UNIT-II-Mkting Mgt.doc

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UNIT - II

Buyer Behaviour – Consumer goods and Industrial goods – Buyinmotives – Buyer Behaviour Model – Factors infuencing buyer behaviourbuying decision process - Industrial buying behaviour - Marketin

Research-Importance - types and steps.Market segmentation – eed and basis o! "egmentation – Marketinstrategy – "egmentation – #argeting – $ositioning.

What is Consumer Buying Behavior?

%e&nition o! Buying Behavior' Buying Behavior is the decision processes and acts people involved in buying and using products.

eed to understand'

• (hy consumers make the purchases that they make)• (hat !actors infuence consumer purchases)

• the changing !actors in our society.

Consumer Buying Behavior re!ers to the buying behavior o! the ultimate consume* &rm needs to analy+e buying behavior !or'

• Buyers reactions to a &rms marketing strategy has a great impact on the &rmsuccess.

• #he marketing concept stresses that a &rm should create a Marketing M,MM that satis&es ,gives utility to customers there!ore need to analy+e th

(hat (here (hen and ho( consumers buy.• Marketers can better predict ho( consumers (ill respond to marketin

strategies.

Types of Consumer Buying Behavior

#ypes o! consumer buying behavior are determined by'

• /evel o! Involvement in purchase decision. Importance and intensity o! interein a product in a particular situation.

• Buyers level o! involvement determines (hy he0she is motivated to see

in!ormation about a certain products and brands but virtually ignores others.1igh involvement purchases--1onda Motorbike high priced goods products visibto others and the higher the risk the higher the involvement. #ypes o! risk'

• $ersonal risk

• "ocial risk

• 2conomic risk

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#he !our type o! consumer buying behavior are'

• Routine Response0$rogrammed Behavior--buying lo( involvement !re4uentpurchased lo( cost items5 need very little search and decision e6opurchased almost automatically. 27amples include so!t drinks snack !oodmilk etc.

• /imited %ecision Making--buying product occasionally. 8hen you need obtain in!ormation about un!amiliar brand in a !amiliar product categorperhaps. Re4uires a moderate amount o! time !or in!ormation gatherin27amples include Clothes--kno( product class but not the brand.

• 27tensive %ecision Making0Comple7 high involvement un!amiliar e7pensivand0or in!re4uently bought products. 1igh degree economic0per!ormance0psychological risk. 27amples include cars homecomputers education. "pend alot o! time seeking in!ormation and decidinIn!ormation !rom the companies MM5 !riends and relatives store personnel et9o through all si7 stages o! the buying process.

• Impulse buying no conscious planning.

#he purchase o! the same product does not al(ays elicit the same Buying Behavio$roduct can shi!t !rom one category to the ne7t.

For e7ample'

9oing out !or dinner !or one person may be e7tensive decision making ,!or someonthat does not go out o!ten at all but limited decision making !or someone else. #hreason !or the dinner (hether it is an anniversary celebration or a meal (ith couple o! !riends (ill also determine the e7tent o! the decision making.

Models of Customer Behaviour8e have no( considered infuences on customer behaviour and introduced one typo! model o! the purchase process.

#he use o! models !or buying behaviour is an attempt to e7press simply th!undamental elements o! a comple7 process. "uch models try to e7press thinterrelationship o! those variables (hich are signi&cant in infuencing the outcomo! a purchase motivation. #heir aim is to help the marketing manager to understanthe buying process so as to use a marketing strategy (hich is most applicable to thspeci&c situation.

#hus the simple model discussed earlier in this chapter attempts to simpli!y anclari!y the purchase decision process by sho(ing it as a series o! se4uential step #his type o! model is use!ul to the marketing manager in trying to infuence thprocess. For e7ample advertising and promotional activity is aimed at tin!ormation search stage and a!ter sales service is aimed at the post-purchaevaluation stage.

#he other ma:or type o! model is the theoretical model (hich tries to sho( thinterrelationship bet(een the various behavioural and economic !actors (hich a

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involved. #he aim is to give the marketing manager a better understanding o! thbuying process. 1ere is an e7ample o! a (ell kno(n theoretical model the 1o(ar"heth model o! consumer behaviour.

Factors Inuencing the Consumer Buying !ecision "rocess* consumer making a purchase decision (ill be a6ected by the !ollo(ing thre!actors'

3. $ersonal

;. $sychological

<. "ocial

#he marketer must be a(are o! these !actors in order to develop an appropriate M

!or its target market.

