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The two essential mantras to achieve success in life are true devotion and continuous efforts.
Devotion comes from within, It requires an inner strength so powerful that it will motivate you for
devoting your powers towards aiming for the moon. Continuous efforts, on the other hand, can be
in terms of appropriate guidance that can be provided to the students in the form of study material
and previous papers and practice papers.
Mahendra’s has once again, here, made a serious effort to provide its students with previous
years papers and practice papers. This book contains the basic theory and terminology in marketing
along with MCQs to help students understand need of marketing in todays world. With the advent
of globalization it has become necessary to learn new & innovative marketing techniques that will
gradually make India a self-sufficient & powerful nation. This book will help you and give you
proper guidance in your preparation for your exams.
Determination and dedication are two most essential pillars of success. We do not support the
fact that there is any shortcut for success but at the same time planning has its own importance.
If we perform a task in a pre-planned manner then it is bound to lead to success. This book
presents a planned structure in front of you to motivate and encourage you to succeed in your
With Best Wishes
M a h e n d r a ' s
1. EVOLUTION OF MARKETING CONCEPTS 7-13
2. DEVELOPING MARKETING STRATEGIES AND PLANS 15-16
3. MARKETING ENVIRONMENT 17-18
4. MARKETING RESEARCH 19-20
5. ANALYZING CONSUMER MARKETS AND IDENTIFYING
MARKET SEGMENTS 21-25
6. MARKET SEGMENTATION AND TARGETS 26-28
7. BRANDS AND BRAND EQUITY 29-31
8. CRAFTING THE BRAND POSITIONING 33
9 PRODUCT STRATEGY 34-38
10. DESIGNING AND MANAGING SERVICES 39-41
11. MANAGING RETAILING, WHOLESALES AND LOGISTICS 43-47
12. MARKETING COMMUNICATIONS 48-63
MULTIPLE CHOICE QUESTIONS BASED ON THE TEXT 64-112
STATE BANK OF INDIA (PREVIOUS PAPERS) 113-127
ANSWERS WITH EXPLANATION MULTIPLE CHOICE QUESTIONS 129-141
ANSWERS WITH EXPLANATION PREVIOUS PAPERS 142-145
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Marketing is used to create the customer, to keep the customer and to satisfy the customer.
With the customer as the focus of its activities, it can be concluded that marketing management
is one of the major components of business management. The evolution of marketing was caused
due to mature markets and overcapacities in the last decades. Companies then shifted the focus
from production more to the customer in order to stay profitable.
Importance of Marketing
Marketing is a very important aspect in business since it contributes greatly to the success of the
organization. Production and distribution depend largely on marketing. Many people think that
sales and marketing are basically the same. These two concepts are different in many aspects.
Marketing covers advertising, promotions, public relations, and sales. It is the process of introducing
and promoting the product or service into the market and encourages sales from the buying public.
Sales refer to the act of buying or the actual transaction of customers purchasing the product or
service. Since the goal of marketing is to make the product or service widely known and recognized
to the market, marketers must be creative in their marketing activities. In this competitive nature of
many businesses, getting the product noticed is not that easy. Strategically, the business must be
centered on the customers more than the products. Although good and quality products are also
essential, the buying public still has their personal preferences. If you target more of their needs,
they will come back again and again and even bring along recruits. If you push more on the product
and disregard their wants and the benefits they can get, you will lose your customers in no time.
The sad thing is that getting them back is the hardest part.
Marketing Promotes Product Awareness to the Public
It has already been mentioned in the previous paragraph that getting the product or service
recognized by the market is the primary goal of marketing. No business possibly ever thought of
just letting the people find out about the business themselves, unless you have already established
a reputation in the industry. But if you are a start-out company, the only means to be made known
is to advertise and promote. Your business may be spending on the advertising and promotional
programs but the important thing is that product and company information is disseminated to the
buying public. Various types of marketing approaches can be utilized by an organization. All forms
of marketing promote product awareness to the market at large. Offline and online marketing make
it possible for the people to be educated with the various products and services that they can take
advantage of. A company must invest in marketing so as not to miss the opportunity of being
discovered. If expense is to be considered, there are cost-effective marketing techniques a company
can embark on such as pay-per-click ads and blogging.
Marketing Helps Boost Product Sales
Apart from public awareness about a company’s products and services, marketing helps boost
sales and revenue growth. Whatever your business is selling, it will generate sales once the public
learns about your product through TV advertisements, radio commercials, newspaper ads, online
ads, and other forms of marketing. The more people hear and see more of your advertisements, the
more they will be interested to buy. If your company aims to increase the sales percentage and
double the production, the marketing department must be able to come up with effective and
strategic marketing plans.
