MARKETING MANAGEMENT

FOR

POST GRADUATE DIPLOMA (PGD)

FEATURING
 Marketing concept
 Principle of marketing environment
 Marketing information system
 Marketing research
 Analysis of buyer’s behaviour
 Marketing organization
 Sales Forecasting
 Sales management
 CHAPTER ONE

INTRODUCTION- MARKETING CONCEPT

Marketing is a general term used to describe all the steps that lead to final sales. It is
the process of planning and executing pricing, promotion and distribution to satisfy
individual and organizational needs.
From this definition it is easy to see that marketing is more than just the process of
selling a product or service. Marketing is an essential part of business, and without
marketing, even the best products and services fail.
Companies constantly fail because they do not know what is happening in the
marketplace and as a result, they are not fully meeting their customer’s needs. They
mistakenly believe that with the proper amount of advertising, customers will buy
whatever they are offered.
Marketing consists of making decisions on the four P’s:
• Product
• Place/Distribution
• Promotion
• Pricing
Before a business owner can make decisions on the four P’s, he/she must devise a
plan. A plan provides a business with guidance on making decisions. This chapter
includes directions on how to devise a plan that will assist in making decisions about
the four P’s. This type of plan is a sixstage process that is commonly referred to as
strategic marketing; a strategic marketing plan is an important part of a business plan.

The Marketing Concept.

This is a business philosophy that challenges the above three business orientations. Its
central tenets crystallized in the 1950s. It holds that the key to achieving its
organizational goals (goals of the selling company) consists of the company being
more effective than competitors in creating, delivering, and communicating customer
value to its selected target customers. The marketing concept rests on four pillars:
target market, customer needs, integrated marketing and profitability.

Distinctions between the Sales Concept and the Marketing Concept:

1. The Sales Concept focuses on the needs of the seller. The Marketing Concept
focuses on the needs of the buyer.

2. The Sales Concept is preoccupied with the seller’s need to convert his/her
product into cash. The Marketing Concept is preoccupied with the idea of satisfying
the needs of the customer by means of the product as a solution to the customer’s
problem (needs).

The Marketing Concept represents the major change in today’s company orientation
that provides the foundation to achieve competitive advantage. This philosophy is the
foundation of consultative selling.

The Marketing Concept has evolved into a fifth and more refined company orientation:
The Societal Marketing Concept. This concept is more theoretical and will
undoubtedly influence future forms of marketing and selling approaches.

The Societal Marketing Concept. This concept holds that the organization’s task is
to determine the needs, wants, and interests of target markets and to deliver the
desired satisfactions more effectively and efficiently than competitors (this is the
original Marketing Concept). Additionally, it holds that this all must be done in a
way that preserves or enhances the consumer’s and the society’s well-being.

This orientation arose as some questioned whether the Marketing Concept is an

appropriate philosophy in an age of environmental deterioration, resource shortages,
explosive population growth, world hunger and poverty, and neglected social
services.
Are companies that do an excellent job of satisfying consumer wants necessarily
acting in the best long-run interests of consumers and society?

The marketing concept possibily sidesteps the potential conflicts among consumer
wants, consumer interests, and long-run societal welfare. Just consider:
The fast-food hamburger industry offers tasty buty unhealthy food. The hamburgers
have a high fat content, and the restaurants promote fries and pies, two products high
in starch and fat. The products are wrapped in convenient packaging, which leads to
much waste. In satisfying consumer wants, these restaurants may be hurting
consumer health and causing environmental problems.
 CHAPTER TWO

PRINCIPLES OF MARKETING ENVIRONMENT

Introduction
All tourism and hospitality organizations across the world operate in a dynamic
business climate with several aspects to consider when making choices. Some of these
circumstances are outside of the organization and hence outside the marketer's control.
For example, a tourist marketer cannot change the cultural, legal, or political
surroundings in which the organization operates.

Analyzing the Internal Environment

The internal environment refers to the resources, procedures, and policies that an
organization oversees in order to fulfill its objectives. The job of a marketer is to
create and promote appealing tourist and hospitality services to target markets.
Factors inside the organization's internal environment will influence the degree of
success. The internal environment consists of the factors that exist within the
organization's immediate business environment. As shown in Figure 12, these include
the organization's product offerings as well as human, marketing, and financial
resources. Within an organization, a variety of factors that are primarily under the
marketer's control influence the organization's marketing efforts. Among these aspects
are the following:
• The tourist offerings of the organization and the markets to which they are
aimed, for example, the quality and price of a hotel room typically indicate its
target market.
• The marketing department's position in the organization and how it fits in; the
marketer must work closely with management as well as finance, accounting,
sales, human resources, and other departments.
 • The corporate culture of the organization, such as whether it has a
bureaucratic or entrepreneurial culture.
• How the organization runs, or what type of organization it is.
• Various publics also have an impact on an organization's marketing
initiatives. These publics may include any organization – such as
shareholders, government, media, local publics, political bodies, or pressure
organizations – with a vested interest in the tourist and hospitality
organization's success.
• Marketing services firms that assist tourist and hospitality organizations in
developing and implementing marketing strategies. Marketing research,
media, advertising, and marketing consultancy firms are examples of these.
The quality, service, innovation, and pricing of these businesses varies.

Figure 12: The micro- and performance environmental factors

Analyzing the Performance Environment

The performance environment (also known as the "microenvironment") is made up
of organizations that either directly or indirectly impact an organization's
operational performance. Competitors, suppliers, and middlemen or distributors are
all part of the performance environment.

Competitors
Understanding competition is essential in tourist planning. A tour operator, for
example, must understand the nature and scale of the competition it confronts from
other tour running organizations. Marketers must realize that they are competing
with both direct and indirect competitors, as well as the prospect of new
competition. They must be informed of what their competitors are doing and make
the required marketing decisions to respond to the tactics of their competitors when
the time comes. It is critical for tourist businesses to understand their rivals.
Organizations that pay greater attention to their competition outperform those who
do not.
Six critical questions must be answered before doing a competitive study for a
company:
1. Who are the primary rivals of the company?
2. What is the market share of these competitors?
3. What are their advantages and disadvantages?
4. What are their strategic objectives?
5. What techniques do they employ?
6. What are their likely reactions?

The Suppliers
Tourism organizations rely on a variety of providers to meet the needs of its
customers. Because consumers are seeking higher-quality goods, the organization's
connection with its suppliers has grown tighter and more vital in recent years. The
quality of an organization's offerings is heavily reliant on the items and services
supplied by its suppliers. A hotel, for example, relies on food and beverage vendors,
 a local laundry service, and maybe a local security firm. The tourist industry's
supply networks and chains are quite complicated. Hundreds of vendors can be part
of a network. To mention a few vendors, an airline relies on caterers, cleaning
personnel, training and recruitment organizations, uniform suppliers, engineers and
maintenance workers, and manufacturers of engines, components, and interiors.
Furthermore, at the other end of the airline industry distribution chain, there is the
airline manufacturing market, which has a restricted number of customers: national
carriers and low-cost airlines. In such a case, the suppliers have a significant
negotiation edge.

Marketing Intermediaries
Marketing intermediates are self-contained businesses that market, sell, and
distribute products to customers. They act as a bridge between an organization and
its markets, as well as between an organization and its suppliers. As a result, they
are often known as distribution channels or intermediaries. Word-of-mouth (WoM)
recommendations, social media, and the internet may all serve as substitutes for
these intermediaries, and are becoming increasingly significant as tourism and
hospitality organizations strive to eliminate the expenses of middlemen and sell
directly to customers.

ANALYZING THE EXTERNAL ENVIRONMENT

The marketers can influence their consumers and
suppliers, they do not have total control over them.
Furthermore, marketers must be informed of
developments in the tourist and hospitality industries as
well as the marketplace, both locally and worldwide. This
assessment of the corporate environment serves as the
foundation for both a SWOT analysis and a PESTLE
analysis.

Analyzing the External Environment

The external environment (or macro-environment) is made up of societal and
global (external) aspects that influence a tourist organization. These elements have
an impact not only on the organization's external environment (such as its rivals),
but also on its internal environment (for instance, the resources). These variables do
not have an immediate influence on the organization's performance, but they may
do so in the long run. The external environment is sometimes known as the distant
or remote environment since it tends to impose pressures that are beyond the
control of the organization. We may utilize the term PESTLE to assist us make
sense of the external world. PESTLE refers to the political, economic, socio-
demographic, technical, legal, and environmental elements that influence an
organization (Figure 13). This is a very handy framework for analyzing the external
world. Political, economic, socio-demographic, technical, legal, and ecological
variables impact an organization's external environment. Although the PESTLE
analysis is utilized in this section, it is not the sole framework for analyzing the
external business environment.

The external (macro-) environment

Political Environment
The political environment is concerned with the interplay between business,
society, and government. An evaluation of the political environment is crucial
because tourist corporations can recognize indications regarding prospective
legislative and regulatory changes in the tourism and hospitality industries, and
have the opportunity to obstruct, influence, and amend such legislation. Most of the
time, the political climate is uncontrollable, but there are times when an
organization or industry coalition may influence legislation in its favor. The
political climate influences tourist marketing decisions and has various effects on
the business environment. Tourism relies on people's ability to travel both
worldwide and locally. The government has a significant impact on other external
business elements such as the economy, which influences the tourist sector.

