Be THE TAMIL NADU 7 Dr. AMBEDKAR LAW UNIVERSITY (State University Established by Act No. 43 of 1997) SCHOOL OF EXCELLENCE IN LAW ‘Perungudi Campus’, M.G.R. Salai, Perungudi, Chennai - 600 113. FUNDAMENTALS OF MARKETING MANAGEMENT HC5B VI SEMESTER B.B.A.LL.B. STUDY MATERIAL By Dr.A.Senthilkumar, M.B.A., M.Phil., Ph.D. Assistant Professor, Department of Inter-Disciplinary Studies School of Excellence in Law The TamilNadu Dr. Ambedkar Law University, ChennaiPREFACE Students experience marketing through billboards, television commercials, and even in the cereal aisle at the grocery store. This course material on ‘Fundamentals of Marketing Management’ with its engaging presentation of concepts will give students the ability to recognize how much marketing principles play a role in their day-to-day lives. With coverage of current marketing practices and exciting new features, this course material could help them better understanding of marketing management principles. Regular study and practice throughout a course leads to better outcomes for both students and professors. Hope this course material could satisfy both students and professors could serve their needs. I am very much thankful for the opportunities given to me in my life to learn and update continuously in my life. I express deepest sense of thankfulness and also gratitude to the Honourable Vice-Chancellor of The Tamil Nadu Dr.Ambedkar Law University for providing the opportunity to prepare this course material. I am grateful to the Registrar, Deputy Registrars, and all other members of the Management Committee for their encouragement and also for their support by providing facilities in par excellence with University to complete this course material work. My sincere thanks are due to the Director(UG Courses) of School of Excellence in Law for providing me this opportunity. Dr.A.Senthilkumar M.B.A., M.Phil., Ph.D. Assistant Professor, Department of Inter-Disciplinary Studies School of Excellence in Law The TamilNadu Dr.Ambedkar Law University, ChennaiFUNDAMENTALS OF MARKETING MANAGEMENT HCSB Course Outline UNIT -1 Nature, Scope and Importance of Marketing - Functions and Problems - Modern Marketing Concepts - Marketing Environment and Marketing Information System. UNIT - II Consumer Behaviour - Consumer Buying Decision Process - Market Segmentation - Marketing Research and Marketing Mix - Classification of Products - Product Planning - Stages in New Product Development - Reasons for New Product Failure. UNIT - I Price Mix - Factors affecting Price of a Product - Kinds of Pricing - Pricing Policies - Channels of Distribution - Meaning, Importance and Nature - Selection of Distribution Channel - Marketing Middlemen - Functions and Type.Price Mix - Factors affecting Price of a Product - Kinds of Pricing - Pricing Policies - Channels of Distribution - Meaning, Importance and Nature - Selection of Distribution Channel - Marketing Middlemen - Functions and Type. UNIT -IV Promotion Mix - Advertising - Meaning, Importance, Types, Media Decisions - Personal Selling - Nature, Importance and Process - Sales Promotion. UNIT-V Marketing of Services - Characteristics - Classification of Services - Marketing Mix for Services - Customer Relationship Management - Concept, Nature and Managing Relationship.CONTENTS UNIT -I Nature, Scope and Importance of Marketing - Functions and Problems - Modern Marketing Concepts - Marketing Environment and Marketing Information System. UNIT 2 Consumer Behaviour - Consumer Buying Decision Process - Market Segmentation - Marketing Research and Marketing Mix - Classification of Products - Product Planning - Stages in New Product Development - Reasons for New Product Failure. 32 UNIT 3 Price Mix - Factors affecting Price of a Product - Kinds of Pricing - Pricing Policies - Channels of Distribution - Meaning, Importance and Nature - Selection of Distribution Channel - Marketing Middlemen - Functions and Type. 98 UNIT 4 Promotion Mix - Advertising - Meaning, Importance, Types, Media Decisions - Personal Selling - Nature, Importance and Process - Sales Promotion. 129 UNIT 5 Marketing of Services - Characteristics - Classification of Services - Marketing Mix for Services - Customer Relationship Management - Concept, Nature and Managing Relationship. 170UNIT 1 FUNDAMENTALS OF MARKETING MANAGEMENT 1.1 INTRODUCTION In the present day world ‘marketing’ is all pervasive. We are exposed to marketing of products, services and ideas almost every day. The study of marketing is very interesting in the sense that every body of us have performed marketing activities in one form or other. For example, during college days, working part time at a fast food restaurant to help fund one’s own education or persuading parents to buy a new music system. When a sales person engaged in selling a T.V., a doctor treats a patient or the district administration asks its people to get their vehicles checked for pollution, everybody is marketing something to the target audience. Marketing is essentially about marshalling all the resources of an organisation to meet the needs of the consumers on whom the entire organisation depends. Although each of these examples are different, they all have something in common; they consist a variety of marketing activities. Many definitions have emerged to describe marketing activities. 1.2 DEFINITIONS AND MEANINGS According to American Marketing Association “Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organisational objectives”. Ramaswamy and Namakumari defines marketing “It is the total system of interacting business activities designed to plan, promote and distribute need satisfying products and services to existing and potential consumers”. Philip Kotler defines marketing “It is a social and managerial process by which individuals and groups obtain what they need and want through creating, offering and exchanging products of value with others”. This definition of marketing is the most widely accepted by marketing educators and practitioners. It highlights the core concepts like needs, wants, demands, products, value, cost, and satisfaction So, we can conclude that marketing is the process of identifying the needs of the target audience and provide the products accordingly in exchange of some value. This process mainly consists of two parties. On the one side, marketers are there who go to resource markets (raw material markets, labour markets, money market, and so on) to buy these resources and shape them into goods and services for their target consumers. On the other hand, consumers are there who provide vital information to the marketers besides money for using various products and services. This simple process can be understood by the figure given below: 1Communication Goods & Services Sa +t —— Industry (a Money Market (a collection of collection of Informatio ‘Therefore, marketing highlights the satisfaction of consumers needs and wants and it has become evident that knowing consumer needs and desires is a road to success for the marketers. But the scenario in marketing has not been the same as we see today. Therefore, it is imperative to go through the various orientations of marketing. DIFFERENCE BETWEEN MARKETING AND SELLING The terms ‘marketing’ and ‘selling’ are related but not synonymous. ‘Marketing’ as stated earlier, emphasises on earning profits through customer satisfaction. In marketing, the focus is on the consumer’s needs and their satisfaction. ‘Selling’ on the other hand focuses on product and emphasises on selling what has been produced. In fact it is a small part of the wide process of marketing wherein emphasis is initially on promotion of goods and services and eventually on increase in sales volume Marketing has long term perspective of winning over consumer loyalty to the product by providing him maximum satisfaction. However, selling has short-term prospective of only increasing the sales volume. In marketing, the consumer is the on king whose needs must be satisfied. In selling, the product is supreme and the entire focus is its sale. Marketing starts before production and continues even after the exchange of goods and services has taken place. It is so because provision of after sale service is an important component of marketing process. Selling starts after the production and ends as soon as the exchange of goods and services has taken place.Marketing Selling Marketing includes selling and other activities like various promotional measures, marketing research, after sales service, etc. It starts with research on consumer needs, wants, preference, likes, dislike etc., and continues even after the sales have taken place. Focus is on earning profit through maximisation of customers’ satisfaction. Customer’s need is the central point around whom all marketing activities revolve. It is an integrated approach to achieve long term goals like creating, Selling is confined to persuasion of consumers to buy firm’s goods and services. Selling starts after the production process is over and ends with the handing over the money to the seller by the buyer. Focus is on earning profit through maximisation of sales. Fragmented approach to achieve short term gain. Allactivities revolve around the product that has been produced. maintaining andretaining the customers. Stresses on needs of the seller. Stresses on needs of buyer. 1.3 MODERN MARKETING CONCEPTS The concept of marketing has evolved through different stages from production orientation to societal orientation. The modern concept of marketing highlights satisfaction of consumer needs and wants whereas the societal concept cares for the well being of the consumer as well as that of society. Let’s discuss these orientations/ philosophies/concepts one by one. 1.3.1 The Production Concept It is one of the oldest philosophies in business. This concept views that consumers will prefer those products that are widely available and cheaper in cost. The organizations are production-oriented in nature and try to achieve high production efficiency and emphasize on wider supply of goods and services. This concept began in 1600s with the colonization of America and continued till the later part of 19th century. In those days, primary motive of the organizations was to make the product available to consumers and to kept the price low. 3In those days, the demand of products used to exceeds the supply. In this particular situation consumers were more interested in obtaining the products rather than its quality and features. The producers used to enjoy the huge economies of scale and it was very difficult for the new entrant to enter into the market as the existent marketers used to enjoy a kind of monopoly situation. Henry Ford was the pioneer in the 1900s to expand the automobile market on the basis of production concept by providing his consumers only a single version of car i.e. T-model in black colour. But the marketers, after a certain period of time, could not get the best of consumer patronage. The reason was that the consumers were motivated to seek varieties while purchasing. As a result, the production concept fails to serve as the right marketing philosophy for the enterprises. 