Marketing Management- Introduction, objectives,

Scope and Importance Part 1

In today’s world of marketing, everywhere you go you are being marketed to in one form or another. Marketing
is with you each second of your walking life. From morning to night you are exposed to thousands of marketing
messages everyday. Marketing is something that affects you even though you may not necessarily be conscious
of it.

After reading this post you’ll understand – What exactly the marketing is, to whom it is beneficial for, and what
are the nature and scope of marketing.

Definition of Marketing

According to American Marketing Association (2004) – “Marketing is an organisational function and set of
processes for creating, communicating and delivering value to customers and for managing relationships in a
way that benefits both the organisation and the stakeholder.”

AMA (1960) – “Marketing is the performance of business activities that direct the flow of goods and services
from producer to consumer or user.”

According to Eldridge (1970) – “Marketing is the combination of activities designed to produce profit through
ascertaining, creating, stimulating, and satisfying the needs and/or wants of a selected segment of the market.”

According to Kotler (2000) – “A societal process by which individuals and groups obtain what they need and
want through creating, offering, and freely exchanging products and services of value with others.”

Nature of Marketing
1. Marketing is an Economic Function

Marketing embraces all the business activities involved in getting goods and services, from the hands of
producers into the hands of final consumers. The business steps through which goods progress on their way to
final consumers is the concern of marketing.

2. Marketing is a Legal Process by which Ownership Transfers

In the process of marketing the ownership of goods transfers from seller to the purchaser or from producer to
the end user.

3. Marketing is a System of Interacting Business Activities

Marketing is that process through which a business enterprise, institution, or organization interacts with the
customers and stakeholders with the objective to earn profit, satisfy customers, and manage relationship. It is
the performance of business activities that direct the flow of goods and services from producer to consumer or
user.
4. Marketing is a Managerial function

According to managerial or systems approach – “Marketing is the combination of activities designed to produce
profit through ascertaining, creating, stimulating, and satisfying the needs and/or wants of a selected segment of
the market.”

According to this approach the emphasis is on how the individual organization processes marketing and
develops the strategic dimensions of marketing activities.

5. Marketing is a social process

Marketing is the delivery of a standard of living to society. According to Cunningham and Cunningham (1981)
societal marketing performs three essential functions:-

 Knowing and understanding the consumer’s changing needs and wants;

 efficiently and effectively managing the supply and demand of products and services; and
 Efficient provision of distribution and payment processing systems.

6. Marketing is a philosophy based on consumer orientation and satisfaction

7. Marketing had dual objectives – profit making and consumer satisfactio

Marketing Management: objectives and Importance

Part 2
The basic purpose of marketing management is to achieve the objectives of the business. A business aims at
earning reasonable profits by satisfying the needs of customers.

Objectives of marketing management as follows:

1. Creation of Demand

The marketing management’s first objective is to create demand through various means. A conscious attempt is
made to find out the preferences and tastes of the consumers. Goods and services are produced to satisfy the
needs of the customers. Demand is also created by informing the customers the utility of various goods and
services.

2. Customer Satisfaction

The marketing manager must study the demands of customers before offering them any goods or services.
Selling the goods or services is not that important as the satisfaction of the customers’ needs. Modern marketing
is customer- oriented. It begins and ends with the customer.

3. Market Share
Every business aims at increasing its market share, i.e., the ratio of its sales to the total sales in the economy.
For instance, both Pepsi and Coke compete with each other to increase their market share. For this, they have
adopted innovative advertising, innovative packaging, sales promotion activities, etc.

4. Generation of Profits

The marketing department is the only department which generates revenue for the business. Sufficient profits
must be earned as a result of sale of want-satisfying products. If the firm is not earning profits, it will not be
able to survive in the market. Moreover, profits are also needed for the growth and diversification of the firm.

5. Creation of Goodwill and Public Image

To build up the public image of a firm over a period is another objective of marketing. The marketing
department provides quality products to customers at reasonable prices and thus creates its impact on the
customers.

The marketing manager attempts to raise the goodwill of the business by initiating image- building activities
such a sales promotion, publicity and advertisement, high quality, reasonable price, convenient distribution
outlets, etc.

7 Major Importance of Marketing Management

(1) Marketing Helps in Transfer, Exchange and Movement of Goods

Marketing is very helpful in transfer, exchange and movement of goods. Goods and services are made available
to customers through various intermediaries’ viz., wholesalers and retailers etc. Marketing is helpful to both
producers and consumers.