"ersonal

=ni4ue to a particular person. %emographic Factors. "e7 Race *ge etc. 8ho in th!amily is responsible !or the decision making. >oung people purchase things !di6erent reasons than older people.

"sychological factors

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$sychological !actors include'

• Motives--

* motive is an internal energi+ing !orce that orients a person?s activitito(ard satis!ying a need or achieving a goal. *ctions are e6ected by a set motives not :ust one. I! marketers can identi!y motives then they can bettedevelop a marketing miM*"/@8 hierarchy o! needsAA

o $hysiological

o "a!ety

o /ove and Belonging

o 2steem

o "el! *ctuali+ation

eed to determine (hat level o! the hierarchy the consumers are at

determine (hat motivates their purchases.Nutrament !e#un$ed%%%

utrament a product marketed by Bristol-Myers "4uibb originally (as targeted consumers that needed to receive additional energy !rom their drinks a!ter e7ercisetc. a &tness drink. It (as there!ore targeted at consumers (hose needs (ere !oeither love and Belonging or esteem. #he product (as not selling (ell and (aalmost terminated. =pon e7tensive research it (as determined that the product dsell (ell in inner-city convenience stores. It (as determined that the consumers !othe product (ere actually drug addicts (ho couldn?t not digest a regular meal. #he(ould purchase utrament as a substitute !or a meal. #heir motivation to purchas(as completely di6erent to the motivation that B-M" had originally thought. #hesconsumers (ere at the Physiological level o! the hierarchy. BM-" there!ore had redesign its MM to better meet the needs o! this target market.

Motives o!ten operate at a subconscious level there!ore are dicult to measure.

• "erception--

8hat do you see)) $erception is the process o! selecting organi+ing aninterpreting in!ormation inputs to produce meaning. I2 (e chose (hat in!o (pay attention to organi+e it and interpret it. In!ormation inputs are thsensations received through sight taste hearing smell and touch.

Selective Exposure-select inputs to be e7posed to our a(areness. More likelyit is linked to an event satis&es current needs intensity o! input change,sharp price drop.

Selective Distortion-Changing0t(isting current received in!ormatioinconsistent (ith belie!s.

*dvertisers that use comparative advertisements ,pitching one produagainst another have to be very care!ul that consumers do not distort th



!acts and perceive that the advertisement (as !or the competitor. * curree7ample...MCI and *#D#...do you ever get con!used)

Selective Retention-Remember inputs that support belie!s !orgets those thdon?t.*verage supermarket shopper is e7posed to 3E products in a shoppin

visit lasting < minutes-GH o! purchases are unplanned. 27posed to 3advertisement per day. Can?t be e7pected to be a(are o! all these inputs ancertainly (ill not retain many.

Interpreting in!ormation is based on (hat is already !amiliar on kno(ledgthat is stored in the memory.

• &#ility and 'no(ledge--

eed to understand individualsJ capacity to learn. /earning changes in person?s behavior caused by in!ormation and e7perience. #here!ore to changconsumers? behavior about your product need to give them ne( in!ormatiore' product...!ree sample etc.

8hen making buying decisions buyers must process in!ormation. Knowledgis the !amiliarity (ith the product and e7pertise.

Ine7perience buyers o!ten use prices as an indicator o! 4uality more thathose (ho have kno(ledge o! a product. on-alcoholic Beer e7amplconsumers chose the most e7pensive si7-pack because they assume that thgreater price indicates greater 4uality.

Learning is the process through (hich a relatively permanent change behavior results !rom the conse4uences o! past behavior.

• &ttitudes--Kno(ledge and positive and negative !eelings about an ob:ect or activitmaybe tangible or intangible living or non- living.....%rive perceptions

Individual learns attitudes through e7perience and interaction (ith othpeople.Consumer attitudes to(ard a &rm and its products greatly infuence thsuccess or !ailure o! the &rm?s marketing strategy.

• Consumers screen in!ormation that conficts (ith their attitudes. %istoin!ormation to make it consistent and selectively retain in!ormation threin!orces our attitudes. I2 brand loyalty.

#here is a di6erence bet(een attitude and intention to buy ,ability to buy.

• "ersonality--

*ll the internal traits and behaviors that make a person uni4ue uni4uenearrives !rom a person?s heredity and personal e7perience. 27amples include'

o 8orkaholism

o Compulsiveness

o "el! con&dence

o Friendliness



o *daptability

o *mbitiousness

o %ogmatism

o *uthoritarianism

o Introversion

o 27troversion

o *ggressiveness

o Competitiveness.

