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Master of Business Administration-MBA Semester 2MB0030 Marketing Management - 4 Credits

Q.1 Explain the meaning of marketing and its importance in business. (10 marks)Answer : DEFINITION OF MARKETING.

Marketing is essentially about marshalling the resources of an organization so that

they meet the changing needs of the customer on whom the organization depends -

Palmer.

It is a process by which

-one identifies the needs and wants of the people.

-one determines and creates a product/service to meet the needsand wants. [PRODUCT]-one determines a way of taking the product/service to the market

place. [PLACE]

-one determines the way of communicating the product to themarket place. [PROMOTIONS]

-one determines the value for the product.[PRICE].

-one determines the people, who have needs/ wants. [PEOPLE]

and then creating a transaction for exchanging the product for

a value.and thus creating a satisfaction to the buyer's needs/wants.

TERMS to understand.1.Product/Service means a product or service or idea to satisfy

the people's needs / wants.

2.Needs mean when a person feels deprived of something.

3.Wants mean when a person's need is formed / shapedby personality, culture, and knowledge.

4.Value means the benefits that the customer gains from

owning and using the product and the cost of the product.

5.Satisfaction means the extent to which a product's perceived performance matches a buyer's expectation.

6.Exchange means the act of obtaining a needed/ wantedobject by offering something in return.

7.Transactions mean a trade off between a buyer / a seller

that involves an exchange at agreed conditions.

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Marketing is based on identifying, anticipating and satisfying customer needs effectively

and profitably. It encompasses market research, pricing, promotion, distribution,

customer care, your brand image and much more.

Originally, a Market was a public place in a town or village, where household

provisions and other objects were available for sale. The definition of market hasexpanded in this globalized world. The traders may be spread over a whole town, or city

or region or a country and yet form a market. For example, stock market, Oil & Oilseeds

market, Steel or Metals market etc where people across the countries can participate in

the business. The essentials of a market are (i) a commodity / item which is dealt with,(ii) the existence of buyers and sellers, (iii) a place; be it a certain region, a country or the

entire world and (iv) interactions between buyers & sellers to facilitate transactions.

In this era of rapid changes, it is marketing which keeps the business in close contact withits economic, political, social and technological environment and informs it of events and

changes that can influence its activities.

American Marketing Association (AMA) offers the following definition of Marketing.

( AMA 2004)

Definition: Marketing is an organization function and a set of process for creating,

communications and delivering value to customers and for managing customer

relationships in ways that benefit the organization and its stake holders

There are many definitions of marketing. The better definitions are focused uponcustomer orientation and satisfaction of customer needs.

Marketing is the social process by which individuals and groups obtain what they

need and want through creating and exchanging products and value with others

Kotler.

Marketing is the management process that identifies, anticipates and satisfies

customer requirements profitably -

The Chartered Institute of Marketing (CIM).

The CIM definition (in common with Barwell's definition of the marketing concept)

looks not only at identifying customer needs, but also satisfying them (short-term) and

anticipating them in the future (long-term retention).

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The right product, in the right place, at the right time, at the right price -

Adcock.

IMPORTANCE OF MARKETING IN BUSINESS:

In a downturn, marketing becomes even more important to the company's bottom line,

making a profit. A marketing plan is key to establishing the dimensions of your market,where you fit according to your product and identifying where a company should focus its

marketing budget to achieve the best overall results. marketing helps to identify new markets,

target new customers and determine the value of the product. If the product that is currentlyin production does not have a sustantial customer base of support, if sales are slipping and

competition is securing your former market share. Marketing helps to identify the need for a

product revitalization or reinvention.

"In a challenging economy, you must find new ways to make marketing work more

effectively, get more out of marketing investments, and measure and account formarketing decisions. In short, you must make changes. Doing the same things in an

uncertain economic environment and expecting the same results is, at worst, adefinition of marketing insanity. At best it is a flawed strategy."

Peter Drucker, the famous management thinker in one of his classic articles has said

Marketing is everything. All other activities in the organization are support services to

the marketing strategy that the company pursues. Marketing is important not only to thecompany but to the consumers and society and to the economy.

Consumer stands to benefit from marketing activities. He has more alternatives to choose

from, improved and better quality products are available and he is able to buy goods atconvenient locations. Thanks to much improved customer service, a consumer is able tocomplain and expects his complaint to be attended in reasonable time. He can now buy

with credit or debit card or cash or on installments.

For the society as a whole, marketing is important because it acts as a change agent

making people use latest products and improves the standard of living of the people. Aswe know, the main objective of marketing is to produce products and services for the

society as per their needs and tastes, and while doing so it creates demand for these goods

and services, encourages them to use them, thus leading to higher demand and sales. Thishigher demand allows the company to achieve economies of scale in both production and

distribution resulting in decrease in production and distribution costs which can be usedto reduce prices to consumers.