To the former, it tells about the specific needs and preferences of consumers and to the latter about the products
that manufacturers can offer. According to Prof. Haney Hansen “Marketing involves the design of the products
acceptable to the consumers and the conduct of those activities which facilitate the transfer of ownership
between seller and buyer.”

(2) Marketing Is Helpful In Raising and Maintaining The Standard Of Living Of The Community

Marketing is above all the giving of a standard of living to the community. Paul Mazur states, “Marketing is the
delivery of standard of living”. Professor Malcolm McNair has further added that “Marketing is the creation and
delivery of standard of living to the society”.

By making available the uninterrupted supply of goods and services to consumers at a reasonable price,
marketing has played an important role in raising and maintaining living standards of the community.
Community comprises of three classes of people i.e., rich, middle and poor. Everything which is used by these
different classes of people is supplied by marketing.

In the modern times, with the emergence of latest marketing techniques even the poorer sections of society have
attained a reasonable level of living standard. This is basically due to large scale production and lesser prices of
commodities and services. Marketing has infact, revolutionised and modernised the living standard of people in
modern times.
(3) Marketing Creates Employment

Marketing is complex mechanism involving many people in one form or the other. The major marketing
functions are buying, selling, financing, transport, warehousing, risk bearing and standardization, etc. In each
such function different activities are performed by a large number of individuals and bodies.

Thus, marketing gives employment to many people. It is estimated that about 40% of total population is directly
or indirectly dependent upon marketing. In the modern era of large scale production and industrialization, role
of marketing has widened.

This enlarged role of marketing has created many employment opportunities for people. Converse, Huegy and
Mitchell have rightly pointed out that “In order to have continuous production, there must be continuous
marketing, only then employment can be sustained and high level of business activity can be continued”.

(4) Marketing as a Source of Income and Revenue

The performance of marketing function is all important, because it is the only way through which the concern
could generate revenue or income and bring in profits. Buskirk has pointed out that, “Any activity connected
with obtaining income is a marketing action. It is all too easy for the accountant, engineer, etc., to operate under
the broad assumption that the Company will realise many dollars in total sales volume.

However, someone must actually go into the market place and obtain dollars from society in order to sustain the
activities of the company, because without these funds the organization will perish.”

Marketing does provide many opportunities to earn profits in the process of buying and selling the goods, by
creating time, place and possession utilities. This income and profit are reinvested in the concern, thereby
earning more profits in future. Marketing should be given the greatest importance, since the very survival of the
firm depends on the effectiveness of the marketing function.

(5) Marketing Acts as a Basis for Making Decisions

A businessman is confronted with many problems in the form of what, how, when, how much and for whom to
produce? In the past problems was less on account of local markets. There was a direct link between producer
and consumer.

In modern times marketing has become a very complex and tedious task. Marketing has emerged as new
specialized activity along with production.

As a result, producers are depending largely on the mechanism of marketing, to decide what to produce and sell.
With the help of marketing techniques a producer can regulate his production accordingly.

(6) Marketing Acts as a Source of New Ideas

The concept of marketing is a dynamic concept. It has changed altogether with the passage of time. Such
changes have far reaching effects on production and distribution. With the rapid change in tastes and preference
of people, marketing has to come up with the same.
Marketing as an instrument of measurement, gives scope for understanding this new demand pattern and
thereby produce and make available the goods accordingly.

(7) Marketing Is Helpful In Development Of An Economy

Adam Smith has remarked that “nothing happens in our country until somebody sells something”. Marketing is
the kingpin that sets the economy revolving. The marketing organization, more scientifically organized, makes
the economy strong and stable, the lesser the stress on the marketing function, the weaker will be the economy.

Marketing Orientations
Market orientation is a business philosophy where the focus is on identifying customer needs or wants and
meeting them. When a company has a market orientation approach, it focuses on designing and selling goods
and services that satisfy customer needs in order to be profitable. The successful market oriented company
discovers and meets the desires and needs of its customers through its product mix.

Market orientation works in the opposite direction to past marketing strategies – product orientation – where the
focus was on establishing selling points for existing goods. Rather than trying to get your customers to like or
become aware of the benefits of your products or services, with the marketing orientation approach you tailor
them to meet the demands of customers.

The main disadvantage with a market orientation approach is lack of innovation. If you spend all your time
satisfying customer needs, you may lose sight of what potential technical breakthroughs there might be. Product
oriented companies, on the other hand, tend to be more technically or scientifically innovative, but lose out
because they have less knowledge about what the consumer wants. 

Types of marketing orientation

1. Production Orientation

The focus for the business is to reduce costs through mass production. A business orientated around production
believes that the “economies of scale” generated by mass production will reduce costs and maximise profits. A
production orientated business needs to avoid production efficiency processes which affect product design and
quality. Compromising product design and quality for the sake of production is likely to reduce the product’s
appeal to customers.