#raits e6ect the (ay people behave. Marketers try to match the store image the perceived image o! their customers.

#here is a (eak association bet(een personality and Buying Behavior thmay be due to unreliable measures. ike ads. Consumers buy products thare consistent (ith their sel! concept.

• )ifestyles--

Recent =" trends in li!estyles are a shi!t to(ards personal independence anindividualism and a pre!erence !or a healthy natural li!estyle.

/i!estyles are the consistent patterns people !ollo( in their lives.

2L*M$/2 healthy !oods !or a healthy li!estyle. "un tan not considere!ashionable in =" until 3;?s. o( an assault by the *merican *cademy %ermatology.

*ocial Factors

Consumer (ants learning motives etc. are infuenced by opinion leaders person!amily re!erence groups social class and culture.

• +pinion leaders--

Marketers try to attract opinion leaders...they actually use ,pay spokespeop

to market their products. Michael Nordon ,ike Mc%onalds 9atorade etc.• ,oles and Family Inuences--

Role...things you should do based on the e7pectations o! you !rom yoposition (ithin a group. $eople have many roles. 1usband !atheemployer0ee. Individuals role are continuing to change there!ore marketemust continue to update in!ormation.

Family is the most basic group a person belongs to. Marketers muunderstand'

o that many !amily decisions are made by the !amily unit

o

consumer behavior starts in the !amily unito !amily roles and pre!erences are the model !or children?s !uture !ami

,can re:ect0alter0etc

o !amily buying decisions are a mi7ture o! !amily interactions anindividual decision making

o !amily acts an interpreter o! social and cultural values !or the individua

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#he Family li!e cycle' !amilies go through stages each stage creates di6ereconsumer demands'

o bachelor stage...most o! B=*%<3

o ne(ly married young no children...me

o !ull nest I youngest child under Go !ull nest II youngest child G or over

o !ull nest III older married couples (ith dependant children

o empty nest I older married couples (ith no children living (ith themhead in labor !orce

o empty nest II older married couples no children living at home hearetired

o solitary survivor in labor !orce

o solitary survivor retired

o Moderni+ed li!e cycle includes divorced and no children.

• T(o Income Marriages &re No( the Norm

Because ; income !amilies are becoming more common the decision make(ithin the !amily unit is changing...also !amily has less time !or children anthere!ore tends to let them infuence purchase decisions in order to alleviatsome o! the guilt. ,Children infuence about O3< billion o! goods in a yeaChildren also have more money to spend themselves.

• ,eference roups--

Individual identi&es (ith the group to the e7tent that he takes on many o! th

values attitudes or behaviors o! the group members.Families !riends sororities civic and pro!essional organi+ations.

*ny group that has a positive or negative infuence on a persons attitude anbehavior.Memership groups ,belong to

*nity marketing is !ocused on the desires o! consumers that belong re!erence groups. Marketers get the groups to approve the product ancommunicate that approval to its members. Credit Cards etc.AA

!spiration groups ,(ant to belong to Disassociate groups ,do not (ant tbelong t1onda tries to disassociate !rom the PbikerP group.

#he degree to (hich a re!erence group (ill a6ect a purchase decision depenon an individuals susceptibility to re!erence group infuence and the strengo! his0her involvement (ith the group.

• *ocial Class--

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an open group o! individuals (ho have similar social rank. =" is not a classlesociety. =" criteria5 occupation education income (ealth race ethnic grouand possessions.

"ocial class infuences many aspects o! our lives. I2 upper middle cla*mericans pre!er lu7ury cars Mercedes.

o =pper *mericans-upper-upper class .<H inherited (ealth aristocratnames.

o /o(er-upper class 3.;H ne(er social elite !rom current pro!essionaand corporate elite

o =pper-middle class 3;.H college graduates managers apro!essionals

o Middle *mericans-middle class <;H average pay (hite collar (orkeand blue collar !riends

o 8orking class <QH average pay blue collar (orkers

o /o(er *mericans-lo(er class H (orking not on (el!are

o /o(er-lo(er class EH on (el!are

"ocial class determines to some e7tent the types 4uality 4uantity products that a person buys or uses.

/o(er class people tend to stay close to home (hen shopping do not engagin much prepurchase in!ormation gathering. "tores pro:ect de&nite claimages.

Family re!erence groups and social classes are all social infuences oconsumer behavior. *ll operate (ithin a larger culture.

• Culture and *u#-culture--

Culture re!ers to the set o! values ideas and attitudes that are accepted byhomogenous group o! people and transmitted to the ne7t generation.