For a company in any business, marketing is considered to be the most important activity.It helps an organization to keep abreast of changes taking place in the market and

consumer tastes and preferences through market research. Based on this reliable data, it

responds to these changes by rectifying any drawbacks in its products or changing itscompetitive strategy. Thus the companys decision- making and planning are not based

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on just hunches but on sound market information. The firm that follows such practices is

sure to prosper under all conditions. Marketing provides an effective channel of

communication to the company with its consumers by way of advertising and salespromotion. Marketing thus brings revenue and earns goodwill for the company.

Successful operation of marketing activities creates, maintains and increases the demandfor goods and services in the economy. It results in the increased level of production.

This, in turn, increases the national income, which is beneficial to the economy.Marketing operations require the services of intermediaries such as wholesalers, retailers,

transporters, and service provides for storage, finance, insurance and advertising. These

services provide employment in large numbers.

The essence of marketing is to understand your customers' needs and develop a plan thatsurrounds those needs. Let's face it anyone that has a business has a desire to grow their

business. The most effective way to grow and expand your business is by focusing on

organic growth.

You can increase organic growth in four different ways. They include:

Acquiring more customers

Persuading each customer to buy more products

Persuading each customer to buy more expensive products or up selling eachcustomer

Persuading each customer to buy more profitable products

All four of these increase your revenue and profit. Let me encourage you to focus on the

first which is to acquire more customers. Why? Because by acquiring more customers

you increase your customer base and your revenues then come from a larger base.

How can you use marketing to acquire more customers?

Spend time researching and create a strategic marketing plan. Guide your product development to reach out to customers you aren't currently

attracting.

Price your products and services competitively.

Develop your message and materials based on solution marketing.

In modern day business scenario marketing is inevitable.

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Q.2 Explain the relevance of BCG matrix and GE matrix with examples (10 marks

After setting mission and objectives, management will develop its business portfolio.

Business portfolio is the right mix of businesses that company operates and products that

offers to customers.

Portfolio analysis is the process by which company analyze its products and businesses.

Company develops their business portfolio in two steps

a. Analyze the existing business portfolio and decide which business should receive

more, less or no investment.

b. Developing the new business portfolio for future to meet growth opportunities andeliminating the unprofitable portfolios.

Analyzing the existing business portfolio:

The current business portfolio of the company is analyzed by the businesses in which it

operates. To make it clearer, let me take an example

EXAMPLE :HLL has got its product range from health,beauty care products to foodbrands it has expanded very vigorously in the Indian market.

HLL has its mission and objectives separately. These subsidiaries of organizations are

called as Strategic business units (SBU)

Strategic business unit: The unit of the company that has separate mission and objectivesand that can be planned independently from other businesses.

Characteristics of SBU.

1. It may be brand, or a product line or separate division of the company.

2. It is having distinct mission and objectives.

3. It is managed by separate executive team.

Strategic planning models used in assessing the existing businesses:

1. BCG matrix ( Boston Consultancy Group)

2. GE matrix ( General electric)

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BCG MATRIX :The Bcg matrix is based on the product life cycle theory that can be

used to determine what priorities should be given in the product portfolio of a business

unit. The BCG Matrix is a business method that was created by the Boston ConsultingGroup in the 1970s. This business method bases its theory on the life cycle of products.

Also known as the Boston Box or Grid, the BCG Matrix is divided into four types of

scenarios, the Stars, Cash Cows, Dogs and Question Marks.The Stars is the scenario where there is the optimum situation of high growth and highshare, this method requires an increased investment due to the continuous growth.

The Cash Cow cycle deals with low growth and high share. This scenario requires a lowinvestment, but the growth is very slow.

The Dogs method is the situation where the growth is low and the market share is low, thisis one of the worst situations. In this situation if the products are not delivering the cashthen it is best to liquidate.

The last part of the cycle is the Question mark which is high market growth but low shares.In this situation there is a high demand but low returns. It is best to try and increasemarket share or get it to deliver cash.

The limitation of this business theory is that it only works with high market share and thisis not the only meter for success. Also there are many situations in business where theDogs can out earn the Cash Cows.

The BCG grid may provide a the basis for a business development strategy for largebusiness but what about the small business?

It is possible to have a high market share and not have increased profits, or have a lowmarket share and still be profitable.

The BCG Matrix is a great stepping stone for market research and has great possibilities,but for today's companies it may need to be tweaked just a little.

This business model is a pretty decent model and if used in the right situation it can help a

business to increase and monitor its market share and growth.

All business big or small should have some type of a business plan or model that they canbase their business products on and by keeping an eye on the market and watching whatconsumers want they can increase their profit.

A simple BCG Matrix diagram or template can be used to plan your Growth Market Sharestrategy and many samples can be found on the web. If you prefer you may use BCGMatrix software.

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Autonomous divisions (or profit centers) of an organization make up what

is called a business portfolio. When a firm's divisions compete in differentindustries, a separate strategy often must be developed for each business.TheBoston Consulting Group (BCG) Matrix and theInternal-External (IE)Matrix are designed specifically to enhance a multidivisional firm's effortsto formulate strategies.

