MOTIVES

Product buying motives refer to those influences and reasons, which prompt (i.e. induce) a

buyer to choose a particular product in preference to other products. They include the physical

attraction of the product (i.e. the design, shape, dimension, size, colour, package, performance,

price etc. of the product) or the psychological attraction of the product (i.e. the enhancement of

the social prestige or status of the purchaser through its possession), desire to remove or reduce

the danger or damage to life or body of the possessor, etc. In short, they refer to all those

characteristics of a product, which induce a buyer to buy it in preference to other products.

Product buying motives may be sub-divided into two groups which are as follows:

(a) Emotional product buying motives

When a buyer decides to purchase a product without thinking over the matter logically and

carefully (i.e., without much reasoning), she is said to have been influenced by emotional

product buying motives. Emotional product buying motives include the following:

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1. Pride or Prestige

Pride is the most common and strongest emotional buying motive. Many buyers are proud of

possessing some product (i.e., they feel that the possession of the product increases their social

prestige or status). In fact, many products are sold by the sellers by appealing to the pride

prestige of the buyers. For instance, diamond merchants sell their products by suggesting to the

buyers that the possession of diamonds increases their prestige or social status.

2. Emulation or Imitation

Emulation, i.e., the desire to imitate others, is one of the important emotional buying motives.

For instance, a housewife may like to have a silk saree for the simple reason that all the

neighbouring housewives have silk sarees.

3. Affection

Affection or love for others is one of the stronger emotional buying motives influencing the

purchasing decisions of the buyers. Many goods are purchased by the buyers because of their

affection or love for others. For instance, a husband may buy a costly silk saree for his wife or

a father buy a costly watch for his son or daughter out of his affection and love.

4. Comfort or desire for comfort

Desire for comfort (i.e., comfortable living) is one of the important emotional buying motives.

In fact, many products are bought comfort. For instance, fans, refrigerators, washing machines,

cushion beds, etc. are bought by people because of their desire for comfort.

5. Sex appeal or sexual attractions

Sex appeal is one of the important emotional buying motives of the buyers. Buyers buy and

use certain things, as they want to be attractive to the members of the opposite sex. Men and

women buy cosmetics, costly dresses, etc., because of this emotional motive, i.e., sex appeal.

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6. Ambition

Ambition is one of the emotional buying motives. Ambition refers to the desire to achieve a

definite goal. It is because of this buying motive that, sometimes, customers buy certain things.

For instance, it is the ambition that makes many people, who do not have the facilities to pursue

their college education through regular colleges, pursue their education through

correspondence courses.

7. Desire for distinctiveness or individuality

Desire for distinctiveness, i.e., desire to be distinct from others, is one of the important

emotional buying motives. Sometimes, customers buy certain things, because they want to be

in possession of things, which are not possessed by others. Purchasing and wearing a particular

type of dress by some people is because of their desire for distinctiveness or individuality.

8. Desire for recreation or pleasure

Desire for recreation or pleasure is also one of the emotional buying motives. For instance,

radios, musical instruments, etc. are bought by people because of their desire for recreation or

pleasure.

9. Hunger and thirst

Hunger and thirst are also one of the important emotional buying motives. Foodstuffs, drinks,

etc. are bought by the people because of this motive.

10. Habit

Habit is one of the emotional considerations influencing the purchasing decision of the

customers. Many customers buy a particular thing because of habit, (i.e. because they are used

to the consumption of the product). For instance, many people purchase cigarettes, liquors, etc.

because of sheer habit.

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(b) Rational Product Buying Motives

When a buyer decides to buy a certain thing after careful consideration (i.e. after thinking over

the matter consciously and logically), s/he is said to have been influenced by rational product

buying motives. Rational product buying motives include the following:

1. Safety or Security

Desire for safety or security is an important rational buying motive influencing many

purchases. For instance, iron safes or safety lockers are bought by the people because they want

to safeguard their cash, jewelries etc., against theft. Similarly, vitamin tablets, tonics,

medicines, etc., are bought by the people because of this motive, i.e. they want to safeguard

their health and protect themselves against diseases.

