UNIT 1

INTRODUCTION TO MARKETING

1
A: DEFINITION OF MARKETING
• There are many definitions of Marketing. The better
definitions are focused upon the customer
orientation and satisfaction of customer needs.
• Marketing is the management process that
identifies, anticipates and satisfies customer’s
requirements profitably. OR
• Marketing is the social process by which individuals
and groups obtain what they need and want
through creating and exchanging the products and
the values with others.
• Generally the marketing is the process of buying
and selling in a market. 2
• 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 every
day. Marketing is something that affects you even though
you may not necessarily be conscious of it.

B: NATURE AND SCOPE OF MARKETING

NATURE OF MARKETING
1. Marketing is an Economic Function: Marketing hold 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 are the concern3 of
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 philosophy based on consumer
orientation and satisfaction.
4. 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
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5. 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.

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6. Marketing is a social process: Marketing is the
delivery of a standard of living to society by
knowing and understanding the consumer's
changing needs and wants and managing the supply
and demand of products.
7. Marketing had dual objectives - profit making and
consumer satisfaction.

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SCOPE OF MARKETING
The range of the marketing activities involves the
coverage of the following:
• Study of Consumer Wants and Needs: Goods are
produced to satisfy consumer wants. Therefore
study is done to identify consumer needs and
wants. These needs and wants motivates consumer
to purchase.
• Pricing Policies: Marketer has to determine pricing
policies for their products. Pricing policies differs
from product to product. It depends on the level of
competition, product life cycle, marketing goals and
objectives, etc.
• Study of Consumer behavior: Marketers perform
study of consumer behavior. Analysis of buyer
behavior helps marketer in market segmentation
and targeting.
• Production planning and development: Product
planning and development starts with the
generation of product idea and ends with the
product development and commercialization.
Product planning includes everything from branding
and packaging to product line expansion and
contraction.

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• Promotion: Promotion includes personal selling,
sales promotion, and advertising. Right promotion
mix is crucial in accomplishment of marketing goals.
• Consumer Satisfaction: The product or service
offered must satisfy consumer. Consumer
satisfaction is the major objective of marketing.
• Marketing Control: Marketing audit is done to
control the marketing activities.
• Distribution: Study of distribution channel is
important in marketing. This concern with the
movement of the product from producers to the
ultimate consumers.
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C: PHILOSOPHIES OF MARKETING
Evolution of marketing is explained in terms of five
philosophies that guides marketing efforts.
a/. Production Concept (1920s): The concept hold
that consumer will favour those products that are
widely available and in low cost i.e inexpensive.
• Consumers favour those products that are widely
available. Managers focused on achieving high
production. The orientation

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b/. Product concept: The concept holds that
consumers will favour those products that offer the
most quality, performance and features. Also the
management focuses on making good products and
improves them over time.
c/. Selling concept (1920s-1950s): Companies aim to
sell what they make rather than what the market
wants. Also unemployment was high and there
were many unsold goods.

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d/. Marketing concept (1930s to present): During this
stage firms analyses the needs of their customers
and then make decisions to satisfy those needs
better than competition.
• Firms/companies determine what customers want,
then produces what the consumer wants and sells
to consumer what they wants.

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e/. Societal Marketing Concept.
• It focuses to improve the life of consumers and the
society as a whole.
• Organizations using this concept tend to analyse the
needs, wants and demand of the target market and
deliver superior value to consumers which results to
overall well being of consumers and the society.
• This concept is relatively new in comparison to
other concepts.