1.3.2 The Product Concept The product concept assumes that consumers will buy the product that offers them the highest quality, the best performance, and the most features. A product orientation leads a company to try constantly to improve the quality of its product. Under this concept, it is believed by the managers that consumers prefer well-made products and can appreciate better quality and performance. Organizations that are devoted to the product concept of marketing, believe that consumers would automatically favour for products of high quality. The managers of these organizations spend considerable energy, time and money on research and development to introduce quality and variations in products. However, some of the managers are caught up in a love affair with their product and do not even realise that the product is not required in the market. This particular situation is described as ‘marketing myopia’ by the great philosopher of marketing Professor Theodore Levitt. Marketing myopia means a wrong and crooked perception of marketing and a short-sightedness about business. It is in form of excessive attention to the quality of the product thereby leaving other aspects without any due care. General Motors designed a beautiful small-sized car with each and every attribute in it but that was a total failure because at that time, that was not required by the consumers. The marketers can add any kind of attribute to their products but if the consumers are not aware of regarding the availability, how can they go for purchasing that particular product. This phenomenon gave birth to another concept ie. selling concept. 1.3.3 The selling concept/sales concept The selling concept is based on the assumption that consumers are unlikely to buy a product unless and until they are actively and aggressively convinced to do so. The idea was evolved through the views of may academicians and practioners that unless 4you make your consumers aware about the product or if he/she is not persuaded, the consumers may develop a tendency to ignore your products. This philosophy maintains the view that an organization can not expect its products to get picked up automatically by the customers. The organization has to put certain amount of efforts consciously to push its products. In this concept, the firm makes the product first and then spells out how to sell it and make profit. Aggressive advertising, personal selling, large-scale promotional instruments like discounts and free gifts etc. are normally employed by the organizations to rely on this concept. The problem with the selling orientation is that it does not take consumer satisfaction into account. In this situation, when consumers are compelled to buy products that they don't need and consequently unhappiness is likely to be communicated through negative word- of-mouth that may dissuade other potential consumers from making a similar purchase. Furthermore, when the product or service is not in a position to fulfil the consumers’ needs, there is a remote possibility of the repeat purchase. 1.3.4 The marketing concept In the 1950s, some marketers started realising that they could sell more products with more ease and comfort, if they produced only those products which already had a place in the minds of the consumers. Instead of trying to sell them the products that had already produced, marketing-oriented firms strived to produce only those products which have been produced according to the needs of the consumers. The marketing concept emphasis that an organization should strive to satisfy the needs of the consumers by identifying them and then produce the products accordingly through a co-ordinated set of activities. Satisfying the customer should be the major focus of all the organisational activities. Here instead of focusing on quality or sale, consumer’s need and desired satisfaction become the premise which is a must delivered phenomenon to be successful in the era of competition. To identify unsatisfied consumer needs, organisations had to go for extensive marketing research. While doing so, it was discovered that consumers were highly complex individuals, possessing a wide variety of innate and acquired needs. Hence, the study of consumer needs has become the basis of another discipline also i.e. consumer behaviour. 1.3.5 The societal marketing concept As our society moves through the 1990s, the marketing concept continues to take on new meanings. The old and traditional concept of marketing has emphasised and focused on the satisfaction of consumers’ needs and wants to meet the objectives and goals of the organisations. But the ever changing scenario in the field of marketingbrought in a third consideration and that is the welfare of society. In this philosophy, emphasis is being placed on how certain marketing activities and efforts affect society as a whole in the era of limited resources, environmental degradation and global competition. This philosophy puts a question mark whether satisfying consumers’ need serve the long term intervals of the society or not. Hence, the new concept emerged as the societal marketing concept where it is emphasised that besides satisfying consumer needs, long run societal welfare has to be considered by the marketers. The marketers have to adopt social and ethical considerations into their marketing practices. They must make a balance between the different criteria of organization’s profits, consumer's satisfaction and public interest as a whole. 1.3.6 Holistic marketing concept Holistic marketing concept is a part of the series on concepts of marketing and it can be defined as a marketing strategy which considers the business as a whole and not as an entity with various different parts. According to holistic marketing concept, even if a business is made of various departments, the departments have to come together to project a positive & united business image in the minds of the customer. Holistic marketing concept involves interconnected marketing activities to ensure that the customer is likely to purchase their product rather than competition. Example of Holistic marketing concept An organization will have different departments like sales and marketing, accounting and finance, R&D and product development and finally HR and operations. Thus, if you want to implement a holistic marketing concept in your organization, you need to ensure that R&D and product development take the feedback from marketing and sales to launch the product which is most likely to attract customers. On the other hand they need to work closely with accounting and finance to find out the exact budget for the project. Sales and marketing need to communicate to the HR the right kind of people that they need, and finally, admin and operations need to devise a plan to retain these people. ‘Thus, in the above manner, you get the right product at a right price with the right profits. Along with this you get the right people who will market your product in the right manner. If you do all these things, you are sure to get the right customer to your doorstep. This is the complete essence of holistic marketing concept. By doing the right things 6together as an organization, your product and brand stands a far better chance in being successful than compared to these elements working individually without any holistic vision. Today, customer mindset is changing. Wealth is becoming lesser and debt is high. Thus customer purchases are being made after lots of thinking. Customers search offline as well as online for the right product and have good knowledge of the product before they purchase. It is likely that the customer has already made a purchase decision even before he enters the showroom. Thus holistic marketing concept is needed at this hour to ensure that the customer chooses your product over everyone else. Akey driver of Holistic marketing is marketing communications. The job of marketing communications is to send the right message to the target group. By approaching various customer contact points, a uniform message can be sent to the customer. ‘This consistency is likely to raise confidence in the customer for your company thereby raising the brand image. Samsung is an example of Holistic marketing where the products are developed keeping the customer in mind, The showrooms are branded in the proper manner, the customer service is polite and the service is fast. Thus Samsung is an excellent example of Holistic marketing. Some key concepts which are important in Holistic marketing are Internal marketing - Marketing between all the departments in an organization Relationship marketing - Building a better relationship with your customers, internal as well as end customers is beneficial for holistic marketing. Performance marketing - Driving the sales and revenue growth of an organization holistically by reducing costs and _—sincreasing _ sales. Integrated marketing - Products, services and marketing should work hand in hand towards to growth of the organization. ‘Thus Holistic marketing is a concept which is organization wide and helps the growth of the organization with the right marketing of the product. With the rise in competition and the limits placed on customers with finite financial resources, decisions will be scarce and as an organization we have to implement holistic marketing so that decisions are made by customers in our favour.1.4 NATURE OF MARKETING (a) Marketing is customer oriented: Marketing begins and ends with the customer. The job of the marketing is not only to satisfy the consumer but even to delight him/ her. All the activities of an organization must be directed and focussed towards the consumer. The organisations can not ignore emerging technologies, materials, instruments and new ways of organizing the things but with the considerations of consumers. Therefore, marketers must allow their customers to dictate product specifications and standards regarding quality. This job can only be performed if consumers’ needs are continuously monitored. (b) Marketing is the delivery of value: when a consumer derives satisfaction from a particular product on the basis of product's overall capacity and performance is known as value in consumer's perception. The consumers today make a trade-off between cost and benefit of the product and they consider the product’s value and price before making a decision. At times they