2. Economy

Economy, i.e. saving in operating costs, is one of the important rational buying motives. For

instance, Hero Honda bikes are preferred by the people because of the economy or saving in

the operating cost, i.e. petrol costs.

3. Relatively low price

Relatively low price is one of the rational buying motives. Most of the buyers compare the

prices of competing products and buy things, which are relatively cheaper.

4. Suitability

Suitability of the products for the needs is one of the rational buying motives. Intelligent buyers

consider the suitability of the products before buying them. For instance, a buyer, who has a

small dining room, naturally, goes in for a small dining table that is suitable, i.e. that fits in

well in the small dining room.

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5. Utility or versatility

Versatility or the utility of a product refers to that quality of the product, which makes it suitable

for a variety of uses. Utility of the product is one of the important rational buying motives.

People, often, purchase things that have utility, i.e. that can be put to varied uses.

6. Durability of the product

Durability of the product is one of the most important rational buying motives. Many products

are bought by the people only on the basis of their durability. For instance, buyers of wooden

furniture go in for teak or rosewood table, though they are costlier, as they are more durable

than ordinary wooden furniture.

7. Convenience of the product

The convenience of the product (i.e. the convenience the product offers to the buyers) is one

of the important rational product buying motives. Many products are bought by the people

because they are more convenient to them. For instance, automatic watches, gas stoves, etc.,

are bought by the people because of the convenience provided by them.

(II) PATRONAGE BUYING MOTIVES

Patronage buying motives refer to those considerations or reasons, which prompt a buyer to

buy the product wanted by him from a particular shop in preference to other shops. In other

words, they are those considerations or reasons, which make a buyer, patronise a particular

shop in preference to other shops while buying a product.

Patronage buying motives also may be sub-divided into two groups viz. a) Emotional patronage

buying motives and b) Rational patronage buying motives.

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(a) Emotional Patronage Buying Motives

When a buyer patronises a shop (i.e. purchases the things required by him from a particular

shop) without applying his mind or without reasoning, he is said to have been influenced by

emotional patronage buying motives. Emotional patronage buying motives include the

following:

1. Appearance of the shop

Appearance of the shop is one of the important emotional patronage buying motives. Some

people make their purchases from a particular shop because of good or attractive appearance

of the shop.

2. Display of goods in the shop

Attractive display of goods in the shop also makes the buyers patronise a particular shop.

3. Recommendation of others

Recommendation of others also constitutes one of the important emotional patronage buying

motives. Some people purchase their requirements from a particular shop because that shop

has been recommended to them by others, i.e., by their friends and relatives.

4. Imitation

Imitation also is one of the emotional patronage buying motives influencing the purchases of

buyers. Some people make their purchases from a particular shop just because other people

make their purchases from that shop.

5. Prestige

Prestige is one of the emotional patronage buying motives of the buyers. For instance, some

people consider it a prestige to take coffee from a five-star hotel.

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6. Habit

Habit is also one of the important emotional patronage buying motives. Some people make

their purchases from a particular shop for the simple reason that they have been habitually

making their purchases from that shop.

(b) Rational Patronage Buying Motives

When a buyer patronises a shop after careful consideration (i.e. after much logical reasoning

and careful thinking) he is said to have been influenced by rational patronage buying motives.

Rational patronage buying motives include the following:

1. Convenience

Convenient location proximity of a shop is one of the considerations influencing the purchases

of many buyers from a particular shop. Many buyers, usually, buy their requirements from a

near-by shop, as it is convenient to them to make their purchases.

Similarly, convenient working hours of the shop also influence the purchases of good many

buyers. For instance, if a shop works for a longer period of time every day and even on Sundays,

it will be very convenient to the buyers. As such, many buyers may make their purchases from

such a shop.

2. Low price charged by the shop

Price charged by the shop also influences the buyers to patronise a particular shop. If the price

charged by a shop for a particular product is relatively cheaper, naturally, many people will

make their purchases from that shop.

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3. Credit facilities offered

The credit facilities offered by a store also influence the buying of some people from a

particular shop. People who do not have enough money to make cash purchases every time

prefer to make their purchases from a shop which offers credit facilities.