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D: SIGNIFICANCE OF MARKETING
To individuals:
• It brings about an increased level of satisfaction
through acquiring products of high quality or
improved products which appeals to individual
preferences.
• Individuals obtains goods/services at a competitive
prices as well as at the convenient location
• Enable availability of information of products
• Gives customers choice of products

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To Firms:
• Increase revenue
• Increase market share
• Stimulate research and new ideas resulting in
new goods and services
To Society:
• Improve standard of living for both buyers and
marketers
• Employment opportunities
• Catalyst for technological development
• Foreign currency through export
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UNIT 2

ELEMENTS OF EFFECTIVE
MARKETING PRACTICES
(MARKETING MIX)

16
INTRODUCTION
• Marketing the business is about how to
position it to satisfy the market’s needs
by using marketing mix.
• Marketing Mix is the set of controllable
variables (business tool) that the firm can
use to influence the buyer's response.
Normally marketing mix known as 4 P’s.
i.e price, product, promotion, and place.
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Cont…..
• Each of the four P’s is a variable the
marketer control in creating the
marketing mix that will attract customers
to the business.
• In service marketing, however, the four Ps
are expanded to the seven P's (i.e people,
process & physical evidence) to address
the different nature of services.
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Cont…..

1. Product. The right thing to satisfy the

needs and wants of the target customers.
2.Price. The monetary value of something
(product).
3.Place. The distribution of the products
which makes the product available to
consumers.
4.Promotion. A marketing communication
of the availability of the product, its price
and its place. 19
1: PRODUCT STRATEGIES

20
• Philip Kotler, defines the term product as
anything that can be offered to the
market for consumption that might
satisfy a need.
• It can be tangible (i.e. goods) or
intangible (i.e. service) product.

21
**NEW PRODUCT DEVELOPMENT

• New product development is the complete

process of bringing a new product to the
market place.
• A new product may therefore be in any of the
following categories.
• Really innovative products, new product
lines; additions to existing product lines;
improvements/revisions to existing products;
repositioning targeting new markets or
segments.
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NEW PRODUCT DEVELOPMENT………

• New product development process takes a shape

through the following steps;
1. Idea Generation. This refers to collection of as many
ideas as possible from marketing environment
2. Idea screening. This is aimed at reducing the number
of ideas so as to create only a few good ones by
considering viable opportunity, fixed & variable costs
as well as profit return.
3. Concept Development and Testing. A product
concept is an elaborated version of the idea expressed
in meaningful consumer terms and Concept testing
done by asking consumers a set of questions.
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NEW PRODUCT DEVELOPMENT………
4. Marketing Strategy Development. This
involves the development of preliminary
marketing strategy. It may include the
description of the target market, marketing
mix for the first year, its budget and planned
along run and profit goals.
5. Business analysis. This is the evaluation of
business attractiveness of the product
through; demand forecasting, cost & profit
estimation and payback periods for the
investment into the new product.
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NEW PRODUCT DEVELOPMENT………
6. Product Development. This involves the
development of the product concept into a
physical product based on research findings
from;
– The physical aspects of the product
– The functional tests in the laboratory
7. Marketing Testing. To test consumer responses
to the product and the marketing this governs
it under actual market conditions.
8. Commercialization. Launching, distributing
and selling of product in market niche.
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REASONS CAUSING NEW PRODUCT FAILURES

• There are many reasons causing product failures, the

most common include:
– Faulty estimates of market potential
– Unexpected reactions of competitors
– Poor timing in the introduction of the product
– Inadequate quality control leading to product
deficiencies.
– Faulty estimate in production and marketing costs.
– Ineffective promotion and distribution channels.
– Faulty marketing tests.
– Failure to give the new product much attention.
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**PRODUCT LIFE CYCLE
• Product life cycle refers to the cycle
through which every product goes
through from introduction to
withdraw stage.
• Analysis of these stages for the
purpose of repositioning the product
in the market is called Product Life
Cycle management.
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THE PRODUCT LIFE CYCLE………….
• The following are the stages in a product life
cycle;
- Introduction Stage
- The Growth Stage
- The Maturity / The Saturation Stage
- The Decline Stage
- Withdraw stage
• However, most products fail in the
introduction phase. Other has very cyclical
maturity phases where declines see the
product promoted to regain customers. 28
THE PRODUCT LIFE CYCLE………….