The BCG Matrix graphically portrays differences among divisions interms of relative market share position and industry growth rate. The BCGMatrix allows a multidivisional organization to manage its portfolio ofbusinesses by examining the relative market share position and the industrygrowth rate of each division relative to all other divisions in theorganization. Relative market share position is defined as the ratio of adivision's own market share in a particular industry to the market share heldby the largest rival firm in that industry. For example, in Table 6-4, therelative market share of Ocean Spray premium non-carbonated beverage is

14.7/40.5 = 0.36 and Sony's market share in the music industry is 16/27 =0.59, and the new Hilton-Promus hotel company's market share is290,000/528,896 = 0.55.

TABLE 6-4 A. Market Share of Premium Non-carbonated Beverages

BRAND MARKET SHARE IN 1999% CHANGE IN SHARE FROM1998Snapple 40.5 % 3.7 96Ocean Spray 14.7 -2.9Arizona 13.7 -2.3Lipton 10.8 -1.3

SoBe 9.3 6.9Mistic 5.0 - 3.2Nestea 4.7 -0.9Nantucket Nectars 1.4 -0.1. .

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GE MATRIX

The General Electric Business Screen was originally developed to help marketing

managers overcome the problems that are commonly associated with the Boston Matrix(BCG), such as the problems with the lack of credible business information, the fact that

BCG deals primarily with commodities not brands or Strategic Business Units (SBU's),and that cashflow if often a more reliable indicator of position as opposed to market

growth/share.

The GE Business Screen introduces a three by three matrix, which now includes a

medium category. It utilizes industry attractiveness as a more inclusive measure than

BCG's market growth and substitutes competitive position for the original's market share.

So in come Strategic Business Units (SBU's). A large corporation may have many SBU's,

which essentially operate under the same strategic umbrella, but are distinctive andindividual. A loose example would refer to Microsoft, with SBU's for operating systems,

business software, consumer software and mobile and Internet technologies.

Growth/share are replaced by competitive position and market attractiveness. The point is

that successful SBU's will go and do well in attractive markets because they add valuethat customers will pay for. So weak companies do badly for the opposite reasons. To

help break down decision-making further, you then consider a number of sub-criteria:

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For market attractiveness:

Size of market.

Market rate of growth.

The nature of competition and its diversity.

Profit margin.

Impact of technology, the law, and energy efficiency.

Environmental impact.

. . . and for competitive position:

Market share.

Management profile.

R & D.

Quality of products and services.

Branding and promotions success.

Place (or distribution).

Efficiency.

Cost reduction.

At this stage the marketing manager adapts the list above to the needs of his strategy. The

GE matrix has 5 steps:

One - Identify your products, brands, experiences, solutions, or SBU's.

Two - Answer the question, What makes this market so attractive?

Three - Decide on the factors that position the business on the GE matrix.

Four - Determine the best ways to measure attractiveness and business position.

Five - Finally rank each SBU as either low, medium or high for business strength,

and low, medium and high in relation to market attractiveness.

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Now follow the usual words of caution that go with all boxes, models and matrices. Yes

the GE matrix is superior to the Boston Matrix since it uses several dimensions, as

opposed to BCG's two. However, problems or limitations include:

There is no research to prove that there is a relationship between market

attractiveness and business position.

The interrelationships between SBU's, products, brands, experiences or solutions

is not taken into account.

This approach does require extensive data gathering.

Scoring is personal and subjective.

There is no hard and fast rule on how to weight elements.

The GE matrix offers a broad strategy and does not indicate how best toimplement it.

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)

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Q.3. What do you mean by MIS? Explain its benefits, types and components. (10marks)

Answer : Marketing environment is changing and presenting new opportunities and

threats to an organization. The main responsibility for identifying significant changes inthe market place falls on the marketing department. They are better placed and have

advantages in undertaking this task because they are regularly interacting with customers

and observing competition.

The Marketing Departments need to develop Marketing Information Systems that

provide them information about buyer wants, preferences, behavior and also about

competition. They are able to do this by setting up systems and marketing related

research methods to collect this valuable information which is ultimately used to helpmake marketing decisions.

A Marketing Information System is a set of procedures to collect, analyze and distribute

accurate, prompt and appropriate information to different levels of marketing decision

makers.

A management information system (MIS) is a system or process that provides

information needed to manage organizations effectively [1]. Management information

systems are regarded to be a subset of the overall internal controls procedures in abusiness, which cover the application of people, documents, technologies, and procedures

used by management accountants to solve business problems such as costing a product,

service or a business-wide strategy. Management information systems are distinct from

regular information systems in that they are used to analyze other information systemsapplied in operational activities in the organization.[2] Academically, the term is

commonly used to refer to the group of information management methods tied to the

automation or support of human decision making, e.g. Decision Support Systems, Expertsystems, and Executive information systems.

Philip Kotler defines MIS as a system that consists of people, equipment and procedures

to gather, sort, analyze, evaluate and distribute needed, timely and accurate information

to marketing decision makers.