2. Product Orientation

A product orientated company believes that its product’s high quality and functional features make it a superior
product. Such a company believes that if they have a superior product customers will automatically like it as
well. The problem with this approach is that superiority alone does not sell products; superior products will not
sell unless they satisfy consumer wants and needs.

3. Sales Orientation

A sales orientated company’s focus is simple; make the product, and then sell it to the target market. This type
of orientation involves the organization making what they think the customer needs or likes without relevant
research. However as we know sales usually aren’t this simple. An effective marketing strategy requires market
and marketing research, prior to product development and finally an effective promotion strategy.

4. Market Orientation

A market orientated company puts the customer at the “heart” of the business; all activities in the organization
are based around the customer. The customer is truly king!. A market orientated organization endeavours to
understand customer needs and wants, then implements marketing strategy based on their market research; from
product development through to product sales. Once sales have begun further research will be conducted to find
out what consumers think about the product and whether product improvements are required. As markets
continuously change, market research and product development is an ongoing process for a market orientation
company.

Core Concept of Marketing

Philip Kotler, the eminent writer, defines modern marketing as, “Marketing is social and managerial process by
which individuals and groups obtains what they needs and wants through creating and exchanging product and
value with others.” Careful and detailed analysis of this definition necessarily reveals some core concepts of
marketing, shown in Figure.

1. Needs

Existence of unmet needs is precondition to undertake marketing activities. Marketing tries to satisfy needs of
consumers. Human needs are the state of felt deprivation of some basic satisfaction. A need is the state of mind
that reflects the lack-ness and restlessness situation.

Needs are physiological in nature. People require food, shelter, clothing, esteem, belonging, and likewise. Note
that needs are not created. They are pre-existed in human being. Needs create physiological tension that can be
released by consuming/using products.

2. Wants

Wants are the options to satisfy a specific need. They are desire for specific satisfiers to meet specific need. For
example, food is a need that can be satisfied by variety of ways, such as sweet, bread, rice, sapati, puff, etc.
These options are known as wants. In fact, every need can be satisfied by using different options.

Maximum satisfaction of consumer need depends upon availability of better options. Needs are limited, but
wants are many; for every need, there are many wants. Marketer can influence wants, not needs. He
concentrates on creating and satisfying wants.

3. Demand

Demand is the want for specific products that are backed by the ability and willingness (may be readiness) to
buy them. It is always expressed in relation to time. All wants are not transmitted in demand. Such wants which
are supported by ability and willingness to buy can turn as demand.
Marketer tries to influence demand by making the product attractive, affordable, and easily available. Marketing
management concerns with managing quantum and timing of demand. Marketing management is called as
demand management.

4. Product

Product can also be referred as a bundle of satisfaction, physical and psychological both. Product includes core
product (basic contents or utility), product-related features (colour, branding, packaging, labeling, varieties,
etc.), and product-related services (after-sales services, guarantee and warrantee, free home delivery, free
repairing, and so on). So, tangible product is a package of services or benefits. Marketer should consider
product benefits and services, instead of product itself.

Marketer can satisfy needs and wants of the target consumers by product. It can be broadly defined as anything
that can be offered to someone to satisfy a need or want. Product includes both good and service. Normally,
product is taken as tangible object, for example, pen, television set, bread, book, etc.

However, importance lies in service rendered by the product. People are not interested just owning or
possessing products, but the services rendered by them. For examples, we do not buy a pen, but writing service.

Similarly, we do not buy a car, but transportation service. Just owning product is not enough, the product must
serve our needs and wants. Thus, physical product is just a vehicle or medium that offers services to us.

As per the definition, anything which can satisfy need and want can be a product. Thus, product may be in
forms of physical object, person, idea, activity, or organization that can provide any kind of services that satisfy
some needs or wants.

5. Utility (value), Cost, and Satisfaction

Utility means overall capacity of product to satisfy need and want. It is a guiding concept to choose the product.
Every product has varying degree of utility. As per level of utility, products can be ranked from the most need-
satisfying to the least need-satisfying.

Utility is the consumer’s estimate of the product’s overall capacity to satisfy his/her needs. Buyer purchases
such a product, which has more utility. Utility is, thus, the strength of product to satisfy a particular need.

Cost means the price of product. It is an economic value of product. The charges a customer has to pay to avail
certain services can be said as cost. The utility of product is compared with cost that he has to pay. He will
select such a product that can offer more utility (value) for certain price. He tries to maximize value, that is, the
utility of product per rupee.