4. Services offered

The various sales and after-sale services, such as acceptance of orders through phone, home

delivery of goods, repair service, etc., offered by a shop also induce the buyers to buy their

requirements from that shop. Rational buyers are, often, influenced by the various services or

facilities offered by the shop.

5. Efficiency of salesmen

The efficiency of the salesmen employed by a shop also influences the people in patronising a

particular shop. If the employees are efficient and are capable of helping the buyers in making

their purchases, people naturally would flock to such a shop.

6. Wide choice

Wide choice of goods offered by a shop is one of the rational considerations making the buyers

patronise a particular shop. People generally prefer to make their purchases from a shop, which

offers wide choice (i.e. wide varieties of goods).

7. Treatment

The treatment meted out by a shop to the customers is one of the rational considerations

influencing the buyers to patronise a particular shop. Usually, people would like to purchase

their requirements from a shop where they get courteous treatment.

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8. Reputation of the shop

Reputation of the shop for honest dealings is also one of the rational patronage buying motives.

Usually, people would like to make their purchases from a store having reputation for fair

dealings.

MAJOR FACTORS INFLUENCING CONSUMER BEHAVIOR

Consumer behavior is influenced by many different factors. A marketer should try to

understand the factors that influence consumer behavior.

Major factors that influence consumer behavior are as follows:

(A) PSYCHOLOGICAL FACTORS

Human psychology is a major determinant of consumer behavior. These factors are difficult to

measure but are powerful enough to influence a buying decision.

Some of the important psychological factors are:

(i) Motivation

When a person is motivated enough, it influences the buying behavior of the person. A person

has many needs such as social needs, basic needs, security needs, esteem needs, and self-

actualization needs. Out of all these needs, the basic needs and security needs take a position

above all other needs. Hence basic needs and security needs have the power to motivate a

consumer to buy products and services.

(ii) Perception

Consumer perception is a major factor that influences consumer behavior. Customer perception

is a process where a customer collects information about a product and interprets the

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information to make a meaningful image of a particular product. When a customer sees

advertisements, promotions, customer reviews, social media feedback, etc. relating to a

product, they develop an impression about the product. Hence consumer perception becomes

a great influence on the buying decision of consumers.

(iii) Learning

When a person buys a product, he/she gets to learn something more about the product. Learning

comes over a period of time through experience. A consumer’s learning depends on skills and

knowledge. While skill can be gained through practice, knowledge can be acquired only

through experience.

Learning can be either conditional or cognitive. In conditional learning the consumer is

exposed to a situation repeatedly, thereby making a consumer to develop a response towards

it. Whereas in cognitive learning, the consumer will apply his knowledge and skills to find

satisfaction and a solution from the product that he buys.

(iv) Attitudes and Beliefs

Consumers have certain attitudes and beliefs which influence the buying decisions of a

consumer. Based on this attitude, the consumer behaves in a particular way towards a product.

This attitude plays a significant role in defining the brand image of a product. Hence, marketers

try hard to understand the attitude of a consumer to design their marketing campaigns.

(B) SOCIAL FACTORS

Humans are social beings and they live around many people who influence their buying

behavior. Humans try to imitate other humans and also wish to be socially accepted in the

society. Hence their buying behavior is influenced by other people around them. These factors

are considered as social factors. Some of the social factors are:

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(i) Family

Family plays a significant role in shaping the buying behavior of a person. A person develops

preferences from his childhood by watching family buy products and continues to buy the same

products even when they grow up.

(ii) Reference Groups

A reference group is a group of people with whom a person associates himself. Generally, all

the people in the reference group have common buying behavior and influence each other.

(iii) Roles and status

A person is influenced by the role that he holds in the society. If a person is in a high position,

his buying behavior will be influenced largely by his status. A person who is a Chief Executive

Officer in a company will buy according to his status while a staff or an employee of the same

company will have different buying pattern.

(C) Cultural Factors

A group of people is associated with a set of values and ideologies that belong to a particular

community. When a person comes from a particular community, his/her behavior is highly

influenced by the culture relating to that particular community. Some of the cultural factors

are:

(i) Culture

Cultural Factors have a strong influence on consumer buying behavior. Cultural Factors

include the basic values, needs, wants, preferences, perceptions, and behaviors that are

observed and learned by a consumer from their near family members and other important

people around them.