Economic Environment
Tourism marketers must be aware of the economic climate in which their clients
operate. It has a tremendous impact on the organization's marketing strategy and the
volume of demand produced. Marketers should consider interest rates, employment
rates, exchange rates, wealth distribution, and competitive prices. These economic
determinants in potential tourist countries are very crucial in influencing consumer
purchasing power and spending patterns (for example, demand for travel). These
characteristics also have an impact on production costs and company
competitiveness. They have a far more rapid and immediate impact than gradually
changing demographic trends. The economic environment is divided into local,
national, regional, and global components. Changes in the local and regional
economy can have a significant impact on a tourist organization. Global economic
patterns and trends should also be studied.

Interest Rates
Interest rates have an impact on how individuals spend their money. This has an
influence on market demand as well as national investment in new tourism offers
such as restaurants, hotels, and other tourist attractions. After paying larger house
loan and hire-purchase instalments, low- and middle-income individuals have less
discretionary money. This, in turn, reduces demand for vacations and other forms of
leisure consumption.

Employment Rates
Unemployment definitely has an impact on demand since jobless individuals cannot
afford tourism offers. On the other hand, the tourist sector is a good job creator,
producing main or direct employment in businesses such as restaurants, attractions,
and hotels. It also creates secondary employment, with indirect job creation in
industries like as construction and manufacturing.

Rates of Exchange
Currency exchange rates are crucial in the tourist industry environment, particularly
for tourism enterprises operating in international markets.

Inflation
Inflation raises consumer prices in a certain nation; the cost of products and services
may rise, resulting in a drop in sales. During a recession, customers often purchase
less products and increase their savings. In an attempt to encourage demand, prices
then decrease. Prices may, however, rise during a recession. As a result,
understanding the broader general economic trends and an organization's
marketplace is critical.

Taxation
Tourism taxes is a contentious and current subject. On the one hand, governments
use tourist money to create and maintain critical infrastructure, as well as to
perpetuate the economic advantages from this industry. Businesses, on the other
side, believe that these taxes slow down growth rates and decrease the possibility for
creating and sustaining jobs.

Socio-demographic Environment
Social, cultural, and demographic aspects comprise the socio-demographic
environment. It includes societal attitudes, beliefs, and conventions. Tourism
businesses must adapt or adjust their offers in response to changes in the socio-
demographic environment. Marketers are faced with the difficult challenge of
responding to these continuously changing dynamics. We will begin our discussion
of the socio-demographic factors that have a significant impact on tourism consumer
markets in both receiving and producing countries by taking into account the social
and cultural factors of fashion and tastes, changes in lifestyle, the role of women in
society, and crime and prostitution. We will address demographic aspects - another
uncontrolled element in the external environment – such as age and racial structure,
geographic location, family life cycle, and education. Demographic changes, such as
an increase or fall in population or a reduction in a certain age group, should be
recognized and accounted for when marketers set long-term targets, as these crucial
elements impact tourist demand. The number and structure of a population fluctuate
regularly, influencing tourist demand.

Tastes and Fashion

Tourism is an excellent example of a fashion item. A recently established elegant
boutique hotel with themed décor in a metropolitan region may be the flavor of the
month, but destinations, like clothing, fluctuate in and out of favor. Because of its
exclusivity and exotic remote location, some customers regard visiting an exotic
place such as the Seychelles as a status symbol, and it quickly becomes the "flavor-
of-the-month" holiday destination.

Changes in Lifestyle
Lifestyles are always evolving, and customers' tastes alter throughout time.
Recent societal tendencies toward healthier living have resulted in a rise in athletic
vacations and restaurants that provide healthier cuisines.

The Role of Women in Society

Another issue that has influenced societal views and values is the changing role of
women in many nations.

Crime and Prostitution

Several nations, like Brazil and South Africa, have high crime rates and
consequently have a tarnished reputation as a tourist destination. Several violent
events involving tourists have happened, and the resulting media coverage in the
different markets may have discouraged individuals from visiting Brazil and South
Africa. In the case of prostitution, social values are culturally specific and not
universal. For example, in Thailand, organized prostitution is permitted and even
promoted as a tourist attraction, yet it is regarded as a societal problem in the
United Kingdom and most other European nations. While tourism does not generate
prostitution, it does contribute to it.

Age and Race Structure

The age and race composition of the population at the national level is relevant to
an organization in terms of both target markets and personnel recruiting. People in
Western and affluent nations are clearly living longer lives, which boosts
population size and, as a result, demand for leisure and tourism activities.

Population
The two most populous nations are China and India. Both of these emerging nations
have a sizable and growing middle class. India has an estimated 250 middle-class
customers and hence has a high potential for international travel. In 2018, Chinese
visitors took approximately 149,7 million abroad excursions, accounting for one-
fifth of total worldwide tourist purchases. According to the UN Population Division
(2017), India's population is expected to reach over 1.6 billion by 2050, China's
population is expected to reach 1.3 billion, the United States is expected to reach
around 400 million, and the United Kingdom is expected to reach 75 million (7
ons.gov.uk). Population declines are expected in several nations, including Russia
and China. These developments will have a substantial impact on international
travel flows between nations, especially China, which is expected to have a
booming outbound tourism sector.
 Education
The impact of education is a significant factor of travel. In general, the better the
degree of education attained, the bigger the quantity of travel undertaken. Income,
social status, and home composition are all factors that influence education. A higher
education, particularly a degree, improves one's chances of finding work.

Legal Environment
The legal environment affects every area of a company's operations. In most nations,
codes of practice for advertising and price transparency have been implemented.
However, advertising standards vary from country to country. Legislation and
regulation influence tourism and hospitality marketers on a local level. Visa
restrictions and border controls, government deregulation, health and safety, funding
of the destination marketing organization (DMO), and employment regulations all
have an impact on destinations and enterprises.

Ecological Environment
The marketer must also be knowledgeable about the natural area in which the
tourist organization operates. The natural environment includes natural resources
that marketers require as inputs or that are impacted by marketing activity. The
industry's many stakeholders should be worried about these aspects and should
respond by striving to promote the benefits while minimizing the drawbacks. After
all, a country's natural environment is frequently the primary draw for both local
and international tourists. The natural environment covers both the environment
and health difficulties, natural catastrophes, and wildlife incidents.

The Environment
Environmental challenges provide both possibilities and risks to the tourist sector
on a local and national scale. The prospects stem from the reality that many
consumers would pay extra for an environmentally friendly product and will remain
loyal to, instance, a hotel chain that recycles or engages in environmentally
responsible activities. The tourist sector, on the other hand, is a threat to the natural
environment. For example, tourist planes emit CO2 and cause air and noise
pollution, while the building of hotels, resorts, and attractions has a variety of
negative or undesired environmental effects. These effects are determined by the
type of development, the environmental conditions of the region, and the amount to
which adequate planning and management are carried out. Tourism puts significant
strain on local land usage, potentially resulting in soil erosion, increased pollution,
natural habitat loss, and greater pressure on endangered species. These
consequences have the potential to gradually deplete the environmental resources
on which tourism depends.

Biodiversity
Biodiversity refers to all living things and ecosystems that make up the
environment; from trees to bacteria, everything plays a significant role in the
planet's upkeep. However, as global warming, pollution, and deforestation continue
to rise, biodiversity is in jeopardy. Throughout the planet, billions of species are
becoming or have become extinct. Reducing our meat consumption, particularly
red meat, and making more sustainable choices will help the earth function more
effectively.

Depletion and pollution of water

Water scarcity inhibits populations from realizing their full potential. During the
2018 holiday season, Cape Town, South Africa, had a severe drought, significantly
impacting the city's tourism business. Some tourist attractions, destinations, and
resorts (for example, swimming pools and golf courses) use a lot of water. Water
pollution, such as an abundance of plastic garbage and hazardous chemicals
entering streams, harms the planet's most important resource. We can reverse the
damage created by humans by teaching people about the causes and effects of water
contamination. Laws must also be changed to make pollution regulations more
stringent and uniform across international borders.
 Deforestation
As a result of excessive human demands and desires, many of the Earth's natural
resources are becoming limited. Deforestation, in particular, is harming the Amazon
and African bush forests. Plants and trees supply oxygen, food, water, and medicine
to people all around the world. To assist tackle this problem, hotels and hospitality
firms should use more recycled and organic products, reducing the quantity of
paper and cardboard they use.

Pollution
Pollution is a major contributor to many other environmental issues, including
climate change and biodiversity. Our ecology is being harmed by seven major
forms of pollution: air, water, soil, noise, radioactive, light, and thermal. Pollution
and environmental problems are all interconnected and impact one another.