• Illustration of PLC

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Stages of product life cycle
1. INTRODUCTION STAGE: In this stage, a
new product is introduced on a large scale
for the first time. Market reacts slowly to
the introduction. Initially, the company
may suffer losses, sales improves gradually.
Most of the products fail in this stage itself.
• Strategies at this level:
- Product; few products are relatively differentiated
- Price; skimming pricing or penetration strategy applied
- Distribution; selective distribution implemented
-10/19/2024Promotion; aimed at building brand awareness 30
Stages of product life cycle……….
2. GROWTH STAGE: Sales increase as more try the
product and others repeat and adopt. Profits
increase and may reach maximum levels due to
lower unit costs and higher price due to higher
command. Also market share tends to stabilized.
• Strategies at this level:
– Product improved/ differentiated
– Intensive distribution applied
– Promotion mix used to build brand preference
– Prices may be lowered to attract next layer of price
sensitive buyers.
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Stages of product life cycle……….
3. MATURITY STAGE: Sales reach at the peak as the market
becomes saturated. Profits start to diminish following stiff
competition. The company thus spends more in price
allowance, increasing product quality, advertising and
sales promotion to maintain market share.
• Strategies at maturity stage:
– Product – modification made to differentiate the
products
– Price – price reduction to win competition and avoiding
price war
– Distribution – increasing distribution and providing
incentives to resellers
Promotion – emphasis on differentiation and building
– 10/19/2024 32
Stages of product life cycle……….
4. DECLINE STAGE: Sales decline drastically as
customers shift to new products due to taste
changes or fashion. Profits are eliminated due
to declining volume and increased cost per
unit.
• Strategy at maturity stage:
– Altering of product features (innovation)
– Intense price-cutting
– Selective distribution
– Sale the business entity or
–10/19/2024
Use the same strategy until the product dies a natural
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Stages of product life cycle ……….

5. THE - WITHDRAW STAGE

• At this stage the product is removed from the
market.
• It is the end of such product if there is no initiative
of advertising it again for it to be back in the
market.

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PRODUCT STRATEGIES
• Expansion strategy: This involves the
addition of new product line to the
existing products mix. It provides wider
choice of products to customers but
demands investment of extra resources
to the product mix.
• Contraction strategy: Involves
elimination of those products which have
no further long-term profitability or are
already making loss. 35
Product strategies…..
• Alteration strategy: Involves alteration or
modification of product by improving it through
redesigning or packaging or even changing of the
product name.
• Product repositioning strategy: Through this
strategy the product positioning can be reinforced
or altered by altering price, quality or promotion
in such a way that it appeals to specific market
segment.
• Stretching strategy : This strategy involves adding
a higher priced/prestige item ( up-market stretch)
or lower priced item (down-market stretch) to a
product mix. 36
2. PRICING STRATEGIES

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**INTRODUCTION
• Pricing is the process of setting a price for
a product (i.e. goods or services)
• The amount of money charged for a
product or sum of values consumers
exchange for a product is known as
PRICE.

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**OBJECTIVES OF PRICING

• To increase the profit: this is the most

common objective. A company may fix
the price with the aim of earning certain
percentage of profits
• Market Share Objective: some
companies fix the price with a view to
capture new market or to, increase or
maintain the existing market share. The
objective here is to either avoid
competition or to meet it.
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Objectives of pricing………..
• To Stabilize the Price: This is usually
followed in the oligopoly market by the
market leaders. The objective here is to
avoid the price war & fluctuations in
price.
• To Recover Cost: To get back the cost
incurred as early as possible, is another
objective of pricing. It is for this reason
that different prices are set for cash &
credit sales for the same product.
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Objectives of pricing………..

• Penetration Objective: The objective

of penetration pricing is to fix a low-
price so as to enter the new market.
• To Maintain the Product Image: In
this case, the objective is to fix a
higher price to create a perception
that the product is of superior
quality. This is called market
skimming strategy.
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**PRICING METHODS OR DETERMINANTS OF PRICE