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(ii) Subculture

Within a cultural group, there exists many subcultures. These subcultural groups share the same

set of beliefs and values. Subcultures can consist of people from different religion, caste,

geographies and nationalities. These subcultures by itself form a customer segment.

(iii) Social Class

Each and every society across the globe has the form of social class. The social class is not just

determined by the income, but also other factors such as the occupation, family background,

education and residence location. Social class is important to predict the consumer behavior.

(IV) PERSONAL FACTORS

Factors that are personal to the consumers influence their buying behavior. These personal

factors differ from person to person, thereby producing different perceptions and consumer

behavior.

Some of the personal factors are:

(i) Age

Age is a major factor that influences buying behavior. The buying choices of youth differ from

that of middle-aged people. Elderly people have a totally different buying behavior. Teenagers

will be more interested in buying colorful clothes and beauty products. Middle-aged are

focused on house, property and vehicle for the family.

(ii) Income

Income has the ability to influence the buying behavior of a person. Higher income gives higher

purchasing power to consumers. When a consumer has higher disposable income, it gives more

opportunity for the consumer to spend on luxurious products. Whereas low-income or middle-

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income group consumers spend most of their income on basic needs such as groceries and

clothes.

(iii) Occupation

Occupation of a consumer influences the buying behavior. A person tends to buy things that

are appropriate to this/her profession. For example, a doctor would buy clothes according to

this profession while a professor will have different buying pattern.

(iv) Lifestyle

Lifestyle is an attitude, and a way in which an individual stay in the society. The buying

behavior is highly influenced by the lifestyle of a consumer. For example when a consumer

leads a healthy lifestyle, then the products he buys will relate to healthy alternatives to junk

food.

(V) ECONOMIC FACTORS

The consumer buying habits and decisions greatly depend on the economic situation of a

country or a market. When a nation is prosperous, the economy is strong, which leads to the

greater money supply in the market and higher purchasing power for consumers. When

consumers experience a positive economic environment, they are more confident to spend on

buying products. Whereas, a weak economy reflects a struggling market that is impacted by

unemployment and lower purchasing power. Economic factors bear a significant influence on

the buying decision of a consumer. Some of the important economic factors are:

(i) Personal Income

When a person has a higher disposable income, the purchasing power increases simultaneously.

Disposable income refers to the money that is left after spending towards the basic needs of a

person.

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When there is an increase in disposable income, it leads to higher expenditure on various items.

But when the disposable income reduces, parallelly the spending on multiple items also

reduced.

(ii) Family Income

Family income is the total income from all the members of a family. When more people are

earning in the family, there is more income available for shopping basic needs and luxuries.

Higher family income influences the people in the family to buy more. When there is a surplus

income available for the family, the tendency is to buy more luxury items which otherwise a

person might not have been able to buy.

(iii) Consumer Credit

When a consumer is offered easy credit to purchase goods, it promotes higher spending. Sellers

are making it easy for the consumers to avail credit in the form of credit cards, easy

installments, bank loans, hire purchase, and many such other credit options. When there is

higher credit available to consumers, the purchase of comfort and luxury items increases.

(iv) Liquid Assets

Consumers who have liquid assets tend to spend more on comfort and luxuries. Liquid assets

are those assets, which can be converted into cash very easily. Cash in hand, bank savings and

securities are some examples of liquid assets. When a consumer has higher liquid assets, it

gives him more confidence to buy luxury goods.

(v) Savings

A consumer is highly influenced by the amount of savings he/she wishes to set aside from his

income. If a consumer decided to save more, then his expenditure on buying reduces. Whereas

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if a consumer is interested in saving more, then most of his income will go towards buying

products.