Climate Change
As a result of human actions such as the usage of chlorofluorocarbons, the Earth is
warming faster than it would naturally (CFCs). Greenhouse gases are the primary
driver of climate change, trapping the sun's heat and warming the earth's surface.
Global sea level rise is decreasing the land, triggering major floods and extreme
weather events all across the planet. Examples of global warming repercussions
include an increase in the frequency of severe storms such as typhoons or
hurricanes, which threaten tourism sites, and a rise in sea levels, which affects low-
lying countries.

Health and Safety Issues

On a worldwide scale, public health challenges such as viruses and infections will
continue to harm tourism and hospitality offers and destinations, particularly in
underdeveloped countries. Most nations throughout the world, as well as their
tourist and hospitality enterprises (such as resorts and cruise lines), and
international athletic events, have been badly impacted in recent years by an
outbreak of the Coronavirus in 2020.
 Natural Disasters
Natural catastrophes occur all over the world and have a significant influence on the
lives of those who are immediately impacted as well as those who intend to visit the
region. Earthquakes, hurricanes, floods, tornadoes, typhoons, avalanches, tsunamis,
cyclones, fires, and volcanic eruptions are examples of natural catastrophes. Natural
disasters have an impact on the popularity of any destination. Damage to
infrastructure, such as roads and bridges, restricts access to natural disaster-affected
areas. Furthermore, many of these calamities occur unexpectedly and have a severe
impact on a region's tourism business when extensively publicized on television or
in newspapers. In certain circumstances, a lack of natural resources has an
influence on the tourist business environment.

CHAPTER THREE

MARKETING INFORMATION SYSTEM

Introduction
The successful marketing activities depend upon the careful analysis of the marketing
environment i.e. the external and internal focus affecting various marketing activities.
The marketing opportunities need to be analyzed and captured for earning the profits.
It is therefore required to gather the marketing information or forming a marketing
information system for analysis of marketing environment The marketing
environment consists of all actors and factors which affect the firm’s ability to
maintain successful and sustained relationships with its customers. The marketing
environment can be divided into micro and macro environment. The components of
micro environment are the company, suppliers, marketing channel firms
(intermediaries), customers, competitors and public. The macro-environment factors
are demographic, economic, technological, political and cultural. The marketing
information is a critical element in effective marketing of products and services.
Though most of the firms operate with some form of marketing information system
but the systems vary in terms of their sophistication. Well designed marketing
information systems helps in gathering and analyzing the desired marketing
information for efficient coordination of marketing plans.

What is Marketing Information System (MkIS)?

Kotler has defined MkIS as a system that consists of people, equipment and procedure
to gather, sort, analyze, evaluate and distribute marketing information. The marketing
information system encompasses the analysis, planning, implementation and control
function of marketing management. The overall objective of MkIS is to provide input
from targets markets, marketing channels, competitors, consumers and other forces
for creating, changing and improving the marketing decisions and formulating
marketing strategies.
In a broader sense, the Marketing information system creates an organized and timely
flow of information required by the decision makers for effective and efficient
marketing. It involves the equipments, software, databases, procedures,
methodologies and people necessary for the system to meet its organizational
objectives.
A MkIS is a computerized system that is designed to provide an organized flow of
information to enable and support the marketing activities of an organization. The
MkIS serves collaborative, analytical and operational needs. In the collaborative
mode, the MkIS enables managers to share information and work together virtually.
In addition, the MkIS can enable the marketing firms to collaborate with customers on
product attributes and customer requirements.
The well designed MkIS begins and ends with the user. MkIS assesses the information
needs by interviewing marketing managers and surveying the marketing environment
to determine that which information is needed, designed and feasible to offer. The
desired information set is developed and distributed to managers for effective decision
making.

Dimensions of MkIS
The information systems could be understood in terms of the quality and quantity of
information they possess. It is important that the marketing information systems
possess and provide relevant information. Therefore, it is important to give emphasis
not only to generation, storage and retrieval of the relevant information to fill in the
existing gaps but attention should also be paid to elimination of irrelevant data. The
benefits from a marketing information system could be ascertained by the following:
1. Information Accessibility: The ease and speed with which the particular
information could be obtained. Faster and easier access will be valuable to the
decision makers in making effective and efficient decisions.
2. Comprehensiveness: It is completeness of the information and indicates about
the usefulness of the marketing information.
3. Accuracy: It means the exactness of the information.
4. Timeliness Information: This indicates the readiness of the information for
timely decision making and how it is made available to the user manager.
5. Authenticity: This indicates the mechanisms used for generating the
information. If the information is generated from a scientific and formal
information system, it can be treated as authentic and could be measurable.

Steps in Design of Marketing Information System

Defining the system
There is need to define the system and its elements for which design is to be made.
This involves defining the elements and their inter-linkages in the system. For
example, a firm may be interested in the MkIS on the sales and prices of various types
of dairy products in a particular locality.

Source of information and frequency

After deciding the information needs, the sources and the frequency of information
have to be decided. The information can be obtained from the internal as well as
external sources. The internal records and databases of the company will serve as the
internal sources. For example, the competitors’ information on dairy products’ sales
and prices would be obtained from local dealers and distributors.
MkIS formats
There are basically two formats which are important for MkIS, viz., the Research
Assessment Sheet, and Marketing Activity Evaluation Sheet. The Research
Assessment Sheet contains information like marketing decisions, parameters,
frequency, source and the format code, whereas the Marketing Activity Evaluation
Sheet will contain the items, relationship, standard, actual, variance and reason. The
first format is useful from the information point of view while the second format could
be used for control. For example, the Research Assessment Sheet may contain the
marketing decision like introducing different size variants (paneer in 200 g, 400 g, 500
g and one kg packs) and the quantity bought at different time periods ( may be a day,
week or fortnight). The Marketing Activity Evaluation Sheet must contain the impact
of introducing the size variants on the sales of that product.

MkIS implementation
Once the system, source's frequency and MkIS formats have been defined, the MkIS
needs to be implemented. For this, the training of research staff is required. The
information schedules are to be developed and the information needs to be collected.

Benefits of the Marketing Information System

The Marketing information system increases the number of options available to
decision-makers and supports every element of marketing strategy. It affects marketing
interfaces with customers, suppliers and other partners. The primary benefits of the
MkIS are given below:

Monitoring of the market

The marketing information system can enable the identification of emerging market
segments, and the monitoring of the market environment for changes in consumer
behavior, competitor activities, new technologies, economic conditions and
governmental policies.

Development of marketing strategies

The marketing information system provides the information necessary to develop the
marketing strategies for development of new products, product positioning, marketing
communications, pricing, personal selling, distribution, customer service and
partnerships and alliances.

Implementation of marketing strategies

The marketing information system provides support for product launches, enables the
coordination of marketing strategies, and is an integral part of customer relationship
management and customer service systems implementations. It enables the decision
makers to effectively manage the sales force as well as customer relationships. This
has become increasingly important as many marketers are choosing to outsource
important marketing functions and form strategic alliances to address new markets.

Integration of functional areas

The MkIS enables the coordination of activities within the marketing department and
other organizational functions such as engineering, product management, production,
finance, manufacturing, logistics, and customer service.

The Sub-Systems of MkIS

The inputs for the MkIS are provided through the following:
Internal record system
The information gathered from sources within the company to evaluate the marketing
performance and analyze marketing problems and opportunities. The marketing
managers use internal records and reports for day-to-day planning, implementation and
control decisions. Internal records consist of information gathered from the sources
within the company. The companies maintain their internal records and these are
available on intranet (only for internal users). The internal record system provide
current data on costs, sales, inventories, cash-flows and accounts receivable and
payable. The companies have now developed advanced software based internal record
system to allow for speedy and comprehensive information. The information from
internal records is quicker and cheaper as compared other sources. But, it might lead to
misleading inferences when the information collected for some other purpose is used
for making marketing decisions.

Marketing intelligence system

It supplies the marketing managers with everyday information and developments in the
external marketing environment based on scientific methods. The everyday
information about developments in changing marketing environment helps the
marketing managers prepare marketing plans. This system determines the intelligence
needed, collects it and delivers it to marketing managers. The marketing intelligence
comes from many sources like company's personnel and executives, marketing agents
and the sales force. Marketing intelligence is generally publicly available information.
The information can be scanned from annual reports, press releases, advertisements
and other business publications. The marketing intelligence staff scans relevant
publications, summarize important news and sends important information to marketing
managers. The intelligence services greatly improve the decision making.

Marketing research
It involves collecting information which is relevant to specific marketing situation
facing the company. The marketing research process involves a number of steps like
formulation of research problem and objectives, developing the research plan,
collecting and analyzing the information, and making the final report.

Marketing decision support system (MDSS)

It consists of statistical and decision tools to assist marketing managers in making
better decisions. It is a coordinated collection of data and data systems, tools,
techniques with supporting software and hardware. The organizations use MDSS
software and decision models, gather and interpret relevant and reliable information
and turn it into a marketing action

Fig. 10.1 Marketing decision support system

Use of Marketing Information Systems
1. Identifying market segments, analyzing economic trends
2. Analyze the market shares and the factors affect ting market share
3. Analyzing the market structure, competitors’ market positions and marketing
strategies
4. Understanding consumer behavior and the factors affecting it
5. Identifying and analyzing the factors affecting price determination and demand
analysis
6. Studying a firm’s overall cost structure and its impact on production cost
7. Analyzing the firm’s sales by region, product, brand, territory, etc
8. Developing estimates of sales potential .