Satisfaction means fulfillment of needs. Satisfaction is possible when buyer perceives that product has more
value compared to the cost paid for. Satisfaction closely concerns with fulfillment of all the expectations of
buyer. Satisfaction releases the tension that has aroused due to unmet need(s). In short, more utility/value with
less cost results into more satisfaction.

6. Exchange, Transaction, and Transfer

Exchange is in the center of marketing. Marketing management tries to arrive at the desired exchange. People
can satisfy their needs and wants in one of the four ways – self-production, coercion/snatching, begging, or
exchanging.

Marketing emerges only when people want to satisfy their needs and wants through exchange. Exchange is an
act of obtaining a desired product from someone by offering something in return. Obtaining sweet by paying
money is the example an exchange.

Exchange is possible when following five conditions are satisfied:

(i) There should be at least two parties

(ii) Each party has something that might be of value to the other party

(iii) Each party is capable of communication and delivery

(iv) Each party is free to accept or reject the exchange offer

(v) Each party believes it is desirable to deal with the other party

7. Relationships and Network

Today’s marketing practice gives more importance to relation building. Marketing practice based on relation
building can be said as relationship marketing. Relationship marketing is the practice of building long-term
profitable or satisfying relations with key parties like customers, suppliers, distributors, and others in order to
retain their long-term preference in business.

A smart marketer tries to build up long-term, trusting, and ‘win-win’ relations with valued customers,
distributors, and suppliers. Relationship marketing needs trust, commitment, cooperation, and high degree of
understanding.

Relationship marketing results into economical, technical, social, and cultural tie among the parties. Marketing
manager is responsible for establishing and maintaining long-term relations with the parties involved in
business.

Network is the ultimate outcome of relationship marketing. A marketing network consists of the company and
its supporting stakeholders – customers, employees, suppliers, distributors, advertising agencies, colleges and
universities, and others – whose role is considered to be essential for success of business. It is a permanent setup
of relations with stakeholders. A good network of relationships with key stakeholders results into excelling the
marketing performance over time.

8. Market, Marketing, Marketer, and Prospect

In marketing management, frequently used words are markets, marketing, marketer, and prospects. A market
consists of all potential customers sharing a particular need or want who might be willing and able to engage in
exchange to satisfy this need or want.
Marketing is social and managerial process by which individuals and groups obtain what they need and want
through creating and exchanging product and value with others.

Marketer is one who seeks one or more prospects (buyers) to engage in an exchange. Here, seller can be
marketer as he wants other to engage in an exchange. Normally, company or business unit can be said as
marketer.

Prospect is someone to whom the marketer identifies as potentially willing and able to engage in the exchange.
(In case of exchange between two companies, both can be said as prospects as well as marketers). Generally,
consumer or customer who buys product from a company for satisfying his needs or wants can be said as the
prospect.

Marketing Mix
The marketing mix refers to the set of actions, or tactics, that a company uses to promote its brand or product
in the market. The 4Ps make up a typical marketing mix – Price, Product, Promotion and Place. However,
nowadays, the marketing mix increasingly includes several other Ps like Packaging, Positioning, People and
even Politics as vital mix elements.

4P’s of marketing Mix

(i) Price

It refers to the value that is put for a product. It depends on costs of production, segment targeted, ability of the
market to pay, supply – demand and a host of other direct and indirect factors. There can be several types of
pricing strategies, each tied in with an overall business plan. Pricing can also be used a demarcation, to
differentiate and enhance the image of a product.

(ii) Product

It refers to the item actually being sold. The product must deliver a minimum level of performance; otherwise
even the best work on the other elements of the marketing mix won’t do any good.

(iii) Place

It refers to the point of sale. In every industry, catching the eye of the consumer and making it easy for her to
buy it is the main aim of a good distribution or ‘place’ strategy. Retailers pay a premium for the right location.
In fact, the mantra of a successful retail business is ‘location, location, location’.

(iv) Promotion

It refers to all the activities undertaken to make the product or service known to the user and trade. This can
include advertising, word of mouth, press reports, incentives, commissions and awards to the trade. It can also
include consumer schemes, direct marketing, contests and prizes.
Importance
All the elements of the marketing mix influence each other. They make up the business plan for a company and
handled right, can give it great success. But handled wrong and the business could take years to recover. The
marketing mix needs a lot of understanding, market research and consultation with several people, from users to
trade to manufacturing and several others.