will have to give up a particular product to obtain the other one since first one involves a big cost. Thus, he will choose the product that gives him more value per rupee. According to De Rose, “Value is the satisfaction of customer requirements at the lowest possible cost of acquisition, ownership, and use”. Thus, the organisations’ strategies must be aimed at delivering greater customer value than that of their competitors. (c) Marketing is a net-work of relationships: The customer is at the centre-stage and focus of all marketing activities. From 1990s onwards the focus is not only to identify the needs and delivers it to customers but is shifting towards relationships marketing. According to Philip Kotler “Relationship marketing is the practice of building long-term satisfying relations with key parties like customers, suppliers and distributors in order to retain their long-term preference and business”. The marketers who are smart enough to maintain their relationships by delivering high quality products in time, better services and fair prices in comparison with their counterparts. (d) Marketing as a separate discipline: There used to be the days when marketing was treated as a part of economics. But now it is recognised as a full-fledged separate discipline. It is not the time when we just talk of sales and purchase or the quality of the product or the monopoly. With the emergence of modern marketing concept, the issue of green marketing and environmental protection have come up and regarding that various laws have been framed. When we talk of knowing consumer behaviour, it leads us to entirely a new world of human behaviour and for that matter, a marketer must possess the knowledge of psychology. Why a particular product is preferred by a consumer and other declines it to use? The answer has in the study of culture. 8‘Therefore, marketing has emerged as a separate discipline and got its strength from the related areas like law, psychology, anthropology, sociology and statistics et (e) Marketing is business: When it is said that marketing is business, the contention is that the all activities starts from marketing i.e. through knowing consumer and end up on the consumers i.e, knowing consumer dissonance. It means the entire business revolves round the marketing. According to Peter F. Drecker “Marketing is so basic that it can not be considered as a separate function. It is the whole business seen from the point of view of its final result, that is, from the customer's point of view. Business success is not determined by the producer but by the customer”. So, business seeks customers because they are the business providers and ultimately marketing is business. 1.5 SCOPE OF MARKETING Marketing management has become the subject of growing interest for everybody in today’s scenario. Therefore, it is of utmost importance to discuss the scope of marketing. It can be understood in terms of functions that a marketing manager performs. Let’s discuss some of the issues that are undertaken by a marketing manager so as to elaborate the scope of marketing. (a) Marketing Research: While sitting in a company’s office, no one can identify the needs and wants of the consumers. For that purpose, research has to be carried out in analysing the consumer’s needs, their tastes and preferences, brand image of the product and effectiveness of certain advertisements etc. These are the major areas of research where a marketing manager requires information to be successful in market because by knowing these information, he takes timely, accurate and better decision. ‘The marketing research not only gather information regarding certain problem but also suggests corrective and action oriented steps. (b) Product Planning and Development: A product is a bundle of utility offered to consumers to satisfy their needs. Through marketing research, a marketer is able to know the needs of the consumers but what kind of storage and transportation is required, it depends upon the nature of the product. Product must be according to the requirement and must also be according to the paying capacity of the consumers. ‘There are number of decisions involved in this process like supplier of raw materia, packaging, storage and distribution etc. (c) Pricing: One of the important functions of a marketing manager is to determine the price of a product. Price is always influenced by the cost, services attached to it, government policy, competitors prices and marketer's requirement of profit margin. aA good pricing policy is a significant factor to attract the consumers because price is the only ‘p’ of marketing mix which generates revenue for the organisations. (4) Financing: Financing of consumer purchasing has become an important part of modern marketing. The marketing manager plays an important role in the finance department in this regard and consequences thereto. In the era of global competition when there is fierce competition and so many alternatives are available to a customer, certain finance schemes have become an important device to increase the volume of sales. Since the interest rates has come down significantly, financing facilities have taken the shape of lubricants that facilitates the operation of the marketing machine. In the era when the world economy is passing through a great recession, these facilities help generating revenue for the respective organisations and consequently are helping the economy to revive back and for the consumers those who can afford to realise their dreams of having a colour TV or small car, can fulfill their dreams through these instruments of marketing, (e) Insurance: When goods and services are exchanged from one hand to another, from one place to another place, a large number of risk factors are involved. Marketing has now spread its arms to cover these risks through insurance activities. National calamities like flood and earthquake or damage of goods and services due to fire, theft or accident, may cause big losses and can hamper the entire business. The various insurance companies provide the protection against these risks by getting a nominal amount of premium in return. (f Advertising: In this era of competitive world, advertising has become an important instrument in the hands of marketers. It makes the consumer aware about the product, makes him curious about the product and then force him for action and thus promote the sale. According to American Marketing Association “Advertising is a paid form of non-personal presentation by an identified sponsor”. It is a non-personnel link between a marketer and the consumer. Through advertising marketers are able to position their products in the minds of the consumer through various media like newspapers, magazines, television, radio, hoardings, window display and internet etc. Apart from the above areas there are many more business areas where marketing activities have these vast scope but besides business areas, marketing has its scope in the non-business or non-profit sector also. A student who tries to occupy the front seat is also engrossed in doing marketing. Churches, hospitals, colleges and universities are the other non-profit sector where marketing activities are seriously performed. 101.6 FUNCTIONS OF MARKETING To achieve success in your marketing effort you need to have glimpse of the big pictures and the activities you need to perform in achieving your set marketing objectives, these activities is referred to as the function of marketing. It refers to those specialize activities that you as a marketer must perform in order to achieve your set marketing objectives. The functions of marketing are; 1, Researching 7. Pricing 2. Buying 8. Distribution 3. Product development and management 9. Risk bearing 4. Production 10. Financing 5. Promotion 11. After sales-service 6. Standardization and grading (1)Research function: the research function of marketing is that function of marketing that enables you to generate adequate information regarding your particular market of target. You must carry out adequate research to identify the size, behavior, culture, believe, genders etc. of your target market segment, their needs and want, and then develop effective product that can meet and satisfy these market needs and want. (2)Buying function: the function of buying is performed in order to acquire quality materials for production. When you design a good product concept, you should also ensure you're buying the essential materials for the product. This function is carried out by the purchase and supply department, but your specifications of materials goes a long way in assisting the purchasing department to acquire the necessary materials needed for production. (3)Product development and management: product development is an essential function of marketing since it was the duties of the marketing department to identify what the market need or want and then design effective product based on the identified need and want of the market. Product development passes through some basic stages carried out by the marketers to develop a targeted market specified product. And you can also manage your product by evaluating it performance and changing them to fit the current market trend. 