VARIOUS STAGES OF THE CONSUMER BUYING DECISION PROCESS

(i) Need recognition

In this first stage, the consumer recognizes that he has an unmet need and is driven to action

by a need or desire. Unsatisfied needs create discomfort to the consumer, so that he begins to

recognize that this need can be met by acquiring or consuming goods and services. This desire

to meet this need over time becomes strong enough to motivate a person to decide to make a

purchase. This recognition of a need can arise internally at any time. When you are watching

television, you are on the computer, you are on the boring sofa, you are stuck in traffic, etc. Or

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in another case, the need may be numbed within it until an external stimulus wakes it up, such

as an advertisement or the sight of a product or service. The depletion of a product (the ink in

your pen runs out) or dissatisfaction with the product you are currently using can also trigger

the decision process. However, becoming aware of the need is not enough to generate the

purchase. As consumers, we have many needs and desires, but finite amounts of time and

money. For this reason, there is also competition between our needs. Therefore, the consumer

quickly once recognized that he has an unmet need, proceeds to the second stage of the

consumer purchase decision process.

(ii) Information and alternatives search

In this second stage of the consumer buying decision process, the consumer identifies

alternative products and brands that are able to meet their needs, and therefore proceeds to

gather information about them from different sources. Whether asking acquaintances or

searching the internet. Most commonly, alternative products are identified first and then

alternative brands. The following factors influence the search for alternatives:

 The amount of information that the consumer already has from experiences and other

sources.

 Consumer confidence in that information.

 The expected value of the additional information or, in other words, what other

information is considered worth acquiring.

After identifying the different alternatives with which the consumer considers that it could meet

their needs, this proceeds to what is the third stage of the process: evaluate the alternatives.

(iii) Evaluation of Alternatives

In this third stage of the consumer buying decision process, the consumer ponders the pros and

cons of the identified alternatives. When some satisfactory alternatives have been identified,

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the consumer proceeds to evaluate them before making a decision. The evaluation may involve

a single or several criteria, with which the alternatives are compared. For example, price,

quality, ease of use, time, durability or color. When multiple criteria are involved, it is common

that not all criteria have equal preponderance. Ease of use, for example, could be more

important than price. As experience is often limited and information from sources such as

advertising or friendships can be biased, evaluations may be incorrect from the point of view

of the facts. That is, the consumer may believe that the price of the A brand is more expensive

than that of the B brand when in fact it is the opposite. As business owners or marketers, we

must closely observe consumers to determine what criteria of choice they follow, to identify

any changes that may occur in their criteria or priorities, and to correct any unfavorable

misperceptions related to our product or service.

(iv) Purchase Decision

In this forth stage of the consumer buying decision process, the consumer decides to buy or not

buy, and makes other decisions related to the purchase. After searching and evaluating, the

consumer has to decide whether or not to buy. Thus, the first result is the decision to buy or not

the alternative evaluated as the most desirable. This part of the process the consumer can make

the decision in 1 hour or up to 1 month later. Everything will depend on the type of product or

service and how large the investment is to acquire said product or service. In this part of the

process it can happen that the consumer does not make the purchase after finding complicated

the way to acquire said product or service. What will make you consider other alternatives. On

the other hand, if the decision is to buy, you have to make a series of related decisions related

to the characteristics, where and when to make the actual transaction, how to take possession

or receive the delivery, the method of payment and other issues. So the decision to make a

purchase is actually the beginning of an entirely new series of decisions that can be as time

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consuming and as difficult as the initial one. Once the consumer has made the decision, he

proceeds to make the purchase and feel happy for having satisfied an intrinsic desire or need.

(v) Post Purchase Behavior

Finally, at this fifth stage of the consumer buying decision process, the consumer seeks to

ensure that the choice he made was correct. What the consumer learns in his journey through

the purchase process has an influence on how he will behave the next time the same need is

pressed. Moreover, new opinions and beliefs have been formed and the old ones have been

corrected. Therefore, this time, we have a more expert consumer in the field. Therefore, as

business owners and marketers, we must also assess how they behave in consumer after making

the purchase. Do you feel happy with the product? Are you dissatisfied with the service? Were

your product expectations higher? For this, it is important to carry out market studies or surveys

to be able to determine if the product or service we offer meets expectations and meets needs.

When not, it is the ideal situation to consider improving our product or service, or making

changes in the way we market and promote our product or service.