Concept of Customer Value

Introduction
We are living in a world that is most unstable and dynamic. World is not only changing but the rate of change is
accelerating. We are experiencing change in our daily life and in marketplace too. Customer needs, wants,
expectations are changing more rapidly; customers are increasingly demanding better quality and reliability in
products and services; new products and services are coming to market more quickly, competition is getting
more intense and global; and technology is changing rapidly.

Businesses are operating in an uncertain, highly competitive, and highly complex environment. Not only small
but big players are also facing difficulties and challenges. Top companies are loosing market share and new
companies are taking their place. In cell-phone industry Nokia was the market leader, but it is not so today,
Samsung took its place.

Today, the leading edge companies are giving importance to customer satisfaction, loyalty, and value. They are
providing higher customer value to attract new customers and retain existing customers and it leads to  their
long term profitability and growth.

Definition of Customer Value

According to Woodruff (1997, p. 142) – “Customer value is a customer’s perceived preference for and
evaluation of those product attributes, attribute performances, and consequences arising from use that facilitate
(or block) achieving the customer’s goals and purposes in use situations”.

Customer value is the difference between the values the customer gains from owning and using a product and
the cost of obtaining the product.

Customer value is the difference between total customer value and total customer cost. Total customer value is
the sum of product value, service value, personnel value, and image value. Total customer cost is the sum of
monetary cost, time cost, physics cost, and energy cost.

Types of Value
 Functional Value

It is concerned with the extent to which a product is useful, has desired characteristics, and performs a desired
function.

1. Appropriate features and characteristics – quality, aesthetics, creativity, and customization.

2. Appropriate performance – performance quality, reliability, and service-support outcomes.
 Appropriate outcomes – effectiveness, operational benefits, and environmental benefits.

For example – Apple focus mainly on creating appropriate features and attributes. Ford focus on performance
and Pfizer focus on appropriate outcomes and consequences.

 Experimental Value

It is concerned with the extent to which a product creates appropriate feelings, experiences and emotions for the
customer. For example – most restaurants focus on sensory values like aesthetics, aromas, ambiance, feel or
tone. Organizations in travel or entertainment focus on creating emotional values like – pleasure, fun,
excitement adventure, or humour.

 Symbolic or Expressive Value

It is concerned with the extent to which customers associate psychological meaning to a product. Some products
appeal to customer’s self-concept and self-worth. Branded products like BMW, Rolex, etc are purchased
because of their status, prestige, and image.

Consumer Buying Behavior: Introduction,

Characteristics
According to Engel, Blackwell, and Mansard

‘Consumer behaviour is the actions and decision processes of people who purchase goods and services for
personal consumption’.

According to Louden and Bitta

‘Consumer behaviour is the decision process and physical activity, which individuals engage in when
evaluating, acquiring, using or disposing of goods and services’.

Consumer buying behavior

Consumer buying behavior is the sum total of a consumer’s attitudes, preferences, intentions, and decisions
regarding the consumer’s behavior in the marketplace when purchasing a product or service. The study of
consumer behavior draws upon social science disciplines of anthropology, psychology, sociology, and
economics

CHARACTERISTIC OF CONSUMER BEHAVIOR

1. PROCESS

Consumer behaviour is a systematic process relating to buying decisions of the customers. The buying process
consists of the following steps;

 Need identification to buy the product .

 Information search relating to the product.
 Listing of alternative brands.
 Evaluating the alternative (cost-benefit analysis)
 Purchase decision.
 Post-purchase evaluation by the marketer.

2. INFLUENCED BY VARIOUS FACTORS

Consumer behaviour is influenced by a number of factors.

The factors that influence consumers are : marketing, personal, psychological, situational, social, cultural etc.

3. DIFFERENT FOR ALL CUSTOMER

All consumers do not behave in the same manner. Different consumers behave differently. The difference in
consumer behaviour is due to individual factors such as nature of the consumer’s life style, culture, etc.

4. DIFFERENT FOR DIFFERENT PRODUCTS

Consumer behaviour is different for different products.  There are some consumers who may buy more quantity
of certain items and very low/no quantity of some other items.

5. REGION BOUNDED

 The consumer behaviour varies across states, regions and countries. For instance, the behaviour of urban
consumers is different from that of rural consumers.

Normally, rural consumers are conservative (traditional) in their buying behaviour.

6. VITAL FOR MARKETERS

Marketers need to have a good knowledge of consumer behaviour. They need to study the various factors that
influence consumer behaviour of their target customers. The knowledge of consumer behaviour enables
marketers to take appropriate marketing decisions.

7. REFLECTS STATUS

Consumers buying behaviour is not only influenced by status of a consumer, but it also reflects it. Those
consumers who own luxury cars, watches and other items are considered by others as persons of higher status.