11(4)Production function: production is the function performs by the production department. Though, this is interrelated to the department of marketing, because your product must possess the essential characteristics that can meet the target market needs and want as identified during your market research, such characteristics as in your product Test, Form, Packaging etc. (5)Promotion function: promotion is one of the core functions of marketing since your finish product must not remain in the place of production, hence, you as. a marketer must design effective communication strategies to informing the availability of your product to your target market. We must be able to design effective strategies to communicate our product availability and features to our target market, such strategies as in; advertisement, personal selling, public relation etc. (6)Standardization and grading: the function of standardization is to establish specified characteristics that your product must conform to, such standard as in having a specify test, ingredient etc. That makes your product brand so unique. Grading comes in when you sort and classify your product into deferent sizes or quantities for different market segment while maintaining your product standard. (7)Pricing function: you perform the function of pricing on your product offerings by designing effective pricing systems base on your product stage and performance in the product life cycle. Price is the actual value consumers perceive on your product, so you as a marketer should ensure that your value of your product is not too high or too low to that of your costumers. (8)Distribution function: the function of distribution is to ensure that your product is easily and effectively moved from the point of production to the target market, the kind of transportation system to employ e.g. Road, rail, water or air, and ensures that the product can be easily accessed by customers. You as a Marketer should also design the kind of middlemen to engage in the channel of distribution, their incentives and motivations etc. (9)Risk bearing function: the process of moving a finished product from the point of production to the point of consumptions is characterized with lots of risks, such risks as in product damaging, pilferage and defaults etc. So you must provide effective packaging system to protect your product, good warehouse for the storage of your product until they are needed, effective transportation system to speedily deliver your product on time. 12(10)Financing function: financing deals with the part of marketing to providing incomes for your business. It refers to how you can raise capital to start operation and remain in business. It refers to your modes of payment for the goods and services transferred to your costumers. (11) After sales-servic should make provision in order to assist your customers after they have purchased your product. In terms of machines or heavy equipment product that requires installation or maintenance, most marketing organization renders such services like installing the machine or maintaining it for stipulated periods on time for free or by a in a more complex and technical product, you as a marketer little service charge. After sales services is an effective marketing strategy to building a long lasting customer relationship, staying ahead of your competitors while making profit for your organization. Adequate understanding of these functions enables you as a marketer to know what is required to be done to having an effective transfer of ownership between you and your costumers, creating a big picture of your business, while also making profit for your organization. 1.7 PROBLEMS OF MARKETING 1) Low Marketing Education: A well informed and educated people tend to be prosperous investors and consumers. This is because they will imbibe the culture and tenets of marketing. But mark ting education is still generally low in developing countries like India. Many policy makers and managers of large organizations still do not know what marketing is all about. Even when some people acquire higher degrees in the field of marketing and business administration, they come out doing the contrary, instead of practicing the true marketing concept or relationship marketing for the benefit of the society as a whole. In situations like that, marketing cannot contribute meaningfully to the development of these economies. 2) Preferences for Foreign Products: Because of the development process of most Asian can countries and their inability to produce most goods (especially technologically sophisticated products), they tend to prefer buying from the more industrialized countries. This makes the development process of local industries and commercial life of the people more impoverished. Developing countries constitute 71% of the world’s population, but only contribute about 12% the world’s industrial production that often boost marketing in these economies. Why should this be the 13case, and who is to be blamed for the structural discrepancy and imbalance? What actions could these countries adopt to accelerate the pace of industrialization and development in order to boost the tempo of marketing. It is generally felt that locally- made goods are only for the poor, uneducated, and those who are not fashionable, while the consumption of imported goods and services is taken as a status symbol for the elite and affluent in developing countries. Even when some countries products are of less quality when compared to similar local brands. This situation makes the growth of marketing and satisfaction of consumers locally difficult. 3) Low Patronage for Non-essential Products and Services: The majority of the people in developing countries are poor, and their.per capita income is below average. This makes it imperatively difficult for them to buy much of luxury goods. Rather their purchases and expenditure are directed towards satisfying the basic needs for food, clothing, and accommodation. Non essential goods and services receive low patronage. Therefore low patronage for certain category of goods do not present attractive marketing opportunities that will ginger investment overture. 4) High cost of production: Marketing has suffered dearly in most developing countries because virtually all production techniques are imported from the developed world. ‘The cost of acquiring equipment and other inputs used for production locally to boost marketing is sometimes extremely exhaubitant for the poor developing countries to buy and finance. To worsen matters, the bulk of Indian production is mainly in agricultural products that contribute less to GNP or Net National income of their various economies. This is because these products are sold at lesser prices in the world market. The income generated from them can only buy little from all that is needed to encourage domestic production, in order to enhance marketing. Where it is possible to import the equipment, the production techniques and skillful manpower requirement is sometimes too expensive to bear, hence the high cost of some local products when compared to the same foreign brands. This reason strengthens consumer's preference for imported products and results to low demand for locally made goods. This affects the marketing potentials of the home industries and equally has an adverse effect on macro- marketing of developing countries. 5) Inadequate Infrastructures: Most developing countries are very poor, such that some of them depend on aids from abroad. It invariable becomes difficult for some of them to provide the necessary infrastructures that would engender and propel smooth marketing scenario. Coupled with the poor road network and transport facilities, poor communication, distressed banks, malfunctioning ports and trade zones, among others. Apart from the deliberate embezzlement by some top government officials, the 14government is yet to provide these infrastructures, and this has made it difficult for marketing activities to be performed effectively and efficiently. Moreover, the inadequacy and poor state of these infrastructures contribute to high cost of doing business in developing countries. The inability or unwillingness of some developing countries to provide these necessary infrastructural facilities that will facilitate the performance of marketing in these economies is in itself a major problem worthy of note. 6) Few Competitive Opportunities: Lucrative competitive businesses are not much in developing countries. In most developed societies economic policies have long assumed that competition among businesses is the most efficient method of producing and marketing goods and services. Proponents of this philosophy contend that it results in maximum productivity and forces inefficient organizations and businesses to terminate their operations. It gives the consumer or buyer an opportunity to choose from several competing companies rather than buy from a monopolist, and stimulates creativity in seeking solutions to marketing problems especially in developing countries where such problems are more. But marketing in the true sense is usually at its best where and when there is real competition. Unfortunately, competition is at the lower ebb in developing countries, this might not be unconnected with the level of poverty and underdevelopment in the continent. But developed countries like USA, UK, Japan and emerging economies in Asia are competing amongst themselves in the manufacturing and supply of different types of products to newly found markets. This is because they have the technology and financial backing. 7) Over- Regulation of Business by Government: Another major problem that has be-deviled the performance of marketing has been the issue of government regulations and interferences in the activities of businesses and corporate firms. Locally, state governments reserve special areas where businesses are not supposed to operate and if structures, housing corporate firms are erected there, they are bound to be demolished. In developing countries, it is usual to find governments promulgating laws to regulate the prices of consumables, fuel, transport fares, exchange values of national currencies, accommodation etc. The haste to get their economies developed and quickly catch up with advanced Nations often lead developing countries to over- regulate business activities and restrict the activities of free enterprise. This makes marketing difficult, since decisions cannot be taken from a purely economic perspective. 8) Political Instability and Civil Unrest: Rapid economic growth and development of marketing techniques cannot be achieved or attained in an environment of political and social instability or political hostility. Political stability implies an orderly system 15for a positive change in governance and peaceful co- existence amongst the citizenry that, poses a great challenge to marketing. Therefore, marketing does not thrive where there is political instability and insecurity or civil disturbances. 1.8 THE MARKETING ENVIRONMENT Managers face difficult and exciting challenges today. A global economy in which world-class quality is the ticket to ride, increased diversity in the work force, and calls. for more ethical conduct promise to keep things interesting. The challenge for today’s and tomorrow’s managers is to be aware of specific changes, along with the factors effecting such changes and their likely impact on the business organisations. The world is shrinking rapidly where cross-cultural skills are a must. Coverage of product and service quality has been significantly increased. Diversity among consumers has also increased by leaps and bounds where managers are challenged to manage this diversity by keeping themselves abreast of the latest happenings. Managers who know more than just management are required today. Those who can value people, communicate well, solve problems, see the big picture and work hard are the precious human material wanted by the organisations. A manager, who can visulalise these changes and understand the dynamic character of marketing environment can survive in the industry. 