CHAPTER FOUR

MARKETING RESEARCH

Defining Marketing Research

Marketing research is the function which links the consumer, customer, and public to
the marketer through information – information used to identify and define marketing
opportunities and problems; generate, refine and evaluate marketing actions; monitor
marketing performance; and improve our understanding of marketing as a process.
Marketing research specifies the information required to address these issues, designs
the method for collecting information, manages and implements the data collection
process, analyzes the results, and communicates the findings and their implications.
This definition may be meaningful to a marketing professional but equally may be
difficult for someone studying marketing to understand. The definition is easier to
comprehend if the four ways research can be used are explained individually:
1. Identify and define marketing opportunities and problems’ means using research to
explore the external environment.
2‘Generate, refine and evaluate marketing actions’ means using research to determine
whether the company is meeting consumer needs.
3.‘Monitor marketing performance’ means using research to confirm whether the
company is meeting the goals it has set.
4‘Understanding marketing as a process’ means using research to learn to market
more effectively.

Although the AMA definition is a useful summary of all that marketing research can
accomplish, a simpler definition can be constructed. According to the dictionary, the
word ‘research’ means to search or investigate exhaustively or in detail. The thesaurus
gives as a synonym for ‘research’ the word ‘inquiry’, which means the act of seeking
truth, information or knowledge. So market research can be defined as a detailed
search for the truth. Marketing has always had the function of connecting the internal
structure of the organization with the external world. Marketing research is a
formalization of this role.

Research that is conducted can be divided into two types. Basic, or pure research, is
conducted to discover new knowledge. When the research is planned and conducted,
its application or how the knowledge might be used is not of major importance. What
is important is that new information is discovered. After the research has been
conducted, how the information can be used is then considered. Universities or very
large corporations conduct most basic marketing research. In applied research, the
research is planned so that the findings can be used to solve a specific problem. This is
the type of research conducted by marketing professionals working either within an
organization or for an external marketing research provider. After all, if a business is
paying for research to be conducted, it needs results that will show how to solve a
problem. Most businesses do not have the time or money to pay for basic research.
The box below provides additional information on the differences between basic and
applied research.
The important fact to remember about applied research is that the information
gathered will be used to assist in making decisions. The decision might be critical and
costly, such as which new product to introduce. Or the decision might be of lesser
importance, such as what color should be used in a brochure. Whatever the decision,
the rationale of all applied marketing research is to help organizations to limit risk,
because making mistakes is expensive.
Decisions that carry a great deal of risk, such as new product introduction, will require
a great deal of research. In fact a full-scale research project combining more than one
research method and a large number of participants may be needed. Conducting the
research will be costly but the expense is acceptable because making the wrong
decision will result in a very expensive mistake. A small decision, such as what color
to use in a brochure, still needs marketing research to eliminate risk – but the research
can be on a much smaller scale because the risk, which here is only the cost of
reprinting the brochures, is less.

Research and Marketing Strategy

Marketing is a new field of academic study in comparison to subjects such as
chemistry or philosophy. However, marketing is not a new human activity. People
have always produced goods that they wished to barter or sell for either another
needed product or money. To do so they need to find a buyer. The field of marketing
simply takes this basic human behavior and plans its strategic implementation.
While there are many definitions of marketing, the definition used by the American
Marketing Association on their website (www.marketingpower.com) describes
marketing as:
Marketing is an organizational function and a set of processes for creating,
communicating, and delivering value to customers and for managing customer
relationships in ways that benefit the organization and its stakeholders. This definition
describes marketing as an exchange that satisfies both the seller (organization) and the
individual (buyer).

Marketing is sometimes misunderstood as only selling, with the organization

convincing the buyer to purchase something they don’t want or need. While selling is
an important part of promotion, there would be no long-term gain for any organization
to focus only on selling their product. Even if they could use high pressure sales
techniques to convince buyers to purchase, business success relies on repeat
customers. Such customers would most likely feel manipulated and be unlikely to
purchase again. The definition also states that an organization should only provide
products that fulfill its goals. Thus, the organization has a mission and a strategic plan
and marketing exists to help the organization meet both, while at the same time
meeting the needs of customers.
Therefore, marketing is much more than just the promotion of a product. The field can
be described as a circle with the customer in the middle surrounded by the four ‘Ps’ of
promotion, price, product and place. All four of these components of marketing must
provide the customer with a wanted or needed product at an acceptable price, in an
appropriate place, and with effective promotion. However, to accomplish this goal the
organization must first listen to the customer’s wants and needs.

Stages of marketing development

Marketing has developed and evolved as social and business conditions have changed.
An early approach to marketing was focused only on the production of goods. When
consumer goods became more plentiful, the approach changed to selling as a means of
convincing consumers to buy. Although these two approaches still exist in some
industries, the current recommended approach is the marketing concept that instructs
companies to first focus on consumer wants or needs.

Companies using the production concept will emphasize the most efficient way to
produce products that provide high quality and low price. When using this approach
companies see the marketplace of consumers as a single group with similar needs who
will purchase any well-made, reasonably priced product. When Isaac Singer invented
the home sewing machine there was a great need for his product. Its successful
introduction to the marketplace is an example of the production approach (see the case
study below). The problem with this approach today is that people can choose from so
many products with high quality and low price. Therefore, consumers also want the
products they purchase to provide additional benefits. The production approach does
not address this issue. To determine what additional benefits are desired, it is necessary
to conduct product research.

The sales concept focuses on using the right sales technique. When companies were
able to produce more mass-produced goods then were immediately needed by
consumers, they started to focus on how to sell products. A company using this
approach will assume that customers will not purchase their product without
considerable persuasion. This approach is still used today in certain industries. For
example, life insurance is a product that is needed but that consumers do not usually
enjoy buying. A salesperson needs considerable skill in sales techniques to overcome
this resistance. If the sales concept is used consumer research is still needed to
determine which approach will be most successful. Even with research, the sales
concept usually does not lead to repeat purchases and therefore is generally not
recommended for consumer goods.

The marketing concept starts by taking into consideration what benefits consumer
desires, and whether the approach is recommended by most marketing experts. This is
recommended because there are now so many products available in the marketplace
that only those products that provide consumers with the benefits they desire will be
purchased.
For example, the Toyota Sienna minivan is one of many minivans on the market
targeted at families. To differentiate their vehicle from the competition’s, Toyota
conducted research to find what features would make traveling with children easier. As
a result they included such features as a passenger-side power sliding door and a rear
seat DVD entertainment system. The research succeeded, as Consumer Reports rates
the Sienna as having the most family-friendly features (CR Quick Take, 2004).
The marketing concept, where the needs and desires of the consumer are taken into
consideration when the product is designed, is considered the best approach to
marketing. However, in order to follow this concept an organization must know what
consumers need and desire. In fact marketing research is needed equally by both those
businesses that sell tangible goods and those companies that sell intangible services.
An example of how a financial institution can use research is given in the box below.
Once again, the only way for companies to know what consumers desire is through
marketing research. For this reason, research can no longer be considered an optional
activity which the organization engages in if it has the time and money. If research is
not conducted, there is a good possibility that the time and money an organization does
have will be wasted.

Importance of Marketing Research

The importance of marketing research in management extends to intelligent decision
making, maximizing profits, increasing the sales, minimizing the risks and ascertaining
whether a new product will be profitable in a given market at a given time.
Toying with a new product idea, wanting to boost up your sales or planning to launch a
new product, the importance of marketing research has grown unprecedentedly,
especially in the times of recession. In fact, Philip Kotler, the marketing guru,
acknowledges that it is only by marketing research, planning, implementation and
control that effective marketing management can be accomplished. Let us therefore
highlight the benefits of this marketing research in management; viz:
a) To Make Marketing Decisions: This research helps the marketers to make a
decision about the product or service. Sometimes a marketer might believe that the
new product or service is useful for the customers. However, research may show that
customers do not need a product or are meeting their needs with a certain competitor
product and so on. Similarly good research strives to provide options for the
successful introduction of new products and services. This makes the market entry of
a new product or service less risky.
b) Survive the Competition: Marketing research helps in ascertaining and
understanding competitor information such as their identity, marketing network,
customer focus and scale of operations. This helps in surviving and in certain cases,
even leaving behind the competition. Moreover, with market research you can also
help understand the under-served consumer segments and consumer needs that have
not been met.

c) Helps to Decide Target Markets: Research helps provide customer

information in terms of their location, age, buying behavior and gender. This helps the
marketers zero in on the target markets and customers for their products and services.

d) Maximize Profits: Apart from profit maximizing steps such as item

optimization, customer profitability analysis, and price elasticity, marketing research
allows you to find out methods that can help you maximize profits. For example, a
product's price elasticity research can help you ascertain the impact of an increased
price on the sales and the profits of a product. This emphasis on profitability also
helps the company's focus to shift from maximizing sales to increasing the profits of a
company. This helps the company survive in the long run and maximize its profits.

e) Increasing the Sales: Increasing the sales of your products or services helps a
company in maximizing its profits. By understanding the customer's needs, wants and
attitude towards the products and determining whether your products fit the bill,
marketers can increase their sales. This helps in not only increasing the sales to the
target customers and people already using the product but also converting the non
users into customers for the product.