8. SPREAD – EFFECT

Consumer behavior has a spread effect.

The buying behaviour of one person may  influence the buying behavior of another person. For instance, a
customer may always  prefer to buy premium brands of clothing, watches and other items etc.
This may influence some of his friends, neighbors, colleagues. This is one of the reasons why marketers
usecelebrities like Shahrukh Khan , Sachin to endorse their brands.

9. STANDARD OF LIVING

Consumer buying behaviour may lead to higher standard of living. The more a person buys the goods and
services, the higher is the standard of living.

[Link] ON CHANGING

The consumer’s behaviour undergoes a change over a period of time depending upon changes in age, education
and income level. Etc, for instance,, kids may prefer colorful dresses, but as they grow up as teenagers and
young adults, they may prefer trendy clot

Buying Motive
Buying motive is the motive to persuade the desires of people so that they buy a particular good or service.
Buying motive relates to the feelings and emotions of people which generate a desire to purchase. Any person
does not buy a product or service just because of excellent salesman pitch but he does also due to the desire
generated within him towards the product or service.

Importance of Buying Motive

Understanding the buying motive of a customer is essential for a company as it helps the company to target the
customer better. Buying motive means that the customer requires a particular product to fulfill a certain need.
No matter how good a product is or how good the marketing is, unless the customer has a need it would not
matter. This makes buying motive extremely important in business.

Motive and instincts are completely different keywords. Motives are voluntary made such that a particular
stimulus will take place where as instincts are involuntary and generally inborn quality of a person. Ex: Thirst is
an instinct but aspire to buy a bottle of mineral water to quench thirst is a motive.

Types of Buying Motives

Buying motives can be categorized as follows:

(1) Product Buying Motives

(2) Patronage Buying Motives

1. Product Buying Motives

Product buying motives are the factors or characteristics of a product that persuade a person to purchase only
that product instead of other products available in the market. The factors can be physical appearance like
design, size, color, price, shape etc. or can be psychological features like status, desire to reduce danger etc.
Product buying motives is divided into two categories: Emotional and Rational.
 Emotional Product Buying Motives- If a person purchases a product without thinking
much rationally (i.e. with less reasoning) then he or she is said to have persuaded by
emotional product buying motives. There are around ten kinds of emotional product buying
motives: prestige, imitation, affection, comfort, ambition, distinctiveness, pleasure, hunger
and thirst, habit.
 Rational Product Buying Motives- If a person purchases a product after thinking rationally
(i.e. logically deciding) then he or she is said to have persuaded by rational product buying
motives. There are around eight kinds of rational product buying motives: security,
economy, low price, suitability, utility, durability, convenience.

2. Patronage Buying Motives

Patronage buying motives are the factors or characteristics that influence a person to purchase a product from
particular shop instead of purchasing from other shops selling the same product. It can be divided into two
categories: Emotional and Rational

 Emotional Patronage Buying Motives- If a person purchases a product from a particular

shop without thinking much about other shops, then he or she is said to have persuaded by
emotional patronage buying motives. There are around six kinds of emotional patronage
buying motives: ambience of shop, showcase of products, recommendations by others,
prestige, habit, imitation.
 Rational Patronage Buying Motives- If a person purchases a product from a shop after
complete analysis and reasoning then he or she is said t have persuaded by rational patronage
buying motives. There are around eight rational patronage

Factors Influencing Consumer Behavior

Consumer behavior can be broadly classified as the decisions and actions that influence the purchasing
behavior of a consumer. What drives consumers to choose a particular product with respect to others is a
question which is often analyzed and studied by marketers. Most of the selection process involved in purchasing
is based on emotions and reasoning.

The study of consumer behavior not only helps to understand the past but even predict the future. The below
underlined factors pertaining to the tendencies, attitude and priorities of people must be given due importance to
have a fairly good understanding of the purchasing patterns of consumers

1. Marketing Campaigns

Advertisement plays a greater role in influencing the purchasing decisions made by consumers. They are even
known to bring about a great shift in market shares of competitive industries by influencing the purchasing
decisions of consumers. The Marketing campaigns done on regular basis can influence the consumer purchasing
decision to such an extent that they may opt for one brand over another or indulge in indulgent or frivolous
shopping. Marketing campaigns if undertaken at regular intervals even help to remind consumers to shop for
not so exciting products such as health products or insurance policies.

2. Economic Conditions
Consumer spending decisions are known to be greatly influenced by the economic situation prevailing in the
market. This holds true especially for purchases made of vehicles, houses and other household appliances. A
positive economic environment is known to make consumers more confident and willing to indulge in
purchases irrespective of their personal financial liabilities.

