MARKETING AND

CONSUMER BEHAVIOR
SEMESTER IV – ALLIED PAPER
SUBJECT CODE: SBT4A
 UNIT 1

MARKETING IN 21ST CENTURY

 SYLLABUS

• Definition and Scope of marketing

• Core marketing concepts
• Direct and online marketing – advantages and
disadvantages
 MARKETING
• Definition:
“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
- American Marketing Association
• Philip Kotler’s definition:
Marketing is a social and managerial process by
which individuals and groups obtain what they
need and want through creating and exchanging
products and value with others

It is basically meeting needs profitably

• Social definition –
Marketing is a societal process by which individuals
and groups obtain what they need and want through
creating offering and freely exchanging products and
services of value with others.

Functional/manegerial definition-
Marketing is the process of planning and executing the
conception of pricing, promoting and distribution of
ideas, goods and services to create exchange that satisfy
individual and organizational goals
• Marketing management:

It is the art and science of choosing target

markets and getting, keeping and growing
customers through creating, delivering and
communicating superior customer value.
Marketing process
Identify the needs and want

Target consumers

Produce

Promote

Promote - Advertising

Sale

Customer Satisfaction

Profit
 Nature of marketing
• It is an art and science
• Customer orientation – identify and satisfy needs
• Delivery of value
• It is a business activity
• It is a business strategy and process
• Aim of marketing – to make selling superfluous
• Psychological constructs – Persuasion, communication
etc
• It is a social function of creating a network of
relationships
 Evolution of marketing concept
1. Production orientation
• During industrial revolution to mid 1930s
• The aim was to produce more goods
• Demand was more than supply

2. Sales orientation
• 1930s to mid 1950s
• The excess products had to be sold
• Supply was more than demand

3
3. Marketing orientation
• 1950s onwards
• Attention to consumer preferences and needs

4. Societal orientation
• 1980s onwards
• The welfare of the customers is given
importance
• Social responsibility of the organization
 Scope of marketing
• What is marketing
• What is marketed?
• Who markets
• Types of market
• Marketplace, market space
• Met markets
• Marketing in practice
 What is marketed
1. Goods
2. Services
3. Events – global sporting events
4. Experiences – theme restaurants
5. Persons
6. Places
7. Properties
8. Organizations
9. Information
10. Ideas
 Who markets
Marketers and prospects

Prospect

Marketer

Marketer
 Demand states
1. Negative demand
2. Non-existent demand
3. Latent demand
4. Declining demand
5. Irregular demand
6. Full demand
7. Overfull demand
8. Unwholesome demand
 Markets
• A collection of buyers and sellers who tract over a
particular product
• Sellers constitute industry and buyers constitute
market
1. Resource market – raw materials market, labour
market, money market
2. Manufacturer market
3. Government market
4. Intermediary market
5. Consumer market
Classification of markets
Market

Need market

Product market

Demographic market

Geographic market
 Types of markets- key customer markets

• Consumer market
• Business market
• Global market
• Non-profit and governmental market
Relationship between industry and market

• Communication
• Goods and services

INDUSTRY
• Marketplace – physical entity

• Market space – digital marketplace

• Metamarkets – cluster of complementary

products and services that are closely related in
the minds of consumers, but spread across
diverse set of industries

• Metamediaries – e.g. tripadvisor.com;

makemytrip.com
 Marketing process

Analysing marketing Selecting

opportunities target markets

Designing marketing Developing

strategies marketing programs

Managing the
marketing effort
 Role of CMO
• Strategic role
• Integrate with CEO and other departments
• Developing skills of marketing executive
• Fluid marketing planning and strategies
• Creating conducive environment for innovation
• Dynamic role of marketing executives and
continuous generation of new ideas
• Competitive edge always to be maintained
 Functions of CMO
1. Strengthening the brand
2. Measuring marketing effectiveness
3. Driving new product development based on
customer needs
4. Gathering meaningful customer insights
5. Utilizing new marketing technology
 CORE
MARKETING
CONCEPTS
 Needs, wants and demand
• Need – basic human requirements, basic needs; need
hierarchy

• Wants – needs directed towards specific objects that might

satisfy the needs; it is shaped by the society and culture

• Demands – wants for specific products backed by an ability to

pay

• Needs pre-exist wants and marketers

• Role of marketers – influence wants along with social factors

• Marketers help customers in identifying the
unconscious needs and articulate it; help them
learn what they want
• 5 types of needs:
1. Stated needs
2. Real needs
3. Unstated needs
4. Delight needs
5. Secret needs
 Target markets, Positioning and
segmentation
• Market Segmentation - Identify and profile distinct groups
of buyers who might prefer or require varying product and
service mix by examining demographic, psychographic, and
behavioural differences among buyers