With an understanding of the customer, competitors, products and the overall industry
needs, this research can equip the management with the power to make better
decisions. However, the importance of marketing research is limited to just being a
marketing tool that helps you make an informed decision. So rather than basing all
your management decisions on a customer survey, use this tool as a guide and
supplement it with intelligent decision making.

The Development of Marketing Research as a Profession

At the beginning of the twentieth century there was a growth both in the number of
universities and also in the number of academic fields being taught. These new
academic subjects, including psychology and sociology, were interested in applying
scientific methods to social problems in ways that would help to explain human
behaviour. However, this interest in applying scientific methods did not apply to
purchase behavior and there is, as yet, no academic area of study called
‘marketing’ or ‘marketing research’.
Yet during the same time span in the business world, marketing research became a
recognized professional field. Throughout this period of economic history businesses
were starting to grow from small local or regional companies to larger national
companies. Since they were now selling their products over a wider geographic area it
became more difficult for companies to identify and understand their customers.
Such an early marketing problem was faced by auto manufactures. Once people who
had the desire and money to purchase cars had done so, the manufacturers needed to
know how to use advertising to reach additional consumers. As a result, the research
method of surveying was borrowed from the social sciences. However, early research
survey studies confronted the key problem of identifying the appropriate consumers to
include as participants.
So once again researchers turned to scientific method and researchers adopted
sampling to identify the appropriate consumers to include in studies. This new method
was useful when the potential consumer group was large in number, which was indeed
the case for auto manufacturers. However, the research conducted was limited to
focusing on finding customers for existing products rather than finding out about the
consumer desire to improve products. Market researchers soon discovered that besides
surveying and sampling, they could also borrow additional techniques from the social
sciences. In 1931 a manual for marketers, Marketing Research Technique, described
not only how to use surveys but also discussed interviewing and focus groups as ways
of conducting marketing research. Because of the successful use of these new
techniques, interest in marketing research continued to grow during the 1930s.
After the end of World War II, there was a pent-up demand from people for the
consumer goods they could not purchase during the war years. However, once
production caught up with demand, companies realized their need to learn sales
techniques. When such sales techniques did not sell enough products, they then tried to
find additional customers and so started to focus on meeting consumer desires for
products. Marketing research was now needed to determine these desires and
specialized marketing firms developed to provide marketing research services to
companies. As a result, universities started to teach marketing research as an academic
field to provide the necessary professionals.
Academic research continues to play a role in the development of marketing science to
solve management problems. In fact as marketing, including marketing research, is
becoming more common in emerging markets, academic researchers have proposed
new models that will help businesses gain needed information .

CHAPTER FIVE

ANALYSIS OF BUYERS BEHAVIOUR

INTRODUCTION
Buyers are the foundation of any business organisation. No business organisation can
grow, survive or excel without buyers or customers. Therefore, marketing firms must
aim at understanding the behaviour of its buyers. They must conduct thorough
research to find out “What factors drive his buyer to act?” “Who are the people
influencing the buying decision of the buyer?” “What are the needs of their buyers”
“What is the occasion for which the buyer is likely to make purchase?” “What is the
frequency of buying?” Such questions will help the marketers to develop a deeper
understanding of their buyer and formulate more appropriate strategies.
Since, buyer behaviour is a psychological construct which is complex to understand
and act. Therefore, well-planned and equipped strategies are required to conduct an
extensive market research and analyse the results carefully. In this unit, you will learn

CONCEPT OF BUYER BEHAVIOUR

Buyer behaviour refers to the way a buyer acts while making a purchase. It refers to
the way in which a buyer takes decision to actually buy a product or not. Buyer
behaviour is also termed as “consumer buying behavior”. However, the term
consumer buying behaviour is limited to an individual buyer while using the term
“buyer behaviour” a buyer can be an individual, group of individuals, organisation
etc. A marketer tries to understand the underlying conditions or circumstances that
drives a buyer to behave in a particular manner. In other words, the marketer tries to
understand what makes a buyer to buy a given product and not some other product.
Some important definitions of buyer behaviour are as follows:
According to Prof. Philip Kotler, “Buying behavior is the decision process and acts of
customers involves in buying and using products.” According to E. W. Condiff, R. R.
Still and R. A. Govoni, “Buyer behavior may be viewed as orderly process whereby
the individual interacts with his/her environment for the purpose of making market
place decisions on products and services.”
According to C. G. Waltters and W. G. Paul, “Consumer behavior is the process
whereby individuals decide what, when, where, how and from whom to purchase
goods and services.”
According to Frederick Webster, “Buyer behavior is all psychological, social and
physical behavior of potential customers as they become aware to evaluate, purchase,
consume and tell other people about the product and services.”
Buyer behaviour is the process where people make decisions regarding what, when,
how to buy and use the products. Buyer behaviour is the driving force behind any
market process as it helps in understanding what the consumer actually wants.
From the above definitions we can conclude that The concept of ‘buyer behaviour’
facilitates the marketer to understand his customer well and make its ‘marketing mix’
strategies after considering his target buyers’ behaviour with due diligence.

DIFFERENCE BETWEEN BUYER AND

CONSUMER
A buyer also known as customer, is the person who actually buys the product or
service. Buyer is the person who pays for the product or services availed. A buyer
may buy a product or service with an intent to resell or consume it. On the contrary, a
consumer is the person who ultimately consumes the product or service. A consumer
is said to be the end user of the product or service. For instance, Ram’s father buys a
pair of shoes for Ram. In this case Ram’s father is the buyer or customer and Ram is
the consumer. On the other hand, Ram’s father buys a pair of shoes for himself. In this
case Ram’s father is the buyer as well as the consumer of the product.

. FACTORS AFFECTING BUYER BEHAVIOUR

There are five major factors that affects a buyer behavior viz. cultural, social,
personal, psychological, and economical factors. The below given flowchart explains
these factors in detail (Figure 1). Let us learn them in detail.
Figure 1: Factors affecting buyer’s behavior flowchart
1. Cultural factors: Buyer’s behavior is influenced by various cultural factors like
the buyer’s culture, social class and sub- culture. Let us learn various cultural
factors.
(a) Culture: Culture is the most significant factor affecting a buyer’s purchase
behavior. Cultural factors include factors like ethics, values, wants, needs,
preferences, perceptions etc. Cultural factors are the observed factors that a
person deduces by observing his family members or the ecosystem he lives in.
(b) Sub- culture: A culture generally, consists of various subcultures like religions,
geographic groups, racial group, nationality, caste etc. These subcultures share
same set of values or beliefs. A marketers may segment the market on the basis
of these subcultures and can accordingly cater the needs of the target segment.
For instance, a marketer may target a specific religious group.
(c) Social class: Every society possess some form of social class. A social class is
determined on basis of various factors like education, wealth, income,
occupation etc. A marketer may aim at targeting a specific segment of social
class. For example, apple inc. targets people falling in higher income group.
2. Social factors: Social factors also influence a buyer’s purchase behaviour.
These factors include various factors like family, reference group, roles and
status etc. let us learn various social factors.
(a) Family: Family plays a significant role in influencing a buyer’s decision about
a product or brand. Family is said to be the strongest factor that impact a
person’s decision. Marketers must aim at understanding the role of the family
members like parents, husband, wife, children, siblings etc. in influencing a
purchase decision.
(b) Reference group: Reference group consists of the people whose suggestions or
advices matter to one. Reference group generally consists of people like
friends, colleagues, relatives, neighbours etc. who we look up to while making
a purchase decision. For instance, buying an iPhone instead of an android
phone because your friend has an iPhone.
(c) Role and status: A person’s buying behaviour is significantly influenced by the
role or status one holds in the society. A person’s role or status is determined by
the profession or the group of people one is associated with. For example,
working in a finance company, a teacher, a housewife, a doctor, chairman of a
housing society etc. A female playing dual roles of housemaker and a teacher,
her purchase decision will be influenced by both the roles she is playing in the
society.