Culture also determines (hat is acceptable (ith product advertising. Cultudetermines (hat people (ear eat reside and travel. Cultural values in the =are good health education individualism and !reedom. In american cultutime scarcity is a gro(ing problem. I2 change in meals. Big impact ointernational marketing.

• %i6erent society di6erent levels o! needs di6erent cultural values.

Culture can be divided into subcultures'o geographic regions

o human characteristics such as age and ethnic background.

I2 8est Coast teenage and *sian *merican.

Culture e6ects (hat people buy ho( they buy and (hen they buy.

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"nderstanding #onsumer Buying Behavior o$ers consumers greater satis%actio&"tility'( )e must assume that the company has adopted the Marketing #oncepand are consumer oriented(

*tages of the Consumer Buying "rocess"i7 "tages to the Consumer Buying %ecision $rocess ,For comple7 decisions. *ctupurchasing is only one stage o! the process. ot all decision processes lead to purchase. *ll consumer decisions do not al(ays include all G stages determined bthe degree o! comple7ity...discussed ne7t.

#he G stages are'

3. Prolem Recognition,a(areness o! need--di6erence bet(een the desirestate and the actual condition. %e&cit in assortment o! products. 1ungeFood. 1unger stimulates your need to eat. Can be stimulated by the marketethrough product in!ormation--did not kno( you (ere de&cient) I.2. see

commercial !or a ne( pair o! shoes stimulates your recognition that you neea ne( pair o! shoes.

;. *n%ormation search--

o Internal search memory.

o 27ternal search i! you need more in!ormation. Friends and relativ,(ord o! mouth. Marketer dominated sources5 comparison shoppinpublic sources etc.

* success!ul in!ormation search leaves a buyer (ith possible alternatives thevoked set .

1ungry (ant to go out and eat evoked set iso chinese !ood

o indian !ood

o burger king

o klondike kates etc

<. Evaluation o% !lternatives--need to establish criteria !or evaluation !eaturethe buyer (ants or does not (ant. Rank0(eight alternatives or resume searcMay decide that you (ant to eat something spicy indian gets highest rank etI! not satis&ed (ith your choice then return to the search phase. Can you thino! another restaurant) /ook in the yello( pages etc. In!ormation !rom di6eresources may be treated di6erently. Marketers try to infuence by P!ramingalternatives.

. Purchase decision--Choose buying alternative includes product packagstore method o! purchase etc.

. Purchase--May di6er !rom decision time lapse bet(een D produavailability.



G. Post+Purchase Evaluation--outcome' "atis!action or %issatis!action. CognitivDissonance have you made the right decision. #his can be reduced b(arranties a!ter sales communication etc. *!ter eating an indian meal mathink that really you (anted a chinese meal instead.

Mar$eting ,esearch

The purpose and approach of mar$eting research

Marketing decisions are inevitably made under conditions o! uncertainty and ris #he use o! marketing research cannot eliminate risk but can reduce it by indicatinthe likely outcome o! a certain course o! action.

Markets are dynamic and competitive5 success in business depends on greatinvestment and more !re4uent innovation so as not to lose ground to competitorImportant decisions have to be taken !re4uently and in order to make decisions (icon&dence management needs relevant and comprehensive in!ormation. It is th

task o! marketing research to provide this in!ormation.Marketing in!ormation may be needed !or' strategic decision-making ,such product li!e cycle estimates in!ormation to help (ith decisions about diversi!ying to segment a market5 tactical decisions ,such as planning sales territories settinshort-term marketing cost budgets5 or preparing a marketing database ,such as !market share analysis competitor analysis substitute product analysis.

#he in!ormation system !or marketing is re!erred to as marketing research.

!e.nitions of mar$eting research

?Market research? and ?marketing research? are o!ten used interchangeably althougit (ould be more correct to say that market research is :ust an aspect o! marketinresearch.

Market research re!ers to &nding out in!ormation about the mark!or a particular product or service.

Marketing research (as de&ned more broadly by the *mericaMarketing *ssociation as ?the systematic gathering recording and analysing data about problems relating to the marketing o! goods and services?. * similde&nition by the =K Chartered Institute o! Marketing re!ers to the ?ob:ectivgathering recording and analysing o! all !acts about problems relating to ttrans!er and sale o! goods and services !rom producer to consumer or user?.

8ithin this de&nition there are a !e( points to note.

o Marketing research should provide a regular in!ormation system to aplanning and control decisions by marketing and senior management.

o Marketing research is concerned (ith all types o! customer and us,industrial government and resellers not :ust the consumer.

o Marketing research provides in!ormation (hich enables managers make decisions about the marketing mi7 -product place price and promotion.is not simply ?market research?.