3. Personal Preferences

At the personal level, consumer behavior is influenced by various shades of likes, dislikes, priorities, morals and
values. In certain dynamic industries such as fashion, food and personal care, the personal view and opinion of
the consumer pertaining to style and fun can become the dominant influencing factor. Though advertisement
can help in influencing these factors to some extent, the personal consumer likes and dislikes exert greater
influence on the end purchase made by a consumer.

4. Group Influence

Group influence is also seen to affect the decisions made by a consumer. The primary influential group
consisting of family members, classmates, immediate relatives and the secondary influential group consisting of
neighbors and acquaintances are seen have greater influence on the purchasing decisions of a consumer. Say for
instance, the mass liking for fast food over home cooked food or the craze for the SUV’s against small utility
vehicle are glaring examples of the same.

5. Purchasing Power

Purchasing power of a consumer plays an important role in influencing the consumer behavior. The consumers
generally analyze their purchasing capacity before making a decision to buy and products or services. The
product may be excellent, but if it fails to meet the buyers purchasing ability, it will have high impact on it its
sales. Segmenting consumers based on their buying capacity would help in determining eligible consumers to
achieve better results.

Consumer Buying Decision Process

Consumer buying behavior is the study of an individual or a household that purchases products for personal
consumption. The process of buying behavior is shown in the following figure

Stages of Purchasing Process

A consumer undergoes the following stages before making a purchase decision −

Stage 1 − Needs / Requirements

It is the first stage of the buying process where the consumer recognizes a problem or a requirement that needs
to be fulfilled. The requirements can be generated either by internal stimuli or external stimuli. In this stage, the
marketer should study and understand the consumers to find out what kinds of needs arise, what brought them
about, and how they led the consumer towards a particular product. 
Stage 2 − Information Search

In this stage, the consumer seeks more information. The consumer may have keen attention or may go into
active information search. The consumer can obtain information from any of the several sources. This include
personal sources (family, friends, neighbors, and acquaintances), industrial sources (advertising, sales people,
dealers, packaging), public sources (mass media, consumer-rating and organization), and experiential sources
(handling, examining, using the product). The relative influence of these information sources varies with the
product and the buyer.

Stage 3 − Evaluation of Alternatives

In this stage, the consumer uses information to evaluate alternative brands from different alternatives. How
consumers go about evaluating purchase alternatives depends on the individual consumer and the specific
buying situation. In some cases, consumers use logical thinking, whereas in other cases, consumers do little or
no evaluating; instead they buy on aspiration and rely on intuition. Sometimes consumers make buying
decisions on their own; sometimes they depend on friends, relatives, consumer guides, or sales persons.

Stage 4 − Purchase Decision

In this stage, the consumer actually buys the product. Generally, a consumer will buy the most favorite brand,
but there can be two factors, i.e., purchase intentions and purchase decision. The first factor is the attitude of
others and the second is unforeseen situational factors. The consumer may form a purchase intention based on
factors such as usual income, usual price, and usual product benefits. 

Stage 5 − Post-Purchase Behavior

In this stage, the consumers take further steps after purchase based on their satisfaction and dissatisfaction. The
satisfaction and dissatisfaction depend on the relationship between consumer’s expectations and the product’s
performance. If a product is short of expectations, the consumer is disappointed. On the other hand, if it meets
their expectations, the consumer is satisfied. And if it exceeds their expectations, the consumer is delighted.

The larger the gap between the consumers’ expectations and the product’s performance, the greater will be the
consumer’s dissatisfaction. This suggests that the seller should make product claims that faithfully represent the
product’s performance so that the buyers are satisfied.

Consumer satisfaction is important because the company’s sales come from two basic groups, i.e., new
customers and retained customers. It usually costs more to attract new customers than to retain existing
customers and the best way to retain them is to get them satisfied with the product

Types of Buying Decision Behaviour

Consumers are becoming smarter day by day; it is not to fool them with any gimmick. Nowadays, consumer
does his/her homework very well before making any purchase in the market. Even before buying a face wash
a consumer go through a rigorous process of choosing the best among the many present in the market. Buying a
face wash and buying a luxurious car is very different, therefore the perception involved and the information
gathered by the consumer in purchasing a car is much more than buying a face wash.
Henry Assael distinguished four types of consumer buying behavior based on the degree of buyer
involvement and the degree of differences among brands.