3. Personal factors: Personal factors are equally important in determining a

buyer’s purchase decision. These include factors like age, income, occupation,
lifestyle, personality. Let us learn various personal factors.
(a) Age: The age of a person influences his purchase decisions. As you must be
aware that people pass through various stages of life cycle like from a child to
an adult, from unmarried to a married couple, from parents to old age etc. at
each stage a person’s preference of products or services varies. For example,
young buyers prefer flashy or fashionable clothes whereas an elderly person
may prefer a comfortable and simple attire.
(b) Income: Income is the most critical factor influencing a buyer’s purchase
decision. The first and the foremost requirement to make a purchase is
affordability. A buyer is said to form demand of a product only if the product is
in the reach of the buyer’s income or affordability. People belonging to higher
income group may purchase expensive items as they can afford it.
(c) Occupation: Occupation influences a buyer’s behaviour while making a
purchase. A buyer tends to make purchase as per his/ her profession. For
instance, a teacher will buy clothes according to his/her profession and a doctor
will buy clothes as per his job considerations.
(d) Lifestyle: Lifestyle is a way or an attitude that person follows to live in a
society and lead his/ her life. Lifestyle is another important factor influencing a
buyer’s behaviour. For instance, a person leading a healthy lifestyle, tend to
buy more healthy stuff than unhealthy or junk food.
(e) Personality: Personality refers to the totality of the behaviour a person in given
situations at different point of times. Personality traits consists of factors like
introvert, extrovert, aggressive, submissive, dominant etc. A marketer may
always segment the audience on the basis of their personality and cater their
needs accordingly.

4. Economic factors: Economic factors are concerned with the purchasing power
of a buyer. These includes factors like personal income, family income, income
expectations, liquid assets, consumer credit etc. let us learn various economic
factors.
(a) Personal income: Many economists have tried to correlate a person’s income
with his/ her spending. As per them, a person’s spending increases with an
increase in his/ her income. Therefore, personal disposable income of a buyer is
a significant factor influencing a buyer’s behaviour.
(b) Family income: The size of the buyer’s family or the aggregate income of the
family influences a buyer’s purchase decision. A small or nuclear family is said
to spend less whereas a big family may spend more.
 (c) Income expectations: Expectations plays an important role in determining a
buyer’s purchase behaviour. A buyer expecting a lower income is tend to spend
less. On the other hand, buyer expecting a higher income may spend more.
Therefore, marginal propensity to consume or save of a buyer is greatly
influenced by the level of expected income.
(d) Liquid assets: Liquid assets refer to those assets which can easily be converted
into money without much variation in the value of the asset, for example: cash,
marketable securities etc. A buyer’s behaviour shall be influenced by the
amount of liquid and fixed assets held by the buyer.
(e) Consumer credit: Nowadays, marketers have started offering credit to their
buyers. Marketers are following the notion of “Buy now, Pay later”. For
example, Bajaj finance offers zero cost EMI to buyers

5. Psychological factors: Psychological factors consist of four factors these are

motivation, perception, learning and attitude (figure 2). Let us learn various
psychological factors.

Figure 2: Psychological factors affecting buyer’s behaviour

(a) Motivation: Motivation plays an important role in determining a buyer’s
behaviour. People have various needs that motivates them and influences their
behaviour. Some of these needs are physiological needs, safety needs, social
needs, esteem needs, and self- actualisation needs. An unfulfilled need is said to
motivate a buyer. However, once a need is fulfilled it no longer motivates the
buyer. Hence, it may not be able to influence the buyer’s behaviour. For
 instance, a person working at a higher position in an organisation might not feel
motivated with an increment in the salary. However, a job promotion may
interest him.
(b) Perception: A buyer’s purchase behaviour is critically influenced by the buyer’s
perception about the brand or product. Perception refers to the image that a
person holds about a particular product or brand in his/ her mind. This
perception is formed on the basis of cognitive processing going through a
buyer’s mind. A buyer or customer comes across various advertisements,
reviews, comments etc. about a brand or product. These brand or product
related activities may lead to formation of cognition in buyer’s mind based on
which a buyer forms an impression of the brand or product. For instance, a
product having maximum positive customer reviews or comments is likely to
form a positive perception in the buyer’s mind.
(c) Learning: Learning is an ongoing process that takes place over a period of time. It
begins before a person buys a product or service and continues after he/ she buys it.
However, when a buyer buys a product or service, he/she is likely to gather more
information about the product or service.
Learning may be conditional learning, cognitive learning, social learning, etc. In
conditional learning, a buyer is exposed to a recurring situation. Hence, he/ she
develops a strategy to tackle the situation. Under cognitive learning, a buyer uses his/
her skills or knowledge acquired over a period of time, to seek satisfaction out of the
purchase he/ she made. In social learning the person learns new behaviours by
observing or imitating other persons.
(a) Attitude: A buyer possesses certain belief or attitude towards a product or brand
that guides him/ her to behave in a certain manner. This attitude or belief
defines the image of a brand or product in the market. Marketers must aim at
launching certain campaigns that can modify or change the existing attitude or
belief in his favour.
 CHAPTER SIX

MARKETING ORGANIZATION

Marketing organization is the foundation of effective sales planning and sales

policies. It enable systematic execution of plans, policies, programs for
controlling all sales activities in order to achieve maximum efficiency,
profitability without sacrificing the level of customer services and satisfaction.
The need for improved methods of distribution and to keep pace with the
expanding production capacity and competition has made sales administration
and marketing management one of the most important functions of business.
Role of marketing in an organization
The role of marketing in an organization is to please and win the loyal support of
their customers. Marketing involves planning, product development, packaging,
pricing, distribution, etc. The marketing department has responsibilities such as
identifying target markets, identifying the most appropriate strategies,
developing new products, creating a sustainable competitive advantage and
establishing management information systems to identify progress.
Six Types of Marketing Organizations
Growth champion;
This organization is highly valued within the company for its ability to drive
revenue. It is considered as important as other major departments, such as
finance and sales. It drives the company’s priorities and leads product innovation
and new business development
senior counselor;
Functioning as a high-level advisor on marketing strategy to the chief executive
officer and the individual businesses, the senior counselor leads major
advertising, promotion, and public relations campaigns’.
Brand foreman;
 Above all, the brand foreman is an efficient provider of marketing services,
ranging from communication strategy to creative output and campaign execution,
in support of the company’s key brands. It serves as the central manager of
agency relationship, and is considered among the company’s most important
support organizations.
Growth facilitator;
The growth facilitator has the authority and skills to develop and lead large,
companywide marketing efforts and help as set the business overall priorities.
These marketing organization coordinators with other major functions, such as
sales and product development.

Best Practices Advisor;

The best practices advisor work with the individual businesses to identify internal and
external best practices and incorporate them into all marketing activities. This
organizations goal is helping the businesses achieve maximum effectiveness and
efficiency, and it has expertise across all elements of the marketing toolkit
Service provider;
This organization supplies marketing services such as adverting, promotion and public
relations at the request of the company’s brand and product teams. The service
provider is effective at executing specific task and is responsive to time sensitive
requests.
Four Types of marketing Organization
There are four types of marketing organization structure which may be on the basis of
function, territory and product basis; According to Peter Druncker,- organization is not
an end in itself it is a means to an end.
Functional organization;
It is one of the common forms of organization. All the activities are divided into line
and staff functions. For example; under staff function, sales manager, marketing
manager, production manager act as specialist and the line functions are given to sales
department. The manager most times looks after the work of line and staff functions,
and the main drawback of the activities of the company.
Product oriented or brand management organization;
In this type of organization, the companies producing multiple products have
individual manager to look after the product and he develop the strategy related to
the product, responsible for the product, do advertising, promotion, distribution only
for the product

Geographical or market or territory organization;

This type of organization is made in case the company is selling the product
worldwide. In this case the people are assigned the job to a particular location,
country, region, state, district which depends upon the area. It may be three tier, two
tier etc.
Divisional or complex organization;
Usually big organizations have combination of all the above there types of the
organization that’s why such type of organization is called complex organization.
The Three Types of Organizational Markets
Organizational markets are markets in which companies and individual purchase
goods for purposes other than personal consumption. These markets are characterized
by having fewer buyers, but larger purchase volumes, than consumer market do. Their
marketing is focused on corporate goals, return on investment and technical
suitability, rather than the styles, fads and perceived values found in consumer
markets. The main organizational market types are producers, resellers and
institutions;
Producers;
Producers buy raw materials and machinery, often from other producers but
sometimes from resellers. Marketing to producers requires technical expertise and
knowledge of the producers operations. Typical marketing strategies involve
identifying problem in the producers industry or particular operations and proposing
solutions that are costeffective. Producers have a long term view of markets since
their needs change slowly. As a result, marketing to producers is usually based on
long term relationships.
Resellers;
Resellers include wholesale companies and retailers, as well as niche suppliers that
specialize in particular area where they have expertise. The key factor for marketing
to reseller is to be aware of their added-value proposition. If the reseller is a
wholesale company offering low prices for high volume, marketers must develop
proposal which address the characteristic. If the company buys specialized
equipment according to specifications and re-sells it to customers based on high
quality and reliability, the marketing will be different
Institution
The institutional market includes governments and non profits. Marketing to these
organizations is highly specialized, with marketers relying on long term
relationships as well as large, one-time opportunities. The purchasing process for
governments tends to be highly bureaucratic and a familiarity with government
procedures is a prerequisite. Where the idea of value in the other two market
segments tends towards the economic, value for these institutions exists more in
terms of benefits rather than economic. Marketers must structure proposals keeping
this in mind.
 CHAPTER SEVEN

SALES FORCASTING

INTRODUCTION
Sales forecasting is an important aspect of business ventures. Without sales
forecasting, it will be difficult to steer the company in the right direction. In this
section, you will learn about the meaning of sales forecasting, levels of sales
forecasting, forecasting by time periods, forecasting options and factors that
determine good sales forecasting.