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Marketing research is there!ore a very broad concept. It embraces not only markresearch but also product research price research sales promotion research andistribution research.

#he table belo( sho(s a number o! activities !alling into each o! these categories research. It is not intended to be e7haustive.

,ype o% research Examples o% activities

Market research *nalysing the market potential o! e7isting productsForecasting likely demand !or ne( products

Forecasting sales !or all products

*nalysing market shares

"tudying market trends

$roduct research 2stimating customer acceptance o! proposed productsForecasting ne( uses !or products

Comparing competitive products

#est marketing

$rice research *nalysing elasticity o! demand

2stimating the e6ect on demand o! changes in creditpolicy

*nalysing customer perceptions o! price

"ales promotionresearch *nalysing the e6ectiveness o! salesmen2stablishing sales territories

*nalysing the e6ectiveness o! advertising

%istributionresearch

$lanning the location and design o! distribution centres

*nalysing dealer supply re4uirements

*nalysing the costs o! di6erent methods o! transportationand

(arehousing.

*peci.c Mar$et ,esearch Techni/ues0

o market !orecasts5o sales !orecasts5o research into potential sales5o in!ormation on concentration ratios5o market signals.

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Market %orecasts

#hese are !orecasts !or the market as a (hole. It is mainly involved in thassessment o! environmental !actors outside the organisation?s control (hich (a6ect the demand !or its products0services. @!ten it consists o! three components.

• *n economic revie( ,national economy government policy covering !orecason investment population gross national product and infation.

• "peci&c market research ,to obtain data about speci&c markets and !orecasconcerning total market demand.

• 2valuation o! total market demand !or the &rm?s and similar produc-including such !actors as pro&tability and market potential.

Sales forecasts

#hese are estimates o! sales o! a product in a !uture period'

• at a given price5

• using a stated method o! sales promotion (hich (ill cost a given amount money.

=nlike the market !orecast a sales !orecast concerns the &rm?s activity directly. takes into account such aspects as sales to certain categories o! customer salepromotion activities the e7tent o! competition product li!e cycle per!ormance ma:or products.

"ales !orecasts are e7pressed in volume value and pro&t and in the case o! nationand international organisations regional !orecasts are usual by product.

Research into potential sales

"ales potential is an estimate o! the part o! the market (hich is (ithin the possibreach o! a product. #he potential (ill vary according to the price o! the product anthe amount o! money spent on sales promotion and market research shouattempt to uanti!y these variations. "ales potential also depends on'

,aho( essential the product is to consumers5,b(hether it is a durable commodity (hose purchase is post ponable5,c the overall si+e o! the possible market5,dcompetition.

8hether sales potential is (orth e7ploiting (ill depend on the cost o! salpromotion and selling (hich must be incurred to realise the potential. "ales potent(ill infuence the decisions by a company on ho( much o! each product to make' i

production mi7. * company might decide !or e7ample that ma7imum pro&ts (ill bearned by concentrating all its production and sales promotion e6orts on onsegment o! a market. *ction by competitors might then adversely a6ect sales anmarket research might reveal that another market segment has become relativemore pro&table. #he company might there!ore decide to divert some productiocapacity and sales promotion spending to the ne( segment in order to revive ipro&ts.

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2stimates o! sales potential are re4uired in deciding (hether to invest money in thdevelopment o! a ne( or improved product.

Market research to be comprehensive must sho( an a(areness o! the economi&scal political and social infuences (hich may a6ect supply and demand !orproduct. Changes (ithin this !rame(ork should (herever possible be anticipated.

+ther aspects of mar$et research include investigation of0

a the e7pansion or decline o! demand (ithin a particular marksegment5

b the e7pansion or decline o! demand (ithin a particulgeographical area5

c the timing o! demand -is there a cyclical or seasonal pattern demand)

Information on concentration ratios

#o develop a market share strategy an organisation might (ant to obtain!ormation about the concentration ratios in the market that is (hat proportion &rms hold most o! the market.

@ne (ay o! e7pressing concentration ratios is to assess the percentage o! thmarket that is held by the top &ve &rms say and the top ten &rms. * more detaileconcentration ratio analysis can be charted on a /oren+ curve. #his is a graph (hicmaps the number o! units in a population against the market share !or (hich theaccount.

In this e7ample !or instance the top H o! the &rms in the industry have EH the total market and the top EH have H o! the market. #he greater the bend othe curve a(ay !rom the straight line the greater is the concentration o! the &rm the hands o! the market leaders.