1.8.1 DEFINITIONS AND MEANINGS It refers to alll external forces which have a bearing on the functioning of the business. According to Barry M. Richman and Melvgn Copen “Environment consists of factors that are largely if not totally, external and beyond the control of individual industrial enterprise and their managements. These are essentially the ‘givers’ within which firms and their management must operate in a specific country and they vary, often greatly, from country to country”. William F. Glucck defines marketing environment “as the process by which strategists monitor the economic, governmental, market, supplier, technological, geographic, and social settings to determine opportunities and threats to their firms”. According to Skinner “Marketing environment consists of all the forces outside an organisation that directly or indirectly influence its marketing activities, includes competition, regulation, politics, society, economic conditions, and technology” From the above definitions we can extract that marketing environment consists of factors that are internal and external which may pose threats to a firm or provide opportunities for exploitation. 16In business all the activities are carried out to satisfy the needs of the consumers. In other words, it is an activity carried out by the people for the people which mean people occupy a central place around which all the activities revolve. It means business is people and a human is always a dynamic entity who believes in change and it may be right to say that the only certainty today is change. It poses a huge challenge for today and especially tomorrow’s businessmen and managers to be aware of specific changes so as to keep themselves abreast of the latest happenings in the field of business to ensure their survival and sustainability in the market. Therefore, the study of marketing environment is of utmost importance for the managers and practitioners. 1.9 CONSTITUENTS OF MARKETING ENVIRONMENT Every business firm consists of a set of internal factors and it also confronts with a set of external factors. The following figure gives a more clear and comprehensive picture about the different factors. Marketing Environment Le Internal Environment External Environment + Human Resources & Micro Environment Macro Environment Internal Relationships + Consumers + Economic Factors + Company Image + Suppliers + Political & Govt. Factors + Management Structure + Competitors * Demographic Factors + Physical Assets + Middlemen * Socio-cultural Factors *R&D&Technological + Publics * International Factors Capabilities + Natural Factors * Marketing Resources + Financial Factors 1.9.1 Internal Environment ‘There are number of factors which influence various strategies and decisions within the organisation’s boundaries. These factors are known as internal factors and are given below: (a) Human Resources: It involves planning, acquisition, and development of human resources necessary for organisational success. It points out that people are valuable resources requiring careful attention and nurturing. Progressive and successful 17organisations treat all employees as valuable human resources. The organisation’s strengths and weaknesses are also determined by the skill, quality, morale, commitment and attitudes of the employees. Organisations face difficulties while carrying out modernisation or restructuring process in form of resistance of the employees. So, the issues related to morale and attitudes should seriously be considered by the management. Moreover, global competitive pressures have made the skilful management of human resources more important than ever. The support from different levels of employees helps the management in making decisions and implementing them. (b) Company Image: One company may issue shares and debentures to the public to raise money and its instruments are over subscribed while the other company make seek the help of different intermediaries like underwriters to generate finance from the public. This difference underlines the distinction between the images of the two companies. The image of the company also matters in certain other decisions as well like forming joint ventures, entering contracts with the other company or launching new products etc. Therefore, building company image should also be a major consideration for the managers. (c) Management Structure: Gone are the days when business was carried out by the single entrepreneur or in the shape of partnerships. Now it has reshaped itself into the formation of company where it is run and controlled by the board of directors who influence almost every decision. Therefore, the composition of board of directors and nominees of different financial institutions could be very decisive in several critical decisions. The extent of professionalisation is also a crucial factor while taking business decisions. (d) Physical Assets: To enjoy economies of scale, smooth supply of produced materials, and efficient production capacity are some of the important factors of business which in turn depends upon the physical assets of an organisation. These factors should always be kept in mind by the managers because these play a vital role in determining the competitive status of a firm or an organisation. (ec) R & D and Technological Capabilities: Technology is the application of organised knowledge to help solve problems in our society. The organisations which are using appropriate technologies enjoy a competitive advantage over their competitors. The organisations which do not possess strong Research and Development departments always lag behind in innovations which seem to be a prerequisite for success in today’s business. Therefore, R & D and technological capabilities of an organisation determine a firm’s ability to innovate and compete. 18(f) Marketing Resources: The organisations which possess a strong base of marketing resources like talented marketing men, strong brand image, smart sales persons, identifiable products, wider and smooth distribution network and high quality of product support and marketing support services make effortless inroads in the target market. The companies which are strong on above-mentioned counts can also enjoy the fruits of brand extension, form extension and new product introduction etc. in the market. (g) Financial Factors: The performance of the organisation is also affected by the certain financial factors like capital structure, financial position etc. Certain strategies and decisions are determined on the basis of such factors. The ultimate survival of organisations in both the public and private sectors is dictated largely by how proficiently available funds are managed. So, these are some of factors related to the internal environment of an organisation. ‘These factors are generally regarded as controllable factors because the organisation commands a fair amount of control over these factors and can modify or alter as per the requirement of the organisation. 1.9.2 External Environment Companies operate in the external environment as well that forces and shape opportunities as well as threats. These forces represent “uncontrollable”, which the company must monitor and respond to. SWOT (Strengths, weaknesses, opportunities and threats) analysis is very much essential for the business policy formulation which one could do only after examination of external environment. The external business environment consists of macro environment and micro environment. (A) Micro Environment It is the company’s immediate environment where routine activities are affected by the certain actors. Suppliers, marketing intermediaries, competitors, customers and the publics operate within this environment. It is not necessary that the micro factors affect all the firms. Some of the factors may affect a particular firm and do not disturb the other ones. So, it depends on what type of industry a firm belongs to. Now let’s discuss in brief some of the micro environmental factors. (a) Suppliers: The supplier to a firm can alter its competitive position and marketing capabilities. These can be raw material suppliers, energy suppliers, suppliers of labour and capital. The relationship between suppliers and the firm epitomises a power equation between them. This equation is based on the industry conditions and the 19extent to which each of them is dependent on the other. For the smooth functioning of business, reliable source of supply is a prerequisite. If any kind of uncertainties prevail regarding the supply of the raw materials, it often compels a firm to maintain a high inventory which ultimately leads to the higher cost of production. Therefore, dependence on a single supplier is a risky proposition. Because of the sensitivity of the issue, firm should develop relations with different suppliers otherwise it could lead to a chaotic situation. Simultaneously firms should reduce the stock so as to reduce the costs. (b) Customers: According to Peter F. Drucker “the motive of the business is to create customers”, because a business survives only due to its customers. Successful companies recognise and respond to the unmet needs of the consumers profitably and in continuous manner. Because unmet needs always exist, companies could make a fortune if they meet those needs. For example it is the era when we could witness the increasing participation of women in the different jobs which has already given birth to the child care business, increased consumption of different household utilities like microwave ovens, washing machines and food processors etc. A firm should also target the different segments on the basis of their tastes and preferences because depending upon a single customer is often risky. So, monitoring the customer sensitivity is a pre condition for the success of business. (c) Competitors: A firm’s products /services are also affected by the nature and intensity of competition in an industry. A firm should extend its competitive analysis to include substitutes also besides scanning direct competitors. The objective of such an analysis is to assess and predict each competitor’s response to changes in the firm’s strategy and industry conditions. This kind of analysis not only ensures the firm’s competitive position in the market but also enables it to identify its major rival in the industry. Besides the existing competitors, it is also necessary to have an eye on the potential competitors who may enter the industry although forecasting of such competitors is a difficult task. Thus an analysis of competition is critical for not only evolving competitive strategy but also for strengthening a firm’s capabilities. (a) Marketing Intermediaries: Marketing intermediaries provide a vital link between the organisation and the consumers. These people include middlemen such as agents or brokers who help the firm to reach out to its customers. Physical distribution entities such as stockists or warehouse providers or transporters ensure the smooth supply of the goods from their origin to the final destination. There are certain marketing research agencies which assist the organisation in finding out the consumers so that they can target and promote their products to the right consumers. 