A well designed MIS serves as a companys nerve centre, continuously monitoring the

market environment both inside and outside the organization. In the process, it collects

lot of data and stores in the form of a database which is maintained in an organized

manner. Marketers classify and analyze this data from the database as needed.

With the advent of Computer Technology, MIS has taken a step further to provide

managers direct access to the databases. This system called MarketingDecision Support System (MDSS) links a decision maker to relevant databases and

analysis tools, thereby allowing him to gain deep insights into needs and trends ofcustomers with the help of sophisticated statistical analysis.

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Today companies organize the information in databases such as customer database,

product database, and field sales database and combine them to be stored in a huge

database called Data Warehouse. The process of searching through information in datawarehouse to identify meaningful patterns that guide decision making is called DataMining.

BENEFITS OF MIS

At the start, in businesses and other organizations, internal reporting was made manuallyand only periodically, as a by-product of the accounting system and with some additional

statistic(s), and gave limited and delayed information on management performance.

Previously, data had to be separated individually by the people as per the requirement and

necessity of the organization. Later, data was distinguished from information, and insteadof the collection of mass of data, important, and to the point data that is needed by the

organization was stored.

Early on, business computers were mostly used for relatively simple operations such astracking sales or payroll data, often without much detail. Over time these applications

became more complex and began to store increasing amounts of information while also

interlinking with previously separate information systems. As more and more data was

stored and linked man began to analyze this information into further detail, creating entiremanagement reports from the raw, stored data. The term "MIS" arose to describe these

kinds of applications, which were developed to provide managers with information about

sales, inventories, and other data that would help in managing the enterprise. Today, theterm is used broadly in a number of contexts and includes (but is not limited to): decision

support systems, resource andpeople management applications,ERP,SCM, CRM,

project management and database retrieval application.

An 'MIS' is a planned system of the collecting, processing, storing and disseminating datain the form of information needed to carry out the functions of management. In a way it is

a documented report of the activities that were planned and executed. According to Philip

Kotler"A marketing information system consists of people, equipment, and procedures togather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to

marketing decision makers." [3]

The terms MISand information systemare often confused. Information systems include

systems that are not intended for decision making. The area of study called MIS issometimes referred to, in a restrictive sense, as information technology management.

That area of study should not be confused with computer science. IT service management

is a practitioner-focused discipline. MIS has also some differences with EnterpriseResource Planning (ERP) as ERP incorporates elements that are not necessarily focused

on decision support.

Any successful MIS must support a businesses Five Year Plan or its equivalent. It must

provide for reports based up performance analysis in areas critical to that plan, withfeedback loops that allow for titivation of every aspect of the business, including

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recruitment and training regimens. In effect, MIS must not only indicate how things are

going, but why they are not going as well as planned where that is the case. These reports

would include performance relative to cost centers and projects that drive profit or loss,and do so in such a way that indentifies individual accountability, and in virtual real-time.

Various benefits of having a MIS and resultant flow of marketing information are givenbelow:

1. It allows marketing managers to carry out their analysis, planning implementation andcontrol responsibilities more effectively.

2. It ensures effective tapping of marketing opportunities and enables the company to

develop effective safeguard against emerging marketing threats.

3. It provides marketing intelligence to the firm and helps in early spotting of changing

trends.

4. It helps the firm adapt its products and services to the needs and tastes of the

customers.

5. By providing quality marketing information to the decision maker, MIS helps in

improving the quality of decision making

TYPES OF MIS

Management information systems are those systems that allow managers to makedecisions for the successful operation of businesses. Management information systems

consist of computer resources, people, and procedures used in the modern businessenterprise. The termMISstands for management information systems. MIS also refers to

the organization that develops and maintains most or all of the computer systems in the

enterprise so that managers can make decisions. The goal of the MIS organization is todeliver information systems to the various levels of corporate managers. MISprofessionals create and support the computer system throughout the company. Trained

and educated to work with corporate computer systems, these professionals are

responsible in some way for nearly all of the computers, from the largest mainframe tothe desktop and portable PCs.

Management information systems can be used as a support to managers to provide acompetitive advantage. The system must support the goals of the organization. Most

organizations are structured along functional lines, and the typical systems are identified

as follows:

Accounting management information systems: All accounting reports are shared by all

levels of accounting managers.

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Financial management information systems: The financial management information

system provides financial information to all financial managers within an organizationincluding the chief financial officer. The chief financial officer analyzes historical and

current financial activity, projects future financial needs, and monitors and controls the

use of funds over time using the information developed by the MIS department.

Manufacturing management information systems: More than any functional area,

operations have been impacted by great advances in technology. As a result,manufacturing operations have changed. For instance, inventories are provided just in

time so that great amounts of money are not spent for warehousing huge inventories. In

some instances, raw materials are even processed on railroad cars waiting to be sent

directly to the factory. Thus there is no need for warehousing.Marketing management information systems: A marketing management information

system supports managerial activity in the area of product development, distribution,

pricing decisions, promotional effectiveness, and sales forecasting. More than any other

functional area, marketing systems rely on external sources of data. These sourcesinclude competition and customers, for example.