THE MEANING OF SALES FORECASTING

Let us first of all consider the meaning of forecasting which will help us to understand
the term sales forecasting. Forecasting is the process of making statements about
events whose actual outcomes have not yet been observed. It is simply an estimate of
what will happen in future. We can therefore view sales forecasting as the process of
estimating what a business sales are going to be in the future. It is basically a
projection of achievable sales revenue, based on historical sales data, analysis of
market surveys and trends and salespersons’ estimates. It tells us what our future sales
will be, compared with the past. The purposes of sales forecasting is to provide
information that can help a marketing manager make intelligence business decisions.
Marketing managers need information about the future to make decisions today that
will guide their company’s Market. They need to ask; “What will be the size of the
market next year?” “How large a share of the market will we have in five years?”
“What changes can we anticipate?” Sales forecasting involves applying research
techniques to answer questions like these. According to Zikmund and d, Amico,
(2002), Sales forecasting is the process of predicting sales totals over some specific
future period of time. An accurate sales forecast is one of the most useful pieces of
information a marketing manager can have, because the forecast influences so many
plans and activities. Peter and Donnelly,(2011) defined sales forecast as an estimate
of how much of the company’s output, either in naira or in units, can be sold during a
specified future period under a proposed marketing plan and under an assumed set of
economic conditions. A sales forecast has several important uses; (1) It is used to
establish sales quotas; (2) it is used to plan personal selling efforts as well as other
types of promotional activities in the marketing mix; (3) it is used to budget selling
expenses; and (4) it is used to plan and coordinate production, logistics, inventories,
personnel and so forth. Sales forecasts are focused on company sales, but they may
also make use of forecasts of general economic conditions, industry sales, and market
size.

LEVELS OF SALES FORECASTING

There are three levels of forecasting which are discussed below:
• Market potential; this refers to the upper limit of industry demand, or the
expected sales volume for all brands of a particular product type during a given
period. Market potential is usually defined for a given geographical area or
market segment under certain assumed business conditions. It reflects the
market's ability to absorb a type of product.
• Sales potential; this is an estimate of an individual company's maximum share
of the market, or the company's maximum sales volume for a particular product
during a given period. Sales potential reflects what demand would be if the
company undertook the maximum salesgenerating activities possible in a given
period under certain business conditions.
• The sales forecast, or expected actual sales volume, is usually lower than sales
Potential because the organization is constrained by resources or because
management emphasizes the highest profits rather than the largest sales
volume.
CONDITIONAL FORECASTING—"WHAT IF?"
Forecasters often assume the upcoming time period will be like the past. However,
marketing is carried on in a dynamic environment an effective forecaster recognizes
that a forecast will be accurate only if the assumptions behind it are accurate.

Therefore, organizations often create three versions of each forecast: one based on
optimistic assumptions, one based on pessimistic assumptions, and one based on
conditions thought to be "most likely" The most likely forecast is not always halfway
between the other two. In bad times, "most likely" might be awfully close to disaster.
The advantage of this threefold forecasting approach is that the forecaster clearly
distinguishes between what is predicted and what is possible.

FORECASTING BY TIME PERIODS

A good forecast specifies the time frame during which the forecasted goal is to be met.
Managers frequently use expressions like "short term," "long term," and "intermediate
term" to describe these time periods. Such expressions can mean almost anything,
depending on the marketing problem under discussion. For novelty items such as snap
bracelets, the difference between the short and the long term may be very short,
indeed. Such products may have a life of only a month and then disappear from the
market. Established products like Honda motorcycles and Lawn Boy lawn mowers
may survive for years or even decades.
Though situations vary, there is general agreement that a short-term forecast covers a
period of a year or less and that long-term forecasts cover periods of 5 to 10 years.
The intermediate term is anywhere in between.
Generally, forecasting time frames do not go beyond 10 years. For some products,
such as automobile tires, it should be safe to assume that a market will exist 10, 20,
or even 50 years into the future. But it is not safe to assume that any product will be
around "forever." Some forecasters do make such long-range forecasts. The problem
is that the longer the time period, the greater the uncertainty and risk involved. The
level of uncertainty increases immensely for each year of the forecast.
As time frames become longer, what starts as a forecast can become a fantasy. The
history of business is littered with stories of managers who encountered disastrous
failure because they assumed that an existing market situation would remain
unchanged indefinitely. Marketing's dynamic environment does not offer the safety
long-term planners would like to have. Thus, many forecasters revise sales forecasts
quarterly, monthly, or weekly, as the situation warrants.

FORECASTING OPTIONS
There is no best way to forecast sales. This does not mean that the marketing
manager faces total chaos and confusion. It does mean that there are many different
methods, ranging from simple to complex, for forecasting. Some methods that have
been used to forecast sales are executive opinion, analysis of sales force composites,
surveys of customer expectations, projection of trends, and analysis of market
factors.
Surveys of Executive Opinion; Top-level executives with years of experience in an
industry are generally well informed. Surveying executives to obtain estimates of
market potential, sales potential, or the direction of demand may be a convenient and
inexpensive way to forecast. It is not a scientific technique, however, because
executives may be biased, either consciously or unconsciously, and thus overly
pessimistic or overly optimistic. Used in isolation, executive opinion has many pitfalls.
But the opinions of seasoned industry executives may be a useful supplement to one or
more of the other forecasting methods.
Analysis of Sales Force Composite; asking sales representatives to project their own
sales for the upcoming period and then combining all these projections is the sales
force composite method of forecasting. The logic underlying this technique is that the
sales representative is the person most familiar with the local market area, especially
the activity of competitors, and therefore is in the best position to predict local
behavior. However, this method may yield subjective predictions and forecasts based
on a perspective that is too limited.
Surveys of Customer Expectations; Surveying customer expectations simply involves
asking customers if they intend to purchase a service or how many units of a product
they intend to buy. This method is best for established products. For a new product
concept, customers' expectations may not indicate their actual behavior.
Projection of Trends; Identifying trends and extrapolating past performance into the
future is a relatively uncomplicated quantitative forecasting technique. Time series
data are identified and even plotted on a graph, and the historical pattern is projected
onto the upcoming period. Thus, if sales have increased by 10 percent every year for
the last 5 years, the trend suggests that next year's sales should also increase by 10
percent An advantage of projecting past sales trends is that the company's accounting
records can provide the needed data. This common method of forecasting can work
well in mature markets that do not experience dynamic changes, since the underlying
assumption is that the future will be somewhat like the past. However, if
environmental change is radical or if new competitors are entering the market, blindly
projecting trends may not be useful and may even be detrimental.

Analysis of market factors; The market factor method of forecasting is used when
there is an association between sales and another variable, called a market factor. For
example, population is a general market factor that will help determine whether sales
potential for CocaCola is higher in Albany, New York, or Salt Lake City, Utah.
Similarly, new housing starts may predict lumber sales. When a number of factors are
combined into an index, the result is referred to as a multiple market factor index. Or
market index, Correlation methods and regression methods are mathematical
techniques that may be used to identify the degree of association between sales and a
market factor.
FACTORS THAT DETERMINE GOOD SALES FORECASTING
Good sales strategy; A good sales strategy is essential for a sales forecasting in that it
takes into account the outcomes that need to occur in order to be successful in
business. A good strategy may include a SWOT analysis, or a clear understanding of
the customer criteria for decision and how one can rank against the criteria, but most
importantly, it will direct the tactics and help to determine the logical series of next
steps.
Understanding buyers’ behaviour: Too many forecasts are simply lists or histories of
what the seller has done without taking into consideration what the buyer is doing.
The sales process, however, only moves forward when the buyer takes action, so it is
incumbent on the sales organization to get clear on how the buyer is making decision.
What is the process they will use?
What stages of the decision cycle are ahead? And what should be done differently at
each stage.
Continuous improvement: A forecast is a snapshot not a movie. At any given time
there is the need to remember that if done well, forecasting represents a movement in
time, and since the environment is constantly changing, forecasts need to be
continually refined. The marketing manager may experience changes in the business
or in the market place that indicate an additional milestone be added to the process.
 CHAPTER EIGHT
SALES MANAGEMENT
INTRODUCTION
In daily life, a layman deals with different transaction in terms of selling and
purchasing of goods and services. In these transactions the second one persuades the
first person. Therefore, selling may be defined as persuading people to satisfy the
want of first one. The person, who does this act, is called as the salesman, the result of
this action as sales,
while these activities of the person, are supervised and controlled by sales-
management. In the present scenario sales executives are professionals. They plan,
build and maintain effective organisations and design and utilize efficient control
procedures. The professionals approach requires thorough analysis, market-efficient
qualitative and
quantitative personal-selling strategy. It calls for skillful application of organisational
principles to the conduct of sales operations. In addition, the professional approach
demands the ability to install, operate, and use control procedures appropriate to the
firm’s situation and its objectives.
Executives capable of applying the professional approach to sales management are in
high demand today. The quality of selling is referred to as salesmanship. In other
words, ‘management’ is synonymous with leadership. Managers do the same thing in
industry, as ministers do in states and at the centre, i.e., they have to plan, forecast,
direct and
control their personnel. Here success lies in running together, hand in hand. Managers
are the captains of the army of their followers.