20Financial middlemen are also there who finance the marketing activities such as transportation and advertising etc. A firm should ensure that the link between organisation and intermediaries is appropriate and smooth because a wrong choice of the link may cost the organisation heavily. Therefore, a continuous vigil of all the intermediaries is a must. (e) Publics: an organisation has an interface with many publics during its life time. According to Cherrunilam “A public is any group that has an actual or potential interest in or impact on an organisation’s ability to achieve its interests”. The public includes local publics, media and action groups etc. The organisations are affected by certain acts of these publics depending upon the circumstances. For example if a business unit is establishment in a particular locality then it has to provide employment to the localites at least to the unskilled labour otherwise local group may harm that very business or they may interrupt the functioning of the business. The media has also to be taken into confidence because in turned hostile they may tarnish the image of the organisation unnecessarily. Simultaneously media may disseminate vital information to the target audiences. Action groups can also create hindrances in the name of exploitation of consumers or on the issue of environmental pollution. ‘The business suffers due to their activities. ‘Therefore, their concerns should also be kept in mind. Albeit, it is wrong to think that all publics are threats to the business yet their concerns should be considered up to a certain level. (B) Macro Environment With the rapidly changing scenario, the firm must monitor the major forces like demographic, economic, technological, political /legal and social/cultural forces. The business must pay attention to their casual interactions since these factors set the stage for certain opportunities as well as threats. These macro factors are, generally, more uncontrollable than the micro factors. A brief discussion on the important macro environmental factors is given below: (a) Demographic Environment: The first macro environmental factor that businessmen monitor is population because business is people and they create markets. Business people are keenly interested in the size and growth rate of population across the different regions, age distribution, educational levels, household patterns, mixture of different racial groups and regional characteristics. For ensuring the success of the business incessant watching of these demographic factors is a prerequisite. To enter into a particular segment, a marketer needs to understand composition of that segment 21with respect to different demographic factors in that very segment so as to decide the optimal marketing mix and also take certain strategic decisions related to it. For example, if the youth form a large proportion of the population, it is but natural for firms to develop their products according to the requirement of this group. Besides the age, it is also necessary to break up population according to sex-wise and also the role of women. Today we can observe that more and more women have taken to work and professions and hence it can be seen that many time saving appliances are available in the market. Each gender group has different range of product and service needs and media and retail preferences, which help marketers to fine-tune their market offers. There is yet another dimension of population changes which a businessman needs to address. For example, occupation and literacy profile of the targeted segment. The higher literacy level will imply a more demanding consumer as he is in the touch of the various media which acquaint him with information, and on the other hand low literacy make the marketers look for other method of communication. The occupation of the population also affects the choice of the products and media habits. Any significant irrigation of the population from one area to another, rural to urban, is another important environmental factor which calls for the marketer’s attention. For example, the movement from north-India to South-India will reduce the demand for warm clothing and home heating equipment on the one hand and will increase the demand for air conditioning on the other hand. So, the companies that carefully analyse their markets can find major opportunities. () Economic Environment: Besides people, markets require purchasing power and that depends upon current income, savings, prices, debt and credit facilities ete. The economic environment affects the demand structure of any industry or product. The following factors should always be kept in mind by the business people to determine the success of the business. (i) Per capita income (ii) Gross national product (iii) Fiscal and monitory policies (iv) Ratio of interest changed by different financial institutions (v) Industry life cycle and current phase (vi) Trends of inflation or deflation 22Each of the above factors can pose an opportunity as well as threat to a firm. For example, in an under-developed economy, the low demand for the product is due to the low income level of the people. In such a situation a firm or company can not generate the purchasing power of the people so as to generate the demand of the products. But it can develop a low priced product to suit the low income market otherwise it will be slipped out from the market. Similarly, an industry gets a number of incentives and support from the government if it comes under the purview of priority sector whereas some industries face tough task if they are regarded as belonging to non-essential or low priority sectors. In the industry life cycle, timing is every thing when it comes to making good cycle- sensitive decisions. The managers need to make appropriate cutbacks prior to the onslaught of recession because at that time sales are bound to decline which leads to increasing inventories and idle resources and that is costly. On the other hand, business people cannot afford to get caught short during a period of rapid expansion. This is where accurate economic forecasts are a necessity and therefore, a manager must pay careful attention to the major economic changes. (c) Technological Environment: Technology is a term that ignites passionate debates in many circles these days. According to some people technology have been instrumental in environmental destruction and cultural fragmentation whereas some others view that it has effected economic and social progress. But no doubt, it has released wonders to the world such as penicillin, open-heart surgery, family planning devices and some other blessings like automobile, cellular phones and internet services etc. It has also been responsible for hydrogen bomb and nerve gas. But the businesses that ignored technological developments, had to go from the world map. For example, in India, cars like Ambassador and Premier had to go from the scene because of obsolete technology. Likewise, containerised movement of goods, deep freezers, trawlers fitted with freezers etc. have affected the operations of all firms including those involved in seafood industry. Now it has been ensured that perishable goods can be transported in a safer manner. Explosion in information technology has made the position of some firms vulnerable. The life cycles of the products have reduced and expectations of the consumers are becoming higher and higher due to all these technological changes. To cope up with this kind of scenario, a continuous vigil of the happenings and adequate investment in R & D needs to be earmarked by the marketer. Marketers must also be aware of certain government regulations while developing and launching new products with latest technological innovations. 23(a) Political/Legal Environment: Business decisions are strongly affected by developments in the political and legal environment. This environment consists of laws, regulations and policies that influence and limit various organisations. Sometimes these laws create opportunities for the business but these may also pose certain threats. For example, if the government specifies that certain products need mandatory packaging then it will boost the cardboard and packaging companies but it will add to the cost of the product. Regulations in advertising, like a ban on advertisement of certain products like liquor, cigarettes and pan masalas and hoarding of food products, gas and kerosene are the reality of today’s business. Business legislations ensure specific purposes to protect business itself as well as the society from unfair competitions; to protect consumers from unfair business practices and to protect the interest of the society from unbridled business behaviour. In India business is regulated through certain laws like Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act), Foreign Exchange and Regulation Act, 1973 (FERA), Partnership Act 1932, Consumer Protection Act, 1986 (CPA), and Companies Act, 1956 etc. A businessman needs to understand various policies and political ideologies because these have a profound impact on the functioning and success of the business. (e) Sociat-cultural Environment: Society shapes the beliefs, values, norms, attitudes, education and ethics of the people in which they grow up and these factors exercise a great influence on the businesses which by far are beyond the company’s control. All these factors are classified as social-cultural factors of the business. The buying and consumption pattern of the people are very much determined by these factors and cost of ignoring the customs, tastes and preferences etc. of the people could be very high for a business. Consumers depend on cultural prescriptions to guide their behaviour, and they assume that others will behave in ways that are consistent with their culture. Culture unites a group of people in a unique way and support the group’s unity. As consumers, people expect that businessman will deliver according to the values, customs and rituals of the existing culture. As the business is going global day by day and the world is at the verge of ‘global village’ the need for developing understanding of cultural differences has become essential to survive. ‘Therefore, the marketers who wish to be the part of the ongoing process need to understand the process of acculturation so that they can develop ways to handle the consumers of different cultures. People’s attitudes toward business is also determined by the culture. ‘What is right and what is wrong’ are basic to all businesses and for doing or not doing a particular work is judged on the basis of prevalent culture and also determines ethical code of conduct. Despite the pervasive nature of culture, not 24all people within a society think, feel, and act the same way. Every society has subcultures- group of people who share certain values but exhibit them in different ways. Within a society such as the India, there are the different tastes and preferences of the different starta. Like a Punjabi has altogether different preferences then that of a South Indian in the name of certain products like food and clothing, and the shrewd marketers have always capitalised on this kind of opportunities. Hence, a thorough understanding of social-cultural environment is imperative in order to be successful. 