Human resources management information systems: Human resources management

information systems are concerned with activities related to workers, managers, and other

individuals employed by the organization. Because the personnel function relates to all

other areas in business, the human resources management information system plays avaluable role in ensuring organizational success. Activities performed by the human

resources management information systems include, work-force analysis and planning,

hiring, training, and job assignments.

A Marketing Information System supplies three types of information.

1. Recurrent Information is the data that MIS supplies periodically at a weekly,

monthly, quarterly, or annual interval. This includes data such as sales, Market Share,sales call reports, inventory levels, payables, and receivables etc. which are made

available regularly. Information on customer awareness of companys brands, advertising

campaigns and similar data on close competitors can also be provided.

2. Monitoring Information is the data obtained from regular scanning of certain sourcessuch as trade journals and other publications. Here relevant data from external

environment is captured to monitor changes and trends related to marketing situation.

Data about competitors can also be part of this category. Some of these data can bepurchased at a price from commercial sources such as Market Research agencies or from

Government sources.

3. Problem related or customized information is developed in response to some

specific requirement related to a marketing problem or any particular data requested by amanager. Primary Data or Secondary Data (or both) are collected through survey

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Research in response to specific need. For example, if the company has developed a new

product, the marketing manager may want to find out the opinion of the target customers

before launching the product in the market. Such data is generated by conducting amarket research study with adequate sample size, and the findings obtained are used to

help decide whether the product is accepted and can be launched

COMPONENTS OF MIS

The following diagram shows a typical Marketing Information System with itscomponents. Which are?

1. Internal Records System

2. Marketing Intelligence System

3. Marketing Research System

4. Analytical Marketing System

The Marketing Information System

Internal Records System

This includes information on (i) Order to payment cycle and (ii) sales informationsystems.

Order to payment cycle has a system which records, the timing and size of orders

placed by consumers, the payment cycle followed by consumers and the time taken to

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fulfill the orders, in the shortest possible time. Customers place order through sales

people and companies dispatch the goods and receive payments directly or through bank.

A proper record system pertaining to order to payment cycle management helpsmangers to decide on production and dispatch schedule, inventory and accounts

receivable schedule and also logistics and distribution management schedules,

Sales Information Systems record everything in the sales Department, starting from

Sales Call Reports to prospects history to Sales territory and quota information for bettersales planning and forecasting purpose.

Marketing Intelligence System

This is a set of procedures and sources used by managers to obtain everyday information

about developments in the marketing environment. This system supplies happeningsdata unlike Internal Records System which supplies results data. Marketing managers

collect data from published sources like books, magazines and journals; by talking to

customers, intermediaries and sales personnel. Some companies appoint specialists togather consumer and competitor information, who does mystery shopping to monitor the

performance of their own or competitors dealers. Competitor information can also be

obtained by buying their product, attending their press conferences, trade shows and

reading their annual reports. Companies purchase commercial information from outsidesuppliers and market research agencies like IMRB, ORG MARG to obtain competitive

data on their sales, advertising expenditures etc., besides their own.

Marketing Research System

This is the third component of MIS. Marketing Research provides information to

marketing manager when he/she encounters marketing problems. This may involveconducting Marketing Research survey by collecting primary data. These surveys may be

conducted by the marketing department itself or a it can hire services of an externalmarketing research agency.

Analytical Marketing Systems

Also known as Marketing Decision Support systems (MDSS), this is a co-ordinate

collection of data, systems, tools and techniques with supporting software and hardware

by which an organization gathers and interprets relevant information from business andenvironment and turns it into a basis for marketing action. All the data which is generated

through the other three systems described above are stored in a data base. The storage andretrieval capability of decision support system allows the collection and use of a widevariety of data throughout the company. Senior managers can access the data base and

continually and monitor sales, markets, performance of the sales people and other

marketing systems as well.

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Q.4.Suppose you need to conduct a small marketing research in yourneighborhood regarding the purchase and use of toothpastes, what will be yourapproach in the process? (10 marks)

Answer :

We need to follow the following process for conducting Marketing research

Step 1. Identifying and defining your problem

The basic problem is to study the purchase and use of toothpaste in locality xyz

Step 2. Developing your approach

As the problem is better defined, we can move onto developing our own approach.Generally speaking, the approach should be developed almost exclusively around a

defined set of objectives. Clearer objectives developed in Step 1 will lend themselves to

better approach development. Developing your approach should consist of an honestassessment of your teams market research skills, establishing a budget, understanding

your environment and its influencing factors, developing an analysis model, and

formulating hypotheses

Step 3. Research design

The next step would be to make a research design.

The research design is nothing but a skeleton of the research process.

It would include step by step planning of each element of the research

Step 4. Collecting the data

The most important process or stage in the research would be actual collection of data.