Market signals

Market signals are in!ormation that comes to light about competitors? actions in thmarket. #hey may be ?honest? or they may be ?blu6s?5 nevertheless they asigni&cant !or making decisions about market strategy. Market signals can take ano! the !ollo(ing !orms.

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a * competitor makes an announcement o! (hat he intends to dbut be!ore he has done it. $rior announcements are publicity measures intendeto (arn o6 competitors !rom trying to do the same and to test competitorreactions. #hey might also be intended to (in support !rom the investing publor as a threat o! retaliatory action against something another competitor ha

already done.b * competitor makes an announcement o! (hat he has done a!te

the event5 such as signing a ma:or contract (ith a supplier or customer omaking a takeover bid !or another company.

c Competitors adopt a particular course o! action (hen they (ouhave been e7pected to do something else. 8hat does their une7pected actiosignal)

d *naggressivemarketing action by acompetitor. 8hen a

&rm?s competitortakes an aggressivemarketing actiondirected speci&callyagainst the &rm itmight be a signal ththe competitorthinks the &rm isgaining too muchmarket share and thaggressive action

might be the &rststage in anintensi&cation o! competition.

Mar$eting ,esearch "rocedure

Marketing research involves the !ollo(ing &ve stages o! (ork.

,a %e&nition o! the problem. *n individual research pro:ect cannot be undertakesuccess!ully until the marketing problem (hich management (ishes to resolvhas been properly de&ned.

,b %esign o! the research. @nce the research team kno(s (hat problem it muhelp to resolve it (ill establish the type o! data the collection method to bused ,postal 4uestionnaire personal intervie( the selection o! a researcagency ,i! appropriate and i! a sample is to be taken the design o! the sampl*ny 4uestions put to respondents must be care!ully designed.

,c Collection o! the data.,d *nalysis o! the data.

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,e $resentation o! a report (hich should then lead to a management marketindecision.

*ources of Mar$eting ,esearch Information

#he sources o! marketing research in!ormation are secondary data and primadata. $rimary data (ill be discussed later. First (e (ill look briefy at secondary dat

%ata research involves collecting data !rom internal and e7ternal sources.

,a Records inside the &rm gathered by another department,b $ublished in!ormation !rom e7ternal sources include'

i. $ublications o! market research agencies such as the ielsen Inde7ii. 9overnment statisticsiii. $ublications o! trade associationsiv. $ro!essional :ournals

"ources !or secondary data !or marketing vary according to the needs o! thorganisation.

a the *nnual *bstract o! "tatistics and its monthly e4uivalent the Monthly %igeo! "tatistics containing data about manu!acturing output housing populatioetc.

b the %igest o! =K 2nergy "tatisticsc 1ousing and construction statisticsd Financial statisticse 2conomic trends! Census o! population

g Census o! productionh %epartment o! 2mployment 9a+ettei British Business : Business Monitors

Non-government sources of information include0

,a the national press ,Financial #imes etc and &nancial and pro!essional maga+inand :ournals5

,b companies and other organisations specialising in the provision o! economic an

&nancial data ,e.g. the Financial #imes Business In!ormation "ervice the %aResearch Institute Reuters and the 27tel 9roup and research organisations (hanalyse certain markets and publish and sell the results ,eg Minte2uromonitor5

,c directories and yearbooks5,d pro!essional institutions ,e.g. Chartered Institute o! Marketing Industr

Marketing Research *ssociation British Institute o! Management Institute $ractitioners in *dvertising5

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,e specialist libraries such as the City Business /ibrary in /ondon collect publishein!ormation !rom a (ide variety o! sources5

,! trade sources' many industries have an industry body (hich provides use!market research data. #he *ssociation o! British Insurers ,*BI provides markshare data on the li!e insurance industry5 the "ociety o! Motor Manu!acturers an

#rades ,"MM# provides detailed data on the registration o! ne( vehicles bbrand on a regular basis. In addition trade press is o!ten a valuable source in!ormation about competitors.

Primary data

#he collection o! primary data is sometimes kno(n as &eld research.

Field research may be carried out in a number o! areas notably customer researcadvertising research product research packaging research and distributioresearch. #here are several techni4ues involved in the collection and analysis primary data and (e shall consider in detail'

,a e7perimentation5 ,e consumer panels5

,b observation5 ,! trade audits such as retail audits5

,c sampling5 ,g pre-testing and post-testing5

,d 4uestionnaires5 ,h attitude scales and methods o! analysis.