1.10 MARKETING INFORMATION SYSTEM Marketing Research is to be distinguished from Marketing Information System (MIS). ‘The latter has been defined as: A structured, interacting complex of persons, machines, and procedures designed to generate an orderly flow of pertinent information, collected from both intra-and extra- firm sources, for use as the basis for decision-making in specified areas of marketing management. This definition indicates the interdependent activities associated with the collection of marketing information, both from internal and external sources. It also shows that such information is collected to facilitate decision-making in different areas of marketing management. We have seen earlier that marketing research is a means of obtaining information to be used in making marketing decisions. A comparison of the two concepts shows that while marketing research generates information, marketing information system concentrates on the storage and flow of information to marketing managers. This clearly shows that marketing information system is a much wider concept than marketing research. ¢ A good marketing information system should determine the information needs of the organisation and generate and” process such information on a continuing basis. It should also provide for its storage so that it can be used when required. ‘Types of Information Supplied by MIS Marketing information system usually supplies three types of information to marketing managers. The information could be recurrent, monitoring and requested. Recurrent information is that information which is provided on a periodic basis. For example, information on sales, market shares, customer satisfaction and perceptions, advertising expenditure, etc. may be supplied on weekly or monthly basis. 25Monitoring information is the information obtained from regular scanning of certain sources. For example, official publications, journals, annual reports of companies constitute common sources of monitoring information. These sources can be very helpful to companies as they can indicate the nature of problems that are likely to arise and the possible changes in business environment. In addition, such information can be helpful in identifying new market segments, new uses,)f the existing product as also possibilities of improving the product by introducing new features. Requested information, as the name implies, is the information sought by a marketing manager. Such information could involve a wide range of activities such as cost and price analysis of competitive products, cash flow position of competitive companies, quality testing of competitive products, etc. It may be noted that such information would not be usually available unless a specific request is made for the same. Once a request is made for specific information, then a series can be built up over time provided such information is useful and marketing managers need it frequently MIS to Help Develop Marketing Plans When a company begins to regularly schedule the coordination of findings from several research projects designed to assist in specific recurring decision situations, the company has began to develop a marketing information system-MIS for short. Such marketing information systems are beginning to evolve, as the following example illustrate. To help its managers develop their marketing plans, the Gillette Company uses information gathered from five different types of regularly recurring research projects. The five projects were designed to provide the managers a complete picture of the razor and blade market, including detailed descriptions of consumers, competition, and distribution. The five projects, and the usefulness of the information they gather, are a follows: 1. Each year a large number of people are selected in a nationwide sample and are personally interviewed in their own homes. The purpose is to determine the brands of razors and blades used by consumers, and to measure consumers’ attitudes towards both Gillette’s products and competitors’ products. 2. The company uses a large panel of shavers who are studied annually through their use of mail questionnaires. These projects are able to measure brand loyalty and brand switching because the same individuals are studied year after year. 263. Annual telephone surveys provide the company with brand awareness and advertising awareness information. These surveys tell the company how it compares with competition on these two important awareness measures. 4. Each month the company conducts two or more consumer use tests, involving both Gillette and competitive brands, in order to evaluate the strengths of all brands. The tests ensure that the company’s products are up to standard and that no claims are made that cannot be substantiated 5. Inventory audits are taken regularly at both the retail and wholesale levels. These provide the company with information regarding product inventory and display, pricing, out-of-stock, local advertising and more. ‘These five projects provide Gillette marketing managers with information on market shares, brand loyalty and brand switching, consumer attitudes, brand and advertising awareness, product advantages versus competition, inventory levels, out- of-stock, retail prices and display, local advertising, and more. As the data are gathered from recurring studies, the managers have a complete picture of current market and competitive conditions from the most recent set of studies, and they know the recent trends that exist in all of these data. All of these items of information provide the Gillette managers an excellent historical record on which to base the development of their new marketing plans. What Information Sources Are Used? Where do marketing managers and marketing researchers get the information they need? All marketing management information comes either from sources internal to the firm or from external sources. External sources of information can be further broken down into primary and secondary sources. Thus marketing management information comes from (1) sources internal to the firm, (2) primary sources external to the firm, and (3) secondary sources external to the firm (see table 1). Some sources are internal to the firm, such as information generated by the marketing, accounting, and production departments. Their normal operating responsibilities require that they compile some of the sales and cost data needed by management. ‘There are also data sources external to the firm, and these can be further classified as primary or secondary data sources. Secondary data are those that have been collected by other organizations; for example, government agencies such as the Commerce and Labour departments of the federal government, financial organizations such as Reserve Bank of India, IMF and IBRD; 27newspapers and magazines such as the Economic Times and Finance India, trade associations such as the CCI. Data from these sources are called secondary because these organizations collect original data, analyse and tabulate these data, but then publish only summary tables and charts. Users of such data are limited to what is presented in the summary tables and charts; the original data are not available to them. As secondary data typically are compiled for some general audience- not just for a specific manager- it is unlikely that their form and content will perfectly satisfy a specific manager’s information needs. SOURCES OF MARKETING MANAGEMENT INFORMATION Internal to Firm External to Firm Primary sources: Consumers Retailers and wholesalers Other business firms Sales and costs broken down by products, markets, and types of marketing activities (advertising, promotion, personal selling, etc.) Secondary sources: Government publications ‘Trade association publications Commercial services Other publications Primary data are those collected specifically by, or for, the data users. There is no intervening party to summarize the original data. As the original data from each unit or respondent are available, they can be retabulated or re-analysed in as many different ways as managers choose. Most important, however, is that the data collected are specified in advance by managers who will use the data; this assures managers that the data will be tailored to their needs. Frequently, manager's need would result in the use of information from both external and internal sources. For example, the “share of market” and “percent distribution” may be derived from either primary or secondary sources. In addition, if both brand awareness and attitude and performance data are used, they will be primary data. In effect, there may be numerous management information needs that can be satisfied only by a systematic integration of external primary and secondary data with the firm’s internal data. 28KEYWORDS Needs: It refers to the state of felt deprivation. How individuals go about satisfying a particular need is conditioned by the cultural values of that society which he/she belongs to. Wants: Wants are the specific satisfiers to satisfy a particular need. For example, transportation is a need and a car is a satisfier. Value: Value is represented by the ratio of perceived benefits to the price paid. Value can be added by better specifying a product offer in accordance with consumer’s expectations. Market: Market consists of potential buyers and sellers where they interact for an exchange process. Earlier people used to describe it as a place only. Marketing myopia: It means a wrong perception about marketing where excessive attention is given to the quality without taking care of the actual needs of the consumers. Demography: The study of population features i.e. relating to broad population statistics, such as age, sex, household composition etc. Competitive advantage: A firm which offers better marketing mix to its target consumers than that of competitors. Culture: The whole set of beliefs, attitudes and ways of behaving by a group of people. Macro-environment: The general external business environment in which a firm operates and are uncontrollable. Micro-environment: The gencral business environment factors which are controllable in nature. Marketing audit: A systematic review of a company’s marketing activities and of its marketing environment. Technology: The application of science for its practical purposes. Legal environment: Laws and regulations and their interpretation. Market research: It is about determining the characteristics of a market like size, growth rate, segment, and competitors positioning etc. a9Marketing research: besides including market research, it includes the monitoring of the effectiveness of its advertising, intermediaries, financing policies and identifying the needs of the consumers. Data-based marketing: The practice of using databases of customers’ names, addresses, phone numbers, past purchases, responses to previous offers, and previous decisions ete. Hypothesis: It is a tentative solution to a problem. Here we take certain assumptions to research objectives. Research design: A master plan that specifically identifies what techniques and procedures will be used to collect and analyse data about a problem. Sampling: Any procedure in which a small part of the whole population is used as the basis for conclusions regarding the whole. QUESTIONS 1. What do you mean by marketing? Describe the feature of marketing. 