Whether to collect the data from primary source i.e actual field work or whether to go forsecondary source would be matter of choice .I would prefer a mix of primary source

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method and secondary source data as my neighbourbood comprises of a cooperative

society where there are around 100 families

The best method would be a distribute a questionnaire pertaining to the research product.

This is a small questionnaire designed to understand your needs about dental care better

Please provide short and to the point answersThe answers should be short and to the point

Name of the Head of family : ___________________________________

Flat no and wing ___________________________________

Number of adults ______________children _____________________

Which toothpaste do you like to purchase and use and why (adults and children )

_______________________________________________________________________

______________________________________________________________________________________________________________________________________________

_______________________________________________________________________

____________________________________________________________

Thank you for taking time out to answer the question

The questionnaire collected would give me the data about the peoples preferences for atoothpaste and the reasons associated with the same.

Step 5. Performing data analysis

The next step I would d would be to conduct a data analysis of the data collectedWhy do people prefer a particular brand will become the outcome of the research

Step 6. Reporting and presentation

Then the data will be compiled and presented

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Sr no COLGATE PEPSODENT DABUR OTHERS

A wing 25 20 15 15

B wing 21 21 12 12

C wing 22 28 13 20

total 68 69 40 47

A wing

COLGATE

PEPSODENT

DABUR

OTHERS

Q. 5 Explain the consumer buying decision process with respect to new products.Give examples. (10 marks)

Buyer decision process for new products.

New Product :-

A good, services or idea that is perceived by some potential customers as new

The buyers decision for existing products and new products varies. You already seen in

the existing product buying decision process consumers have the option to search for theinformation and evaluate them. In the new product such options dont exist. Therefore we

should understand how consumer comes to know about the product. Kotler defined thisprocess as adoption process. According to Philip Kotler Adoption is The mental process

through which an individual passes from first hearing about an innovation to final

adoption

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Adoption Process :-

The mental process through which an individual Passes from first hearing about an

innovation to final adoption.

Consumer go through five stages in the process of adopting new product.

1. Awareness

2. Interest

3. Evaluation

4. Trial

5. Adoption

01. Awareness :- The consumer becomes aware of the product but lacks information

about it.

02. Interest :- The consumer seeks information about the new product.

03. Evaluation :- Consumer consider whether trying the new product makes sense.

04. Trail :- The consumer tries the new product on a small scale to improve his or her

estimate of its value.

05. Adoption :- Consumer decides to makes full and regular use of the new product.

This model suggests that the new products marketer should think about how to help

consumer move through these stages.

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Adoption rate:

The adoption of new product varies from individual to individual.

1. 2.5% of the consumers adopt any new product that enters to the market. These

consumers are status conscious people. Marketer should highlight how the new productwill bring the esteem to the consumer.

2. 13.5% of the customers fall into the early adopter categories. In this categories

customer observed the advantage of the new product and the moment the price of theproduct falls into the affordable category they buy the product.

3. The next group is the biggest one in the adoption process. These group customers are

attracted towards the benefits of the product. They make sure that there are no technical

or general problems associated with the product. This group contains 34% of the totalcustomers.

4. This group consist 34% of customers. The group looks for the quality product at the

affordable prices

5. The final group is called as laggards. These are traditional and price conscious people.They often take lot of time to adoption of the product.

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Q. 6. Explain the different consumer behaviour models. (10 marks)

Answer : Major Factors Influencing Consumer Behavior

Consumers do not make their decisions in a vacuum. Their purchases are highly influenced bycultural social, personal, and psychological factors. For the most part, they are non controllableby the marketer but must be taken in to account. We want to examine the influence of each factoron a buyers behavior.

Cultural Factors

In a diversified country like India cultural factors exert the broadest and deepest influence onconsumer behavior; we will look at the role played by the buyers culture, subculture, and socialclass.

Culture: Culture is the most fundamental determinant of a persons wants and behavior. Whereas

lower creatures are governed by instinct, human behavior is largely learned. The child growing upin a society leans a basic set of values, perceptions, preferences and behaviors through aprocess of socialization involving the family and other key institution .Thus a child growing up inAmerica is exposed to the following values: Achievement and success, activity , efficiency andpracticality, progress, material comfort, individualism, freedom, external comfort,humanitarianism, and youthfulness.

Subculture:

Each culture contain smaller group of subculture that provide more specific identification andsocialization for its members. Four types of subculture can be distinguished .Nationality groupssuch as the Irish, polish, Italians, and Puerto Ricans are found with in large communities andexhibits distinct ethnic tastes and Jews represent subculture with specific culture preference and

taboos.

Social Class:

Virtually all human societies exhibit social stratification. Stratification sometimes takes the form ofa caste system where the member of different caste are reared for certain roles and cannotchange their caste membership .More frequently, stratification takes the form of social classes .

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Social Classes have several characteristics. First, Person with in each social class tend tobehave more alike than persons from two different social classes. Second, persons are perceivedas occupying inferior or superior positions according to their social class. Third, a persons socialclass is indicated by a number of variables, such as occupation, income, wealth, education , andvalue orientation, rather than by any single variable , fourth, individuals are able to move from onesocial class to another up or down during their lifetime. The Extent of this mobility variesaccording to the rigidity of social stratification a given society.