Experimentation

In a controlled e7periment. a controlled research environment is established anselected stimuli are then introduced. #o the e7tent that ?outside? !actors can beliminated !rom the environment ,and there!ore depending on the degree to (hichcontrolled environment is established the observed e6ects can be measured anrelated to each stimulus. Controlled e7periments have been used to &nd the be

advertising campaign the best price level the best incentive machine and the besales training method.

-servation

@bservation can be used as a means o! obtaining sample data (here 4uantitativdata is re4uired

Sampling

* random sample is one selected in such a (ay that every item in the populatio

has an e4ual chance o! being included. #o obtain a random sample (e needsampling !rame (hich has already been described. * random sample can selected !rom the sampling !rame by t(o main methods'

• the ?lottery method? ,picking numbers out o! a hat5

• the use o! random number tables (hich is to be pre!erred as it provides high guarantee against bias.

3G



*egmentation 0 What is a Mar$et?

* market is' *n aggregate o! people (ho as individuals or organi+ations havneeds !or products in a product class and (ho have the ability (illingness an

authority to purchase such products ,conditions needed !or an e7change. #ypes o! markets'

3. #onsumer Intend to consume or bene&t but not to make a pro&t.

;. -rgani.ational/Business For'

o Resale

o %irect use in production

o or general daily operations.

$R@%=C# *ttributes'

•

1igh $o(ered•

Roomy•

"a!ety Features$R@%=C#"'

• #oyota *valon

• @ldsmobile*urora

• Mercury Mysti4ue

• %odge Intrepid

• Chrysler Concorde

• Sision

3E



!eveloping a Target Mar$et *trategy

%eveloping a target market strategy has three phases'

3. *naly+ing consumer demand

;. #argeting the market,s

o undi6erentiated

o concentrated

o multisegmented

<. %eveloping the marketing strategy

*electing Target Mar$ets 1&naly2ing !emand3

eed to aggregate consumers (ith similar needs. %emand patterns' %o potential customers have similar needs0desires or are there clusters) #ypes

demand patterns are'• 0omogeneous Demand-uni!orm everyone demands the product !or th

same reason,s. Sery rare in the =" staple !oods...

• #lustered Demand-consumer demand classi&ed in ; or more identi&abclusters. I2 *utomobiles'

o lu7ury

o cheap

o "porty

o "pacious

Di$used Demand-$roduct di6erentiation more costly and more dicult communicate I2 Cosmetic market need to o6er hundreds o! shades o! lipsticFirms try to modi!y consumer demand to develop clusters o! at least a moderasi+e. @r uses one MM.

Targeting the Mar$et

Undi4erentiated &pproach 1Total Mar$et &pproach3

"ingle Marketing Mi7 !or the entire market.

*ll consumers have similar needs !or a speci&c kind o! product. 1omogeneoumarket or demand is so di6used it is not (orth(hile to di6erentiate try to makdemand more homogeneous.

"ingle MM consists o!'

• 3 $ricing strategy



• 3 $romotional program aimed at everybody

• 3 #ype o! product (ith little0no variation

• 3 %istribution system aimed at entire market

#he elements o! the marketing mi7 do not change !or di6erent consumers a

elements are developed !or all consumers. 27amples include "taple !oods-sugand salt and !arm produce. 1enry Ford Model # all in black.

$opular (hen large scale production began. ot so popular no( due competition improved marketing research capabilities and total production anmarketing costs can be reduced by segmentation.

@rgani+ation must be able to develop and maintain a single marketing mi7.

Ma:or ob:ective is to ma7imi+e sales.

Mar$et *egmentation &pproach

Individuals (ith diverse product needs have heterogeneous needs. Mark

segmentation is the process o! dividing a total market into market grouconsisting o! people (ho have relatively similar product needs there are clusteo! needs.

#he purpose is to design a MM,s that more precisely matches the needs individuals in a selected market segment,s.

* market segment consists o! individuals groups or organi+ations (ith one more characteristics that cause them to have relatively similar product needs.

#here are t(o Market "egmentation "trategies.

Concentration *trategy%

* single market segment (ith one MM.

T Market

T* Market "egment

T-------------------

@ne MM------------------U* Market "egment

T-------------------

T* Market "egment

$R@" include'

• It allo(s a &rm to speciali+e

• can !ocus all energies on satis!ying one group?s needs

• * &rm (ith limited resources can compete (ith larger organi+ations.

C@" include'

• $uts all eggs in one basket.