TYPES OF CONSUMERS BUYING DECISIONS

A consumer’s buying decision depends on the type of products that they need to buy. The

behavior of a consumer while buying a coffee is a lot different from while buying a car. Based

on observations, it is clear that purchases that are more complex and expensive involve higher

deliberation and many more participants. Consumer buying behavior is determined by the level

of involvement that a consumer shows towards a purchase decision. The amount of risk

involved in a purchase also determines the buying behavior. Higher priced goods tend to high

a higher risk, thereby seeking higher involvement in buying decisions.

Four types of consumer buying behavior are mentioned below:

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(i) Complex buying behavior

Complex buying behavior is encountered particularly when consumers are buying an expensive

product. In this infrequent transaction, consumers are highly involved in the purchase decision.

Consumers will research thoroughly before committing to invest. Consumer behaves very

differently when buying an expensive product or a product that is unfamiliar to them. When

the risk of buying a product is very high, a consumer consults friends, family, and experts

before making the decision.

Example

When a consumer is buying a car for the first time, it’s a big decision as it involves high

economic risk. There is a lot of thought on how it looks, how his friends and family will react,

how will his social status change after buying the car, and so on.

In complex buying behavior, the buyer will pass through a learning process. He will first

develop beliefs about the product, then attitudes, and then make a thoughtful purchase choice.

For complex buying behavior customers, marketers should have a deep understanding of the

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products. It is expected that they help the consumer to understand their product. It is important

to create an advertising message in a way that influences the buyer’s beliefs and attitudes.

(ii) Dissonance-reducing buying behavior

In dissonance-reducing buying behavior, consumer involvement is very high. This might be

due to high prices and infrequent purchases. In addition, there is low availability of choices

with fewer significant differences among brands. In this type, a consumer buys a product that

is easily available. Consumers will be forced to buy goods that do not have too many choices

and therefore consumers will be left with limited decision making. Based on the products

available, time limitations, or budget limitations, consumers buy certain products without a lot

of research.

Example

A consumer who is looking for a new collapsible table that can be taken for camping quickly

decides on the product based on a few brands available. The main criteria here will be the use

and the feature of the collapsible table and the budget available to him.

Marketers should run after-sale service camps that deliver focused messaging. These

campaigns should aim to support consumers and convince them to continue with the choice of

their brand. These marketing campaigns should focus on building repeat purchases and

referrals by offering discounts and incentives.

(iii) Habitual buying behavior

Habitual Buying Behavior is depicted when a consumer has low involvement in a purchase

decision. In this case, the consumer is perceiving only a few significant differences between

brands. When consumers are buying products that they use for their daily routine, they do not

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put a lot of thought. They either buy their favorite brand or the one that they use regularly – or

the one available in the store or the one that costs the least.

Example

When a consumer buys a loaf of bread, he tends to buy the brand that he is familiar with without

actually putting in a lot of research and time. Many products fit into this category. Everyday

use products, such as salt, sugar, biscuits, toilet paper, and black pepper all fit into this product

category.

Consumers just go for it and buy it – there is no brand loyalty. Consumers do not research or

need information regarding the purchase of such products. Habitual buying behavior is

influenced by radio, television, and print media. Moreover, consumers are buying based on

brand familiarity. Hence marketers must use repetitive advertisements to build brand

familiarity. Further to initiate product trial, marketers should use tactics like price drop

promotions and sales promotions. Marketers should attract consumers using visual symbols

and imagery in their advertising. Consumers can easily remember visual advertisements and

can associate with a brand.

(iv) Variety-seeking buying behavior

In variety-seeking consumer behavior, consumer involvement is low. There are significant

differences between brands. Here consumers often do a lot of brand switching. The cost of

switching products is low, and hence consumers might want to try out new products just out of

curiosity or boredom. Consumers here, generally buy different products not because of

dissatisfaction but mainly with an urge to seek variety.

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Example

A consumer likes to buy a cookie and choose a brand without putting much thought into it.

Next time, the same consumer might choose a different brand out of a wish for a different taste.

Brand switching occurs often and without intention. Brands have to adopt different strategies

for such types of consumer behavior. The market leader will persuade habitual buying behavior

by influencing the shelf space. The shelf will display a large number of related but different

product versions. Marketers avoid out-of-stock conditions, sponsor frequent advertising, offer

lower prices, discounts, deals, coupons, and free samples to attract consumers.

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