Social Factors:

A consumers behavior is also influenced by social factors, such as the consumers referencegroup, family, and social roles and statuses.

Reference Group : A persons behavior is strongly influenced by many group .A personsreference group are those groups that have a direct (face to face) or indirect influence on thepersons attitudes or behavior. Group having a direct influence on a person are calledmembership group. These are group to which the person belongs and interacts. Some areprimary groups. With which there is fairly continuous interaction, such as family, friends,neighbors, and co-workers. Primary group tend to be informal. The person also belong to

secondary group, which tend to be more formal and where there is less continuous interaction:they include religious organizations, professional associations, and trade unions.

Family Group:

Members of the buyers family can exercise a strong influence on the buyers behavior. we candistinguish between two families in the buyers life . The family of orientation consists of onesparents. From parents a persons acquires an orientation towards religious, politics, andeconomics and a sense of personal ambitions, self worth, and love. Even if the buyer no longerinteracts very much with his or her parents, the parents influence on the unconscious behavior ofthe buyer can be significant. In countries where parents continue to live with their children, theirinfluence can be substantial.

In case of expensive products and services, husband and wives engage in more joint decisionmaking. The market needs to determine which member normally has the greater influence in thepurchase of a particular products or services. either the husband or the wife , or they have equalinfluence . The following products and services fall under such:

Husband dominant: life insurance, automobiles, televisionWife dominant: washing machines, carpeting, non living room furniture, kitchenwareEqual: Living room furniture, vacation, Housing, outside entertainment.

How to succeed:

Companies like Nokia, Reebok, Coke, PepsiCo and major automobile giants like Toyota, Suzuki,Ford, Chevrolet, Mercedes etc.. has made a market for themselves in India. How did theyestablish their own individual market in a country like India which is prone to diverse cultures?Lets take the example of Ford. Before establishing their base in India, they engaged in a lot ofresearches. Their researches were made on the Indian peoples social life, personal tastes andpreferences, way of life, how they identify an effective product and what makes them get attractedtowards a product. The social and economic conditions were analyzed.

The general economy of India was also researched on. They had modified their product to suitthe Indian conditions. Their technology had to be adjusted and suited to such an extent that theircar is adaptable to Indian conditions. Indians are generally prone to be rough and tough

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customers and especially taking into account the road conditions and other social factors theydesigned the product in such a way that its best suited to the conditions and its received by thetarget customers. Today Ford is enjoying a huge market in India. If an automobile company froma different country can make wonders why cannot our own manufacturers adapt to thesetechniques.

A customers want has to be identified and his expectations must be matched with the othereconomic and social factors so that their product is receptive. This can be related to any product.Reebok today is enjoying a huge market in India even though they have hired a company whichis phoenix to manufacture shoes and operate under Reebok. How did they achieve this?Adapting to social conditions play the most important role in establishing your brand in themarket.

This also means that customers are open to new and different products from time to time. Its justthat they want the product to be flexible and adaptable to their needs and preferences. Peopleare changing from time to time, so do their tastes and preferences. Identifying those is the firststep towards achieving success and the rest depends on the performance of the product.

Models of CONSUMER BEHAVIOR

Buyer behavior models.

The influence of social sciences on buyer behavior has prompted marketing experts to

propound certain models for explaining buyer behavior. Broadly, they include theeconomic model, the learning model, the psychoanalytical model and the sociological

model.

1) The Economic Model: According to the economic model of buyer behavior, the buyer

is a rational man and his buying decisions are totally governed by the concept of utility. If

he has a certain amount of purchasing power, a set of needs to be met and a set ofproducts to choose from, he will allocate the amount over the set of products in a very

rational manner with the intention of maximizing the utility or benefits.

2) The Learning Model: According to the learning model which takes its cue from thePavlovian stimulus response theory, buyer behavior can be influenced by manipulating

the drives, stimuli and responses of the buyer. The model rests on mans ability at

learning, forgetting and discriminating. The stimulus response learning theory states thatthere develops a bond between behavior producing stimulus and a behavior response (S.

R. Bond) on account of the conditioning of behavior and formation of habits. This theory

may be traced to Pavlov and his experiments on salivating dogs. Pavlovs experiments

brought out associations by conditioning.

In his well known research with dogs, a bell was rung every time food was served to a

dog. Eventually, the dog started salivating each time upon hearing the bell though no

food was served. The dogs behavior is conditioned; it is related to behavior-producingstimulus (bell ringing) and behavior response (salivation). The S.R. bond so established

causes a set pattern of behavior learnt by the object dog. In terms of consumer behavior,

an advertisement would be a stimulus whereas purchase would be a response.

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Learning Process: According to the stimulus-response theory, learning is dependent on

drive, cue (stimulus), response and reinforcement.