I. Cost Plus Pricing: In this method, the cost of

manufacturing a product serves as the basis to fix the
price, the desired profit is added to the cost & the final
price is fixed. Following are various methods of cost +
pricing.
– Price Based on the Total Cost: Here a percentage of profit is
added to the cost to calculate the selling price. E.g
construction, printing etc
– Price Based on the Marginal Cost: It is the method of pricing
where the price is fixed to recover the marginal cost only.
– Break Even Pricing: Under this method, the price is fixed first to
recover the total cost incurred to produces the product. Applied at
introduction or declining stage
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Pricing methods…………
II. Pricing Based Upon Competition:
Competition based on pricing is defined as a
method where a company tries to maintain
its price on par with its competitors. It is
suitable when the competition is serving &
the product in the market is homogenous.
The company can take risk of either
increasing the price (to attract upper class &
upper middle class consumers) or
decreasing it (to maintain or to increase
their sales during the off season).
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Pricing methods…………

III. Pricing Based on Markets: Depending

upon the market of product, the
manufacturers may fix the price for their
products.
– In a perfect market, he has to go for the
expected price in the market.
– In case of monopoly, he is free to fix the price
& can practice the price discrimination policy.
– In oligopoly where there are few sellers, the
price is fixed by the largest seller called the
market leader & others follow him.
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**PRICING STRATEGIES

• The appropriate strategies and policies

concerning several aspects of the price
structure includes:-
1. Price discount and allowance. Rewards
to consumers to every payment of bills,
volume purchase, buying off season and
for performing certain function. i.e
transportation, storing, quantity
discount, cash discount, seasonal
discount etc.
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Pricing strategies………..
2. Geographical pricing strategies. How to price
products to customers located in different
parts of the country. Eg zonal pricing, basing
point pricing
3. Pioneer pricing strategies. This involves
marketing skimming pricing or marketing
penetration pricing.
4. Product mix pricing. Company accepts any
price for its by-products. Eg. Decreasing the
product price and increase price of its captive
product.
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Pricing strategies………..
5. Promotional pricing strategies. Setting
artificial price by decreasing them on
products. Eg. The price was 370,000/-
now it is 250,000/-
6. Psychological pricing strategies. Involves
pricing goods and services at price points
that make the products appeal less
expensive than it is. They include odd
pricing and prestige pricing
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Pricing strategies………..

7.Resale price maintenance

strategies. Manufacturers provide a
suggested price to retailers as a
means to control over the prices at
which they resell their products.
8.Discriminary pricing strategies.
Different price at segmented market.

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3. PROMOTION DECISION

10/19/2024 49
**INTRODUCTION
• Meaning of Promotion: Promotion is a
part of an organization marketing mix
that is used to inform & persuade the
market regarding its products & services.
• Promotion Mix/Promotion Tools: It is a
combination of personal selling,
advertising, sales promotion, publicity &
public relations that helps an
organization to meet its marketing
objectives.
10/19/2024 50
A: ADVERTISING

• According to Philip Kotler,

“Advertising consists of non-personal
or one way form of communication
conducted through paid media under
clear sponsorship.”
• It is a form of communication by
which spreads information or
awareness to the public using the
persuasive methods.
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**OBJECTIVE OF ADVERTISING
• The main objective of advertising is to
increase the sales of certain goods or
service by motivating the public through
“AIDAS” formula, where A=Attract the
attention, I=Create interest (read), D=Desire
(like), A=Action (act), S=Satisfaction.
• In other words, a good advertisement must
attract the consumers, create interest in
them, make them to desire the product &
finally they should buy the product.
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**TYPES/MODES OF ADVERTISEMENT

1. Persuasive advertising.
• In this advertisement the advertiser
tries to persuade the public to buy his
products or services by explaining the
various good qualities which possesses
over other similar products.
Eg:- Lower price, Large car parking
facilities, buy one get two, 20%
discount, warranty, etc.
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Types/Modes…

2. Informative advertising. covers the

general information of a particular
product or shop.
Eg:- Name of the shop, Location of the shop,
Contact details, New product or service,
Advertising for employees, Warning and
instructions, New events such as exhibition,
sports match, music shows, etc
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Types/Modes…

3. Competitive advertising
• This type of advertising is carried out by
different producers of different brands
of the same products. Each producer
tries to compete with other producers in
order to increase sales and market.
Eg:- Advertisements of soap, cool drinks,
etc.
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Types/Modes…