DEFINITION
Originally, the term ‘sales management’ referred to the direction of sales force
personnel. But, it has gained a significant position in the today’s world. Now, the
sales management meant management of all marketing activities, including
advertising, sales promotion, marketing research, physical distribution, pricing, and
product merchandising. The American marketers association (AMA’s) definition,
takes into
consideration a number of these viewpoints. Its definitions runs like: the planning,
direction, and control of the personnel, selling activities of a business unit including
recruiting, selecting, training, assigning, rating, supervising, paying, motivating, as all
these tasks apply to the personnel sales-force.
Further, it may be quoted: it is a socio-scientific process, involving’ group-effort’ in
the pursuit of common goals or objectives, which are pre-determined. Co-ordination
is its key, though, no doubt, it is a system of authority, but the emphasis is on
harmony and not conflict.
Sales-management differs from other fields of management, mainly in different
aspects: the selling operation of a business firm does not exist in isolation. Thus,
simultaneous with the changes taking place in the business, as well as marketing-
orientation, a new concept of sales management has evolved. The business, is now
society-oriented, on
human-welfare aspects. So, sales-management has to work in a broader and newer
environment, in co-existence with the traditional lines. The present emphasis is now
on total development of human resources.
BENEFITS OF SELLING ACTIVITIES
There are different benefits of selling activities, which are as follows:
(1) Benefits to the society: economic growth and maximum employment are the
basics for national development. The achievement of both these goals means jobs and
incomes for a nation’s labour-force. The number of people, who need jobs, continues
to expand, and also some jobs are being eliminated, because of the introduction of
computers and
abolition of obsolete technology. If jobs are to be made available for all those, who
want and expect them, the economy must continuously expand its production of
goods
and services, which can only be done by adopting sound government-policies and
efficient use of people. Equally important here is the fact, that an economy needs
individuals, to sell what is produced. Through their persistent efforts to create and
stimulate demand, sales-people could be said to be the life and blood of a productive
economic-system. The large number of workers, in factories, and offices, would not
be needed, if someone were not selling their products.
(2) Benefits to consumers: professional people may not know every facet of a product,
but they, at least know its major uses, limitations and benefits; so, they can easily
serve their customers, quite effectively. For exan1ple, an insuranc eagent can analyse
the hazards and risks that confront a client’s business or home-situation, examine
existing
coverage and offer helpful advice, in order to eliminate the gaps or overlaps in
coverage, in addition to saving the client’s money. The sales-engineers are qualified
to analyse
technical-problems, which may be confronting a particular organisation and they can
give the right recommendations for developing efficient operations. Like-wise, the
medical- representatives may help the busy doctor, by keeping him abreast of new
drugs in the market. The list of sales-people who can offer assistance to customers is
practically without end.
(3) Benefits to business firms; their sales-persons and customers: salespersons are
owned by their companies, while customers are the end-users of the company’s
product(s) and/or services, all these people, in the chain of marketing, stand to benefit
by sales-activities. A business firm can be profitable only if its revenues exceed its
costs.
The prime responsibility of the salespersons is to sell the goods, produced by the
organisation, at a profit. The creative sales-person, tries to penetrate his territory, and
adopts suitable means and techniques of profitable-selling of goods and/or services.
Business firms, derive various other benefits from, non-selling activities of sales-
persons. The sales-person, in the field, is an ideal person, to keep the company
abreast, or ahead of competition. He, thus, becomes an important source of field-
intelligence by providing important (and sometimes very crucial) information, about
the nature of competitive-activities, and also about the changing needs of customers.
The sales-force has the additional responsibility of serving the needs of customers that
buy the film’s
product(s). Most firms cannot survive, only on the basis of one-time sales; repeat-
sales are necessary. This is possible only if the customers are served in a professional
manner. A customer-oriented sales-person has to perform such activities as: providing
customers with ‘product-information and ‘demonstration(s); training customers-
employees, in product-use; providing customers with sales-advice; and assisting
customers in maintaining ‘inventories’

ELEMENTS OF SALES MANAGEMENT

There are the four basic elements of sales management, discussed below:
(1) Planning: a business cannot be taken as a chance. Every salesperson or person
concerned have to see for the future, in a planned way like what must be done? And
who will do it?
The plan must be based on extensive market research, and the facts must be verified at
every stage. The plan should also be evaluated, after investigating the total-market,
for a particular type of product. Flexibility must be provided by establishing a
specialists production line, to allow for variation in production. The plan should also
be subject to continued review. The details of the plan should be discussed, with all
the departmental heads, concerned, and their sub-ordinates, who bear responsibility
for fulfilling their parts of the plan Co-ordination: Co-ordination is all pervasive and
permeates every function of the management-process. For example, ill planning,
departmental-plans are integrated into a master.

Plan, ensuring adequate co-ordination. Similarly, organizing starts by co-ordination

wholly, partially inter-departmental and inter-personnel matters. Co-ordination also
helps in maximum utilisation of human-effort by the exercise of effective leadership,
guidance, motivation, supervision, communication etc. The control-system also needs
co-ordination. Co-ordination does not have any special techniques. Nevertheless,
there are sound principles, on which to develop skills. It has a special need to help the
staff,
to see the total picture and co-ordinate their activities, with the rest of the team. The
sales manager has to encourage direct personal-contact, within the organisation,
particularly where there is lateral-leadership. Harmony, and not discord, should be the
guiding mantra. In addition, one has to ensure free flow of information that is
selective to the objectives of the business. No personal problems, arising from
business-operations are to be ignored, but solved through a free-exchange of ideas.
This is especially true in the case of the sales-force of any organisation.

(3) Controlling: the sales manager has to check regularly, that the sales activities are
moving in the right direction or not. He guides, leads, and motivates the subordinates,
so as to achieve the goals planned for the business. He has to take steps to ensure that
the activities of the people conform to the plans and objectives of the organisation.
The controlling system should be such that one can study the past, note the pitfalls
and take corrective measures, so that similar problems may not occur in the future.
The controller has to ensure that the set targets, budgets and schedules are attained or
followed in letter and spirit. There must be procedures to bring to light the failure to
attain a target. The control-system has to (i) prepare sales and market forecasts;
(ii) determine the level of sales-budget; (iii) determine the sales-quotas for each
salesman; (iv) determine, review and select distribution-channels; (v) organise an
efficient sales force; (vi) establish a system of sales-reporting; (vii) establish a system
of statistical sales-credit; (viii) establish stock-control system(s); (ix) review of
performance of the sales-force; and (x) establish periodical testing programmes. In a
big organisation, each salesman is assigned a territory (not so big that it cannot be
adequately covered). Each salesman has a target, set for specific ‘period. From the
weekly and monthly sales-reports, the control system is established, that will prepare
records whether a particular salesman is working efficiently or not.
(4) Motivating: Motivation is essentially a human resource concept. It aims to weld
together distinctive personalities into
an efficient team. For this, knowledge of human psychology
is needed, as a means of understanding behaviour patterns This is especially important
in the case of the sales-force.
Only motivated sales-persons can achieve company’s goals.

OBJECTIVES OF SALES MANAGEMENT

Every business firm has certain objectives to achieve. These objectives may be very
explicit and definitive, or they may be implicit or general. Although, firms have
different mixes of objectives, and they do place differing emphasis, on individual
ones, the typical objectives include (i) profitability, (ii) sales-volume, (iii) market
share, (iv) growth, and (v) corporate-image. While all these objectives are important
to a business firm, the objectives, relating to sales-volume, market share and
profitability, are greatly affected by the effectiveness and efficiency, with which the
sales-function is managed.
Business firms, have, in fact, found that it is the most effective management objective
of the firm; that must emanate out of its overall business or corporate objectives. The
sales-management objectives of a business firm, generally relate to the areas of (i)
achieving sufficient sales-volume, (ii) providing sufficient profit, and (iii)
experiencing
continuing growth.
Generally, objectives of sales-management have to cover various sales-functions, in
an integrated manner. These objectives are to be expressed, as far as possible, in
measurable and quantitative terms, and should also be realistic and achievable. Since,
there are more than one objective, these should be put, on a hierarchical manner
(most-
important, down to the least important). To ensure their flawless realisation, they must
be congruent, i.e., they must fit together, and not be in conflict with each other. For
example, suppose you ask a salesman to cut his travelling expenses, and ask him to
spend more time, in the field. To make these two requirements, more meaningful,
they must be linked with specific time-element.
The setting of objectives should not be based only on the judgment of the top-
management. Rather, it should be formulated and finalised, with the involvement of
the sales-force, at the grass-roots level. In addition, the process of setting of sales-
objectives should begin, only after the company has conducted benchmark studies, to
find out, as to where it stands in terms of product, brand and market-sales and market
share trends (all in measurable terms).