• Segments that present the greatest opportunity is target

markets

• Develop an offering and position it in the minds of the

target market as a provider of benefits . Eg. Volvo safety
transports
 Offerings and brands
• Putting forth a value proposition that satisfy
the customers needs
• Set of benefits offered by the marketer to the
customers
• When value proposition takes a physical form it
is an offering
• Brand – an offering from a known source
• Brand image, consistent quality, regular and
loyal customers
 Value and satisfaction
• Main aim is to deliver satisfaction to customers
• Different offerings is compared by the
customers to analyse which gives greatest value
and satisfaction to them.
• Customer value triad – combination of quality,
service and price.
• Value is perceived – individual differences
• Value is central to marketing concept
• Satisfaction – customer’s judgement of a
product’s perceived performance in relation to
his/her expectations

Less than
Dissatisfied
expectation

PERFORMANCE Matches
Satisfied
of the product expectations

Exceeds
Delighted
expectation
 Marketing channels
marketers role- choose the correct combination of the
different channels
Communication channel
• Deliver and receive message from target buyers. E.g. magazines, TV
etc.
• Subliminal visual cues like design of the website, ambience of the
store etc.
• Dialogue channels

Distribution channels

• Distributers, wholesalers, retailers, agent etc.

Service channels

• Warehouse, transportation, logistics, those who facilitate

transactions with the customers
 Supply chain
• Entire line of activities and functionaries
starting from raw material to final consumer
• Company’s capture a limited percentage of
supply chain’s value.
• Competition is to expand the percentage of
supply chain value
• Aim – capture higher percentage of supply
chain value
 Competition
• It includes all the actual and potential rival offerings a
buyer might consider

• Central aspect of marketing where it is available in all

levels. E.g. from raw material suppliers, ad agency,
retailers etc

• Strategy for competition is core of marketing

• It is a dynamic process and is needed to keep track of
their compititors
 Marketing environment
Task environment Broad environment
• Actors engaged in • Demographic
production, distribution • Economic
and promotion of the • Physical
offering • Technological
• e.g. suppliers, marketing • Political-legal
research agencies, banking •
and finance companies Socio-cultural
• Dealers, brokers, logistics,
ad agencies
 DIRECT MARKETING
• It is the use of consumer-direct channels to
reach and deliver goods and services to
customers without using marketing middlemen.
• Direct marketing consists of any marketing that
relies on direct communication or distribution to
individual consumers, rather than through a
third party such as mass media.
• It is also called Direct order marketing – i.e.
seeking a measurable response
• direct marketing campaigns operate
independently to directly communicate with
target audiences.

• The term Direct marketing was coined by

Lester Wunderman in 1967. He is the father of
Contemprory Direct marketing. He Introduced
the toll free number 1800.

• Immediate orders are obtained from direct

marketing.
 Features of direct marketing
• Personalised communication
• Build long-term relationship with consumers.
• Response of the consumers can be measured
• No middlemen involved
• Uses various channels like mails, catalogue,
Telemarketing, SMS etc.
• Call to action is an important aspect of direct marketing.
For e.g. link to sales, website stores, buy now button
• Work independently
• Establish contact directly with target audience
 Types of direct marketing
• 1. Direct mail
• Catalogue marketing
• Telemarketing
 Direct mailing
• Objectives – direct marketers aim to receive an order from
prospects and judge a campaign success by the response
rate
• Target markets and prospects – RFM formula i.e. Recency;
Frequency and monetary amount
• Offer elements –
1. Product
2. The offer
3. The medium
4. The distribution method
5. Creative strategy
• Testing element
Test the marketing under real marketplace
conditions, different elements of an offer strategy.
It understates the long term impact of marketing
campaign's.
• Measuring campaign success – lifetime value
Analyse the response rate, break-even rate
response rate etc.
 Catalogue marketing
Catalogue marketing is a form of direct marketing
which companies uses printed catalogues or e-
catalogues to display all the products and services
provided by the company.
It is a replacement to the customer visiting a retail
store to check out the relevant products.
• Better access to global customers, saving printing
and mailing cost.
• E.g. Clothes and apparels, furniture's, electronics
etc
 Telemarketing
Use of telephone or call centres to attract
prospects, sell to existing customers and provide
services by taking orders and answering questions.
1. Inbound telemarketing
2. Outbound telemarketing
• Increase revenue, reduce selling cost and
improve customer satisfaction.
• E.g used by banking, credit cards, insurance
companies etc, service industry
 Tools of direct marketing
1. Face to face selling
2. Direct mail/voice mail
3. Digital coupons
• Direct Response TV:
• Direct marketing via television (commonly referred to as DRTV) has two
basic forms- long form and short form, which refers to typical 30-second
or 60-second commercials that ask viewers for an immediate response
• Radio
• Magzines
• Campaigns
• Events
• Internet
 Advantages of direct marketing
• Market demassification
• Better customer research, interaction and product customization.
• Long term personalized relationship with customers
• More accountability to the customers
• Ease of buying
• Cost effective
• Reach prospects at the right moment
• Find the most cost effective method by using alternative methods
• Offers and Strategies are less visible to competitors
• Measure response to check which has been most profitable
Disadvantages of direct marketing
• Irritation
• Unfairness
• Deception and fraud
• Invasion of privacy
• Lesser outreach
 Online marketing
• Online marketing is also known as internet
marketing, web marketing, or digital
marketing.
• It includes several branches such as social
media marketing (SMM), search engine
optimization (SEO), pay-per-click advertising
(PPC), and search engine marketing (SEM).
• Search Ads: When a visitor searches any term on the search engine, the ad of the marketers
appear either on the top of the results or next to it, on the basis of the bidding by the
marketer and the search engine’s algorithm, to identify its significance with respect to the
keyword searched. Only when the visitor clicks on the ads, advertisers pay for it.