4. Collective advertising.
• When all the producers of the same
industries combine to advertise their
products is called collective advertising.
These advertisements are usually
sponsored by trade associations.
Eg:- Join the tea set, Drink more tea, There is
no substitute for coffee, etc
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Types/Modes…

5. Sponsorship advertising.
• In this advertising a sponsor conducts
a particular cultural or sports event
and meets all the expenses himself. He
can advertise through the events
about his products and services.
Eg:- Coca cola conducts foot ball match or cricket
match
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Types/Modes…

6. Institutional advertising.
• Advertising whose purpose is to
promote the image of a business
organization rather than the sale of a
product or service is called
institutional advertising.
• Eg:- Educational institutes, Coca-
Cola, etc.
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**ROLES OF ADVERTISEMENT

1. Increase sales. Intend to increase sales by

providing information about new services
and goods to the public.
2. Persuade the public. Advertising influence
the public and force them to buy certain
goods or services; this results in the overall
increase in sales as well.
3. Encouraging the retailers. Advertising encourages
the retailers to hold the stocks of certain goods.
Well advertised brands can be sold off easily by
10/19/2024 59
Roles…..

4.Information. Advertising.
It enables them to know how to use, where to
purchase, price, benefits, etc.
5. Expansion of market. Advertising aims at
maintaining or expanding markets for existing
products too. Advertising does it by
highlighting the attractive features and the
uses of existing products.
6. Creation of goodwill. Advertising creates
reputation for the company and its products. It
brings attraction to particular brand or
company.
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**KINDS OF ADVERTISING MEDIA
• Press Publicity or the Print Media:
Newspapers, newsletter &Magazines.
• Direct Mail Advantages: circulars,
leaflets, broachers, catalogues, etc.
• Outdoor Advertising: Posters, Paintings,
billboards
• The Broadcast Media: Radio, Television,
Cinema, Online Advertising or Interest
Advertising
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B: SALES PROMOTION

• Sales Promotion is “A group of

activities other than advertising,
personal selling, & publicity that
stimulates consumer purchasing &
dealer’s effectiveness. Eg: Discounts,
Samples, Exhibition, etc.
• It is a combination of various activities
intended to stimulate & to supplement
personal selling & advertising.
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**METHODS OF SALES PROMOTION
1. Sales Promotion Aims At Consumers: In
this case promotion activities are carried
on to include consumers to buy the
product i.e, being promoted. Following are
some of the methods of promoting
products at consumer level:
– Discount Coupons
– Free Samples
– Consumers Contest
– Points to Purchase Display (POP)
– Trade Shows & Exhibition
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Methods of sales promotion……….
2. Sales Promotion Directed at Middlemen:
These are the programs intended to increase
the interests of the middlemen to push the
sales. Some of the promotional methods are:
– Advertisement Allowance: In this case, manufacturers
compensate retailers for displaying their products.
– Premium cards given to increase sales during the off season.
Eg: purchase 5 soaps & get 1 free.
– Wholesalers & agents distribute free samples to retailers in
order to test the market reactions.
– Some manufacturers agree to receive back the goods if they
are not sold within a specified period.
– Trade associations may conduct trade fairs, exhibitions, etc,
10/19/2024for the distributors. 64
**OBJECTIVES OF SALES PROMOTION

• To increase middlemen performances

• To increase consumer’s demand
• To supplement advertising &
salesmanship
• To attract new customers
• To encourage the use of other products
of the same manufacturer
• To create & maintain interest at the level
of middleman.
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C: PERSONAL SELLING OR SALESMANSHIP

• It is defined “Art of winning the

buyer’s confidence for seller’s house
& goods, thereby winning a regular &
permanent customer.”
• It use salesmen/sales people or sales
representatives.

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**FUNCTIONS OF SALESMANSHIP
• The functions performed by a salesman
includes;
– To introduce new products to the market
– To maintain the present customers group & to
discover new customers.
– To help the customers in deciding what to buy &
what not to buy
– To give firsthand information about the market to
the manufacturer.
– To act as a link between the producers &
consumers.
10/19/2024 67
Cont……..