• "mall shi!t in the population or consumer tastes can greatly e6ect the &rm

• May have trouble e7panding into ne( markets ,especially up-marke1aggar having problems &nding someone to license their name !or (omeapparel even though (omen purchase EH 1aggar clothes !or men.

@b:ective is not to ma7imi+e sales it is eciency attracting a large portion one section (hile controlling costs.

27amples include R@/2L *nyone (ear one. 8ho are their target market)) @veO3

Multi-segment strategy

; or more segments are sought (ith a MM !or each segment di6erent marketinplan !or each segment. #his approach combines the best attributes undi6erentiated marketing and concentrated marketing.

Market

MM---------------------UT* Market "egment

TVVVVVVVVVVVVVVVVVVVVVVV






T

27ample' Marriott International'

3. Marriott "uites...$ermanent vacationers

;. Fair&eld Inn...2conomy /odging

<. Residence Inn...27tended "tay

. Courtyard By Marriott...Business #ravellers

$R@" include'

• "hi!t e7cess production capacity.

• Can achieve same market coverage as (ith mass marketing.

• $rice di6erentials among di6erent brands can be maintained Contact /ens

• Consumers in each segment may be (illing to pay a premium !or the tailomade product.

• /ess risk not relying on one market.

C@" include'

• %emands a greater number o! production processes.



• Costs and resources and increased marketing costs through selling througdi6erent channels and promoting more brands using di6erent packaginetc.

• Must be care!ul to maintain the product distinctiveness in each consumegroup and guard its overall image ,Contact lenses

The only di4erence is (hen you thro( them a(ay%

%iscusses the individual branding o! contact lenses

< brands'

• "e4uence; OE-O

• Medalist O3-O;

• @ptima OE

#he core product is the same use di6erent $ackaging Brand ame $rice

di6erentiate and create a di6erent marketing mi7. 8hat (ill happen i! consume&nd out))

@b:ective' "ales ma7imi+ation but can remain a specialist. Can get &rmestablished in one segment then pursue another.

*tages of the *egmentation5 Targeting and "ositioning "rocess

Basis 0 Criteria needed for segmentation

For segmentation to occur'



3. "egments must have enough pro&t potential to :usti!y developing anmaintaining a MM

;. Consumer must have heterogeneous ,di6erent needs !or the product.

<. "egmented consumer needs must be homogeneous ,similar

. Company must be able to reach a segment (ith a MM I2 Revie( to reac%ela(are undergraduate1o( do marketers reach children)

o Cartoons on saturday

o ickelodian

o Cereal bo7es

o "ports illustrated !or kids

/ook at ho( media has changed recently due to changing demographietc. and there!ore the need o! marketers to reach these groups. Med

must respond ecause they are essentially 1nanced y the marketers or aleast heavily susidised

. Must be able to measure characteristics D needs o! consumers to establigroups.

6aria#les that can #e used to segment mar$ets%

eed to determine the variables that distinguish marketing segments !rom othsegments.

• "egmentation variables should be related to consumer needs !or and uso! or behavior to(ard the product. I2 "tereo5 age not religion.

• "egmentation variable must be measurable. o best (ay to segment thmarkets. "electing inappropriate variable limits the chances o! success.

6aria#les for segmenting Consumer Mar$ets include0

• Demographic - age se7 !ertility rates migration patterns and mortalirates ethnicity income education occupation !amily li!e cycle !amsi+e religion and social class.

• 2eographic -Climate terrain natural resources population densitsubcultural values di6erent population gro(ths in di6erent areas.

City si+e

o Metropolitan "tatistical *rea

o $rimary "tatistical Metropolitan *rea

o Consolidated Metropolitan "tatistical *rea

Market density-W o! potential customers (ithin a unit o! land.

• Psychographic - personality characteristics motives and li!estyles



• Behavioristic 3ariales - Regular users-potential users-non use1eavy0moderate0light users Q-; rule Fre4uent =ser Incentives It is &vemore e7pensive to attract a ne( customer as it is to satis!y your currecustomers. Bene&ts segmentation-!ocus on bene&ts rather than o!eatures.

*ingle 6aria#le vs% Multi-6aria#le *egmentation

• Single variale--achieved by using only one variable to segment

• Multi+variale-- more than one characteristic to divide market. $rovidemore in!ormation about segment. *ble to satis!y customers more preciselMore variables creates more segments reducing the sales potential in eacsegment.

8ill additional variables help improve the &rms MM. I! not there is little reason spend more money to gain in!ormation !rom e7tra variables.

UNIT-II-Mkting Mgt.doc

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