Drive: Drive may be defined as any strong stimulus that impels action. It arouses anindividual and keeps him prepared to respond. The drives may be classified as primary

drives and secondary drives. Primary drives are based upon innate physiological needssuch as thirst, hunger, pain avoidance, and sex. The secondary drives are based upon

learning. They are not innate and are derived from the primary drives. These include thedesire for money, fear, pride, rivalry, etc.

Cue: Cue or stimulus may be defined as any object in the environment perceived by the

individual. The aim of the marketing man is to find out or create the cue of sufficient

importance that it becomes the drive stimulus or elicits other responses appropriate to hisobjective. Here, the objective is to find out those conditions under which a stimulus will

enhance the chances of eliciting a particular kind of response.

Response: Response is an answer to a given drive or cue. When a man feels thirsty, heattempts to get water at any cost. Here attempt to get water is a response to the primary

drive of thirst. Response also includes attitudes, familiarity, perception and other

complex phenomena. Responses may be generalized or discriminatory. Generalized

response refers to a uniform response to similar though not identical stimuli.Discriminatory response refers to the selective response to similar stimuli.

Undifferentiated products such as cigarettes and detergents normally elicit generalized

consumer responses but by huge advertising outlays companies try to induce consumersto perceive differences in brands and to make discriminatory responses.

Reinforcement: Reinforcement or reward means reduction in drive and stimulus. It has

been defined as environmental events exhibiting the property of increasing theprobability of occurrence of responses they accompany. Thus, when consumption of aproduct or a brand of product leads to satisfaction of the initiating need (drive/stimulus)

there is reinforcement. If at some later date the same needs are aroused, the individual

will tend to repeat the process of selecting and getting the same product or brand ofproduct. Each succeeding time that product or brand brings satisfaction, further

reinforcement takes place, thus, further increasing the possibility that in future also, the

same product or brand will be bought. This type of behavioral change, increasingpossibility that an act will be repeated, is called learning; reinforcement increases the

rapidity and vigor of learning.

3)The Psychoanalytical Model:

The psychoanalytical model draws from Freudian

Psychology. According to this model, the individual consumer has a complex set of deep-seated motives which drive him towards certain buying decisions. The buyer has a private

world with all his hidden fears, suppressed desires and totally subjective longings. His

buying action can be influenced by appealing to these desires and longings.

The psychoanalytical theory is attributed to the work of eminent psychologist SigmundFreud. Freud introduced personality as a motivating force in human behavior. According

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to this theory, the mental framework of a human being is composed of three elements,

namely,

1. The idor the instinctive, pleasure-seeking element. It is the reservoir of the instinctiveimpulses that a man is born with and whose processes are entirely subconscious. It

includes the aggressive, destructive and sexual impulses of man.

2. The superego or the internal filter that presents to the individual the behavioral

expectations of society. It develops out of the id, dominates the ego and represents theinhibitions of instinct which is characteristic of man. It represents the moral and ethical

elements, the conscience.

3. The ego or the control device that maintains a balance between the id and the superego.

It is the most superficial portion of the id. It is modified by the influence of the outsideworld. Its processes are entirely conscious because it is concerned with the perception of

the outside world.

The basic theme of the theory is the belief that a person is unable to satisfy all his needs

within the bounds of society. Consequently, such unsatisfied needs create tension withinan individual which have to be repressed. Such repressed tension is always said to exist in

the sub-conscious and continues to influence consumer behavior.

4. The Sociological Model: According to the sociological model, the individual buyer is

influenced by society or intimate groups as well as social classes. His buying decisionsare not totally governed by utility; he has a desire to emulate, follow and fit in with his

immediate environment.

5.The Nicosia Model: In recent years, some efforts have been made by marketingscholars to build buyer behavior models totally from the marketing mans standpoint. TheNicosia model and the Howard and Sheth model are two important models in this

category. Both of them belong to the category called the systems model, where the

human being is analyzed as a system with stimuli as the input to the system and behavioras the output of the system. Francesco Nicosia, an expert in consumer motivation and

behavior put forward his model of buyer behavior in 1966. The model tries to establish

the linkages between a firm and its consumer how the activities of the firm influencethe consumer and result in his decision to buy. The messages from the firm first influence

the pre-disposition of the consumer towards the product. Depending on the situation, he

develops a certain attitude towards the product. It may lead to a search for the product or

an evaluation of the product. If these steps have a positive impact on him, it may result ina decision to buy. This is the sum and substance of the activity explanations in the

Nicosia Model. The Nicosia Model groups these activities into four basic fields. Field

one has two sub-fields the firms attributes and the consumers attributes. An advertisingmessage from the firm reaches the consumers attributes. Depending on the way the

message is received by the consumer, a certain attribute may develop, and this becomes

the input for Field Two. Field Two is the area of search and evaluation of the advertisedproduct and other alternatives. If this process results in a motivation to buy, it becomes

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the input for Field Three. Field Three consists of the act of purchase. And Field Four

consists of the use of the purchased item.