D:PUBLICITY
Publicity is the
gaining of public visibility or awareness for a
product, service or the company via the
media.
• Publicity is the deliberate attempt to manage
the public's perception of a subject. The
subjects of publicity include people (for
example, politicians and performing artists),
goods & services, organizations of all kinds,
and works of art or entertainment. 68
4. DISTRIBUTION STRATEGIES

69
**INTRODUCTION
• Channel of distribution refers to a set
of institutions which perform all of the
activities utilized to move a product
and its title from production point to
sales or consumption point through a
value network. OR
• These intermediaries constitute a
marketing channel (also called a trade
channel or distribution channel).
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Introduction…….
Such intermediaries includes;
– MERCHANTS (wholesalers and retailers),
– AGENTS (i.e Brokers and Sales Agents),
– FACILITATORS (i.e transportation
companies, independent warehouses,
banks, advertising agencies & insurance
co.) and
– MARKETING FIRMS (i.e advertising
agencies, marketing research firms and
marketing consultants).
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**FUNCTIONS OF DISTRIBUTION/MARKETING CHANNELS

• Members of the marketing channel

perform a number of key functions such
as:
• Research – the gathering of information
necessary for planning and facilitating
exchange. They gather information about
potential and current customers,
competitors, and other actors and forces
in the marketing environment.
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Functions…………
• Promotion – They develop and
disseminate persuasive
communications to stimulate
purchasing.
• Negotiation – They reach agreements
on price and other terms so that
transfer of ownership or possession can
be affected. The attempts to reach the
final agreement on price and other
terms of the offer – the actual selling
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Functions…………
• Orders – They place orders with
manufactures
• Risk taking – They assumes risks connected
with carrying out channel work.
• Physical distribution – They provide for the
successive storage and movement of
physical products. Physically moving the
product between the manufacturer and
users. This includes other related functions
such as storage.
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Functions…………

• Financing – They provide for buyer’s

payment of their bills through banks and
other financial institutions. They acquire
the funds to finance inventories at
different levels in the marketing channel.
They oversee actual transfer of
ownership from one organization or
person to another.
• Contact – The searching out and
communicating with prospective buyers.
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Functions…………

• Matching – The shaping and fitting of

the offer to the buyers’
requirements. This includes activities
such as sorting (buying a quantity
and breaking items into amounts
desired by customers) grading and
assorting (providing varieties of
items often interrelated for potential
customers.)
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TYPES OF DISTRIBUTION CHANNEL
• Distribution channels are classified into;
direct and indirect distribution channel.
1)Direct distribution channel: In this
channel, producers sell their goods
and services directly to the
consumers. There are no middlemen
present between the manufacturer
and consumers.
e.g Producer Consumer
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Types of Distribution channels………

2)Indirect distribution channel: This

type include more than one
middleman in product distribution.
• E.g P W R C or
P A W R
C
P= Producer, W=Wholesaler, R= Retailer
A=Agent and C=Consumer
78
**DISTRIBUTION STRATEGIES

1. PUSH STRATEGY: A push strategy involves the

manufacturer using its sales force and trade
promotion money to induce intermediaries to
carry, promote, and sell the product to end
users. Push strategy is appropriate where there
is low brand loyalty in a category.
2. PULL STRATEGY: A pull strategy involves the
manufacturer using advertising and promotion to
induce consumers to ask intermediaries for the
product, thus inducing the intermediaries to
order it. Pull strategy is appropriate when there
is high brand loyalty and high involvement in the
category.
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INDIVIDUAL ASSIGNMENT
a) Write short notes on levels and types of
products
b) Define the term promotion mix and describe
factors affecting selection of the promotion
mix.