2. Describe in detail the various philosophies of marketing. 3. Define marketing management? Also discuss the various levels of demand and the task of a marketing manager thereto. 4. Do all companies need to practice the marketing concept? Could you cite companies that do not need this orientation? Why is the study of marketing important to everyone? Discuss. Give an example of a good, service, and idea that you have recently purchased. What is marketing environment? Write down its main ingredients. en Pf Define marketing environment? Discuss in brief the factors that constitute marketing environment. 9. “Firms which systematically analyse and diagnose the environment are more effective than those which don’t”. Elucidate. 10.Discuss the demographic and technological trends that can affect the future of the business. 11. What is “research”? What are the two broad categories in which it can be divided? 2. Distinguish between “problem-solving” and “problem-oriented” research. 3012.What is “marketing research”? Is marketing research a basic research or an applied research? Why? 13.Discuss the definition of marketing research as suggested by the American Marketing Association. 14.“Marketing research is undertaken to guide managers in the analysis of marketing problenis.” Critically examine this statement. 15.How can marketing research benefit marketing management? 16.“Many a time management is not convinced about the utility of marketing research and regards it as an unnecessary activity over which no funds should be spent”, comment. 17. What factors have contributed to the growth of marketing research in the western countries? 18.What is marketing information system? How does it differ from marketing research? 19.Marketing research is generally conceded to be essential for manufacturers, but is it of any real value of retailers and service organizations? Why? 20.A sales manager in a firm with a large sales force recently said, “My sales people give me better information about the market than I could ever get from our market research department.” Discuss. 31UNIT II CONSUMER BEHAVIOUR AND PRODUCT MIX 2.1 INTRODUCTION It is quite evident that knowing consumer needs and desires is a road to success for the marketers, but the question is how? It is not a simple task. At the first instance, we can feel that whatever consumer is telling may be perceived as correct but actually he may act otherwise. They may respond to your message but may be influenced at the last moment by their friends, family members or by their other reference groups. It may happen that they intend to seek products as their counterparts are using but their cultural moorings may not allow them to use those products. They may not be in touch with their deeper motivational level and may not exactly know as to what they really need. Even after conducting surveys and knowing their needs, while trying to convey a message, a marketer may entirely fail to make audience perceive the message as desired. A marketer, for the convenience of the consumers may try to make the goods available at their doorstep, while they actually may prefer going to marketplace. The marketers’ study finds varied types of personalities which require different sort of appeals to convince them according to their self-concepts. So, there are hundreds of questions, which come in the way of conducting research on consumers for knowing their deep-rooted needs and desires, but nevertheless marketers must study their target customers’ needs, wants, perceptions, preferences and buying behaviour. So, the aspect of studying consumer behaviour is another paradigm in the field of marketing which requires huge attention. Although it needs a fulll life-span to study and understand a person’s consumption decisions but for practical reasons marketers have to study consumer behaviour. The study of consumer psyche facilitates designing of more effective solutions to marketing problems. Therefore, a marketer's task is varied and complicated than it actually seems to be. It’s not only the need and wants the marketers have to look for. Rather, their real task is looking for various satisfiers for these needs. These satisfiers are not mere tangible products and services but a complicated expression in terms of products and services of consumers’ hidden desires and dreams, of consumers’-personality make-up and its complicated relation with cultural and social values disseminating from socialisation process and from onslaught of globalisation of culture. 322.2 MEANING AND DEFINITION OF CONSUMER BEHAVIOUR ‘The most crucial issue for the marketers is to identify the needs of the consumers. Only the identification of needs is of no value unless and until this is transformed in to a meaningful and appropriate satisfiers. For this whole process of converting needs into actual satisfaction one needs to understand the complete make up of consumer's mind, and this process is known as consumer behaviour. Let’s also discuss some of the definitions of consumer behaviour. According to Schiffman and Kanuk “Consumer behaviour encompasses all of the behaviours that consumers display in searching for, purchasing, using, evaluating and disposing of products and services that they expect will satisfy their needs”. Wells and Prensky defines that Consumer behaviour is the study of consumers as they exchange something of value for a product or service that satisfies their needs. Hawkins, Best and Coney describes “The field of consumer behaviour is the study of individuals, groups, or organisations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society” On the basis of above definitions, it can be concluded that consumer behaviour is the study of consumers regarding what they buy, when do they buy, from where they buy, how frequently they buy, and how they use certain products. But the study does not stop here as it also goes further to study the post purchase and evaluations of the consumers. So, it addresses all the issues related from pre-purchase to post purchase behaviour of the consumers. ‘The study regarding consumer behaviour can be divided into two parts i.e. consumer buying dynamics and dynamics of business buyers. 2.3 CONSUMERS’ BUYING DYNAMICS Let’s discuss in brief the various determinants of consumer behaviour. Figure 1 summarizes the various factors that influence consumers’ buying behaviour. Fig. I Caltural Social Personal Paychological [Gulture Reference Group life cycle Age & Stage Motivation in Subculture Family Occupation Perception | Social Class Roles & Status Economic Personality | circumstances | 332.3.1 Psychological Factors A person's acquired needs are influenced by certain psychological factors such as motivation, perception, learning and personality, etc. (a) Motivation: Motivation is a process of restoring the balance between actual and designed state of mind that has been effected by some physiological or psychological deprivation. This deprivation may be the cause of simple reaction in human biological system causing hunger, thirst, security and desire for sex etc. or it may be due to complicated acquired needs. So, its very important for the marketers to have a close eye on this dynamic process of motivation, (b) Perception: Perception is the process by which an individual selects stimuli, organises information about those stimuli, and interprets the information. Perception Poses powerful implications for marketers. What is perceived by an individual, it determines how he or she behaves? No consumer purchase can take place unless a consumer perceives that the product or service will offer the benefits he or she needs. Accordingly, marketers must understand how perception works in order to communicate successfully a product's benefits. Regardless of the fact that a product is innovative or advertisement is effective, it will fail if it is not perceived favourably by the potential consumers (c) Learning: Learning is a continuous process by which individual acquires knowledge so that it causes a permanent change in behaviour. Learning is a kind of process that evolves over a time and can not be directly observed. When a person perceives new stimuli in the environment, it is related with the existing pond of knowledge. Therefore, learning reflects both current experiences and past back ground. Learning is essential to the consumption process. In fact, consumer behaviour is largely learned behaviour. We acquire most of our attitudes, values, tastes, preferences, symbolic meanings and feeling through learning. Human culture and social class, institutions such as schools and religious organisations, family, friends, mass media and advertising provide learning experiences that influence the kind of life style the consumers seek and the products they consume. Marketers spend considerable effort to ensure that consumers learn of their existence as well as about their products. Companies that make their consumers learn about their products and services in an effective and efficient manner often obtain a long-term competitive advantage them that of their competitors. (4) Personality: Personality is defined as those inner psychological characteristics that both determine and reflect how a person responds to his environmental stimuli. Personality is enduring and ensures that a person’s responses are consistent over 34