(1) Routinized Response Behavior (RRB)/ Habitual Buying Behavior:

This is the simplest type of consumer behavior. This occurs when the consumer already has some experience of
buying and using the product. Usually, this kind of behavior is adopted for the purchase of low cost, frequently
used items. In such cases the buyers do not give much thought, or search and also do not take a lot of time to
make the purchase.

Most of the time the buyer is familiar with the various brands available and the attributes of each and has a
well-established criteria for selecting their own brand. The buyers are well aware of the product class, know the
brands and also have a clear preference among the brands. The degree of involvement in buying such products
is low. In such a case, the marketer has to ensure two tasks:

(a) The marketer must continue to provide satisfaction to the existing customers by maintaining quality, service
and value.

(b) He must try to attract new customers by making use of sales promotion techniques like points of purchase
displays, off-price offers, etc., and also introduce new features to the products.

(2) Limited Problem Solving (LPS)/ Dissonance Reducing Buying Behavior

In this type of buying behavior, the consumer is familiar with the product and various brands available, but has
no established brand preference. Here the buyer is more complex as compared to routine buying behavior
because the consumer is confronted with an unfamiliar brand in a familiar product class.

The consumer would like to gather additional information about the brands to arrive at his brand decision. For
instance, a housewife buys refined vegetable oils for her cooking and she may be familiar with the concept of
vegetable oil, vanaspati and ghee. She may also know about some of the leading brands available. But to
establish her choice of brand, she would like to check with her friends and regular store about the attributes
of each.

This buying behavior as described limited problem solving because the buyers are in a situation where they
are fully aware of the product class but not familiar with all the brands and their features.

Limited problem solving also takes place when a consumer encounters an unfamiliar or new brand in a known
product category. The housewife, who buys refined vegetable oil, on her next visit to the market, sees a new
brand of vegetable oil. Apart from buying a new brand, this brand of oil also claims the unique attribute of
being low in cholesterol.

To arrive at a decision, whether or not to buy this brand, the housewife needs to gather information about the
new brand, which will allow her to compare it with the known brands. Here the marketer’s job is to design a
communication programme, which will help the buyer to gather more information, increase his brand
comprehension and gain confidence in the brand.
(3) Extensive Problem Solving (EPS)/Complex Buying Behavior

This buying is referred to as a complex buying behavior because the consumer is in an unfamiliar product class
and is not clear about what criteria to consider for buying. Extensive problem solving occurs when
the consumer is encountering a new product category. He needs information on both the product category as
well as the various brands available in it.

This kind of decision is the most complex type. For instance, you may become interested in purchasing a Color
Television set to replace the existing black and white one. You may have heard of the various brand names, but
lack clear brand concepts. You do not know what product attributes or features to consider while choosing a
good television set. So yours is an extensive problem solving.

The marketing strategy for such buying behavior must be such that it facilitates the consumer’s information
gathering and learning process about the product category and his own brand.

The marketer must understand the information gathering and evaluation activities of the prospective consumers.
They have to educate the prospective buyers to learn about the attributes of the product class, their relative
importance and the high standing of the marketer’s brand on the more important brand attributes.

The marketer must be able to provide his consumer with a very specific and unique set of positive attributes
regarding his own brand, so that the purchase decision is made in his favor. In other words, the marketing
communications should be aimed at supplying information and help the consumer to evaluate and feel good
about his/her brand choice. The concept of EPS is most applicable to new products.

The product may be new at the generic level or it may be an established product concept but new for a
particular consumer. In case of a new product concept the entire consumer universe is unfamiliar with the
product. The marketer has to spend large amounts of money in educating the consumers about his product.

The consumer in turn need a great deal of information before they can take a decision; and the decision process
takes a longer time. On the other hand, you may have the situation where the product concept is well understood
by a majority of the consumers, but it is being bought or used by a particular consumer for the first time.

To take a very simple example, a tribal who is exposed to the concept of toothpaste for the first time in his life
will seek a lot of information and take a long time to decide. Because fro him, buying a toothpaste is an EPS
behavior whereas for most of us it is simply Routinized response behavior.

(4) Variety Seeking

Consumers often express satisfaction with their present brand but still engage in brand switching. The motive is
variety seeking, which occurs most often when there are many similar alternatives, frequent brand shifts, and
high purchase frequency.

It can occur simply because someone is bored with his or her current brand choice, or it can be prompted by
external cues as store stock outs or coupons that promote switching. Take the example of chocolates.
The consumers has some beliefs about chocolates chooses a brand of chocolates without much evaluation and
evaluates the product during consumption. Next time, the consumer may reach for another brand out of a wish
for a different taste. In this case the brand switching occurs for the sake of variety rather than dissatisfaction.