80
81
UNIT 2
CONSUMER MARKETS
AND BUSINESS
MARKET BUYING
BEHAVIOUR 82
A: CONCEPT OF CONSUMER MARKET
• The consumer market refers to the buyers who
purchase goods and services for consumption rather
than resale.
• Consumer market can be organization and/ or
individuals who purchase products to consume or to
benefit from the purchased products and who do not
buy products for the main purpose of reselling them
or use them to produce another product.
• Also the expanded view of consumer
behavior embraces much more than the study
of what and why we buy; it also focuses on how
marketers influence consumers and how consumers83
• However, not all consumers are alike in their tastes,
preferences and buying habits due to different
characteristics that can distinguish a certain
consumers from others.

• B: CONSUMER BUYING BEHAVIOR

• Consumer buying behavior is the decision process
and act of people in buying and using products.
• Also it is the purchase decision making pattern
which is a complex combination of needs and
desires of the market, and is influenced by number
of factors.
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• **Types of consumer buying behavior
1: Complex buying behavior : Consumers go through
complex buying behavior when they are highly
involved in a purchase and aware of significant
differences existing among brands.
• Consumers are highly involved in a purchase when
it is expensive. Eg. A purchase of personal
computer.
2: Dissonance - reducing buying behavior: Consumers
go through dissonance – reducing buying behavior
when they are highly involved in a purchase and are
not aware of significant differences existing among
existing brands.
• For instance carpet buying involves self
identification, yet the buyer is likely to consider the
most carpet.
3: Habitual buying behavior: Many products are
bought under conditions of low consumer
involvement and the absence of significant brand
differences. For example the purchase of salt.
4: Variety seeking buying behavior: This buying
behavior is characterized by low consumer
involvement but significant brand differences. Here
the consumers are often observed to do a lot of
brand switching. E.g soap powder.
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** FACTORS AFFECTING/INFLUENCING CONSUMER
BEHAVIOR
1. Cultural factor. i.e culture, cross-culture, sub-
culture and social class.
2. Social factors/influence i.e reference groups,
family, roles and status.
3. Personal influence i.e Age and life cycle stage,
Occupation, Economic circumstances & social
welfare, Lifestyle and personality.
4. Psychological influence I.E motivation, perception,
learning and beliefs.
5. Marketing mix influence i. Product, price, place and
promotion
6. Situational influence i.e physical surrounding, social
surrounding, time, and communication.

**IMPORTANCE OF CONSUMER BEHAVIOR

The knowledge of Consumer Behavior helps the marketer to;
a) Understand and predict the consumption patterns and
consumption behaviors of people.
b) Analyze the environment i.e identifying opportunities
and fighting threats
c) Segmenting, targeting and positioning
c) Designing the marketing-mix
d) Designing the marketing strategy 88
• THE MAJOR DIFFERENCES BETWEEN CONSUMER
MARKET AND BUSINESS MARKET
• In consumer market the purchase might even be
made when the products are not required in day to
day activities. But in business market the business has
to buy to stay profitable.
• The business buyer is sophisticated in terms of the
process involved in buying, decision making while on
the other hand the consumer in the consumer market
might not be as sophisticated.
• The business buyer is an information-seeker,
constantly on the lookout for information and advice.
On the other hand the consumer only searches
information when he requires making a decision. 89
• Packaging is important in consumer market while its
non existent in the business market.
• Expert advice is taken while making purchases in
the business market as against the consumer
market.
• Consumer market product are simplistic while
business products are complicated

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C: BUSINESS MARKET/BUYER
• Refers to those who purchase goods or services
from other firms and use them to buy/produce
other products for resell or use them to support
their works.
• It includes industrial buyers (i.e producers,
government and institutions) and resellers (i.e
wholesalers & retailers).
• Business buyers behavior refers to the buying
behavior of the organizations that buy goods and
services for use in production of other products that
are sold, rented or supplied to others.
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• Also includes wholesaling and retailing firms that
acquires goods to resell or rent to others for profit.