Search Engine Optimization (SEO) entails the activities that improve the probability that a
particular link will appear in the top among all the non-paid links when the visitor searches
for a particular keyword.

• Display Ads: Display ads or otherwise called as banner ads are the one that appears in a tiny
rectangular box that encompasses text and sometimes graphics, which marketers pay on the
placement on specific websites. The cost depends on the traffic on a website, meaning that
the more the number of visitors, higher is the cost.

• Social Media Marketing: It is one of the emerging modes of marketing these days.
Consumers share their videos, audios, texts, and images through various social media
platforms Facebook, Twitter, Google plus, Instagram, Linkedin, Pinterest, etc. with their
friends, relatives, acquaintances and companies.
It facilitates the marketers to make their presence online and connect with their customers
directly
Advantages of Online Marketing
A company can grow faster and reach the target audience through a broader range of
marketing elements.

It has a competitive advantage over traditional means of marketing.

It is easy to trace the number of unique visitors, average session duration, click on an
ad, and so forth.

Contextual placement is one of the important features of online marketing wherein

the marketers can buy ads on the websites which akin to their own products and
services.

Marketers can also place the ads on the basis of the keywords typed by the
customers on Google and other search engines like Bing and Yahoo, to reach the
target audience.
• Effective online marketing programs leverage consumer data and
customer relationship management (CRM) systems. Online marketing
connects organizations with qualified potential customers and takes
business development to a much higher level than traditional marketing.
• It also helps a company raise its brand awareness by establishing its
online presence across the Internet.
• Online marketing combines the internet's creative and technical tools,
including design, development, sales and advertising, while focusing on
the following primary business models:
• E-commerce
• Affiliate marketing
• Local search
• Social media
• Low costs
• Large audiences are reachable at a fraction of traditional advertising budgets, allowing businesses to create
appealing consumer ads. Many advertising platforms also allow for scalable ads with different levels of reach
that are proportioned to the advertising budget. Rather than committing a large amount of money to
advertising, smaller companies can spend a small amount and still increase their reach.
• Flexibility and convenience
• Consumers may research and purchase products and services at their leisure. Business blogs can be used to
let consumers and prospects conduct their own research on the business's products as well as provide their
feedback and reviews.
• Analytics
• Efficient statistical results are facilitated without extra costs. Many advertising tools include their own
analytics platforms where all data can be neatly organized and observed. This facilitates business intelligence
efforts and data-driven decision making.
• Multiple options
• Advertising tools include pay-per-click advertising, email marketing, interstitial ads and banners, social media
advertising, and local search integration (like Google Maps). Digital marketing companies usually offer their
services across various online advertising channels by tuning their offer to the individual client’s needs.
• Demographic targeting
• Consumers can be demographically targeted much more effectively in an online rather than an offline
process. Coupled with the increased analytics potential explained above, organizations can improve their
targeting over time, have a clearer understanding of their customer base, and create specific offers that are
shown only to certain demographics.
• The main limitation of online marketing is the lack of tangibility, which means that consumers are unable to
try out, or try on items they might wish to purchase. Generous return policies are the main way to circumvent
such buyer apprehension.
• Online marketing has outsold traditional advertising in recent years and continues to be a high-growth
industry.
• Online marketing can deliver benefits such as:
• Growth in potential
• Reduced expenses
• Elegant communications
• Better control
• Improved customer service
• Competitive advantage
• Disadvantages of Online Marketing
• Fake clicks on the ads done by software-
powered websites.
• Hacking of the website is possible, which results
in the loss of control over the messages.
• Lack of tangibility
• Privacy issues
• Persuasion is higher