FACTORS INFLUENCING BUSINESS MARKET/BUYER

BEHAVIOR
1. Economic factors: e.g price and service
2. Personal factors: e.g emotion
3. Environmental factors: e.g politics, culture,
competition, technology etc
4. Organizational factors: e.g objectives, policies,
procedures, systems etc
5. Interpersonal factors: e.g motives, preference,
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BUSINESS BUYING PROCESS
• The process takes place in 9 stages;
1. Problem recognition: identification of needs.
2. General needs description: description of features
and quantity of products needed.
3. Products specifications: description of technical
criteria.
4. Value analysis: approaches of cost reduction.
5. Supplier search: compilation of list of qualified
suppliers.
6. Proposal solicitation: requesting proposals from
qualified suppliers.
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7.Supplier selection: choosing the preferred suppliers
for favorable terms and conditions.
8. Order-routine specification: orders to chosen
supplier based on specifications and terms of
purchase.
9. Performance review: critique of supplier
performance to the purchase terms.

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PARTICIPANTS IN BUSINESS BUYING PROCESS
• USERS i.e those who will use the products
• INFLUENCERS i.e specification evaluators
• BUYERS: i.e formal authority
• DECIDERS: i.e approvers
• GATEKEEPERS: i.e controllers of information flow

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SEGMENTATION, TARGETING
AND POSITIONING IN
MARKETING

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INTRODUCTION
• The marketing concept stresses that a firm should
create a Marketing Mix that satisfies customers,
therefore need to analyze the what, where, when and
how consumers buy.
• Therefore to win the buyers reaction Marketers must
develop marketing strategies (i.e. segmentation,
targeting & positioning).
• Together these strategies comprise a three stage
process. First marketers must determine which kinds of
customers exist, then secondly they select customers
they are best off trying to serve and finally, implement
segmentation by optimizing their products/services for
that segment and communicating that they have made 97
A: SEGMENTATION
• Market segmentation is a process of dividing a total market
into different segments by classifying consumers on the
bases of their significant characteristics such as income,
preferences, profession, age, sex etc
• Segmentation can be heterogeneous or homogeneous.

BASIS/FACTORS FOR MARKET SEGMENTATION

• The following basis/factors are considered before
dividing the market:
– Geographical Factors: On the basis of
geographical factors, market may be classified
as state-wise, region-wise & nation-wise.
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– Psychological factors: On the basis of personality,
consumers may be divided in to introverts (reserve
people), talkative, status, conscious, suspicious & so on.
– Demographic Factors: This is the most
widely used basis for market segmentation.
Market is classified on the basis of
population, using ages, income, sex, etc as
indicators.
– Behavior Factors. This includes Occasions
(seasonal business), Benefits and attitude.
– Social Economic Factors. On the basis of
economic factors, markets have been
classified in upper class (rich), middle class, 99
THE PURPOSE OF SEGMENTATION
• The following are some of the benefits of
marketing segmentation.
– It helps to understand the complex behavior of
consumers
– Helps to formulate marketing programs
– Tastes & Preferences of consumers may be
easily determined.
– It helps in locating the new markets
– It helps marketing programs beneficial to
consumers as products are produced & sold
according to their needs 100
B: TARGETING
• Market Targeting refers to the process of dividing
the market into segments, evaluating these
segments and selecting the appropriate segment as
the target market.
• Target market refers to the segment the company
wants to serve. Eg Heineken
• The purposes of market targeting is to develop a
solid marketing plan and promotion strategies for
the target market.

101
FACTORS/BASES FOR TARGETING
• In choosing the target market the
marketers generally depend on the
following factors:
–Service to existing segments served by
other manufacturers.
–Size of the segment. i.e small/large
–Strengths of a company
–Interest of the target market
–Geographical location 102
C: POSITIONING
• Positioning defined as the process of
differentiating the company’s total
offerings from competitors so as to
make the consumer admire and
favor/prefer those offers with reference
to competitors.
• The purpose of positioning is to
distinguish the product for other
products and revive a brand by
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POSITIONING PROCESS
• The Positioning Process—includes the following steps:
a. Identify the target market.
b. Determine specific customer wants, needs, benefits
desired.
c. Analyze attributes and perceived images of present and
potential competitors.
d. Compare your position and that of competitors on
each dimension valued by customers (perceptual
mapping).
e. Identify a unique position that offers desired benefits
to target market that are not offered by competitors.
f. Design marketing program to communicate benefits
and persuade customers. 104
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