Marketing Builds Company Reputation
In order to conquer the general market, marketers aim to create a brand name recognition or
product recall. This is a technique for the consumers to easily associate the brand name with the
images, logo, or caption that they hear and see in the advertisements.
EVOLUTION OF MARKETING CONCEPTS
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McDonalds is known for its arch design which attracts people and identifies the image as McDonalds.
For some companies, building a reputation to the public may take time but there are those who
easily attract the people. With an established name in the industry, a business continues to grow
and expand because more and more customers will purchase the products or take advantage of
the services from a reputable company.
Marketing plays a very essential role in the success of a company. It educates people on the latest
market trends, helps boost a company’s sales and profit, and develops company reputation. But
marketers must be creative and wise enough to promote their products with the proper marketing
tactics. Although marketing is important, if it is not conducted and researched well, the company
might just be wasting on expenses and time on a failed marketing approach.
What is Marketed?
Marketing people market 10 types of entities. They are:
Goods: Physical goods that may be manufactured, produced in farms or mined. These account for
the bulk of the marketing efforts in most of the countries.
Services: These are intangible products that involve performing some service for the customers.
This may be service performed on the customer, like a haircut, on customer’s possessions, like
servicing of car, or for the customer, like screening of a movie. Services account the maximum
marketing effort after products in most of the countries. In many developed countries the volume of
services has exceeded that of goods.
Events: Time based shows such as new year celebration, or a sporting event.
Experiences: Experiences which results from a combination of products and services. The customer
is interested in the total experience such as an organized holiday tour package rather than the
individual products and services included in the package.
Persons: Like marketing of a celebrity or of a candidate in a public election.
Places: Like cities, state, nations, for purposes such as attracting tourists and investment.
Properties: This could be physical properties like real estate or intangible rights in properties.
Organizations: This basically refers to building positive image of organizations, such as companies,
universities, and charitable organizations.
Information: Books are the traditional means of selling information, but there are many other type
of information marketed. For example market intelligence, economic analysis and mailing lists.
Ideas: Every market offering includes a basic idea. In addition ideas may be marketed by themselves.
For examples, some religious bodies try to promote their ideas of what constitutes the right behavior.
Company Orientations to the Marketplace
What philosophy should guide a company marketing and selling efforts? What relative weights
should be given to the interests of the organization, the customers, and society? These interest
often clash, however, an organization’s marketing and selling activities should be carried out under
a well-thought-out philosophy of efficiency, effectiveness, and socially responsibility. Five orientations
(philosophical concepts to the marketplace have guided and continue to guide organizational
1. The Production Concept
2. The Product Concept
3. The Selling Concept
4. The Marketing Concept
5. The Societal Marketing Concept
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Let us now discuss each of the concepts in detail.
1. The Production Concept: This concept is the oldest of the concepts in business. It holds that
consumers will prefer products that are widely available and inexpensive. Managers focusing on
this concept concentrate on achieving high production efficiency, low costs, and mass distribution.
They assume that consumers are primarily interested in product availability and low prices. This
orientation makes sense in developing countries, where consumers are more interested in obtaining
the product than in its features.
2. The Product Concept: This orientation holds that consumers will favor those products that
offer the most quality, performance, or innovative features. Managers focusing on this concept
concentrate on making superior products and improving them over time. They assume that buyers
admire well-made products and can appraise quality and performance. However, these managers
are sometimes caught up in a love affair with their product and do not realize what the market
needs. Management might commit the “better-mousetrap” fallacy, believing that a better mousetrap
will lead people to beat a path to its door.
3. The Selling Concept: This is another common business orientation. It holds that consumers
and businesses, if left alone, will ordinarily not buy enough of the selling company’s products. The
organization must, therefore, undertake an aggressive selling and promotion effort. This concept
assumes that consumers typically sho9w buyi8ng inertia or resistance and must be coaxed into
buying. It also assumes that the company has a whole battery of effective selling and promotional
tools to stimulate more buying. Most firms practice the selling concept when they have overcapacity.
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Their aim is to sell what they make rather than make what the market wants.
4. 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).
3. The selling concept starts with the seller and its focus is on existing products, it being seller-
oriented. The company believes in aggressive selling and other promotions. Customer value and
satisfaction are no concern for the seller. The firm produces the products first and then figures out
ways to sell and make profits. Different company departments operate without coordination.
4. Marketing orientation starts with the customer and the company strives to learn customer needs
and wants, develops appropriate products or services to satisfy the customer. Business is viewed
as a customer need satisfying activity. All departments coordinate their activities and the focus is
on customer needs. Profits are an outcome of doing the job well by the company. It requires
reliable companywide information system and maintains it. All departments are responsive to
informational inputs. Everybody understands the critical role played by marketing, a fact visibly
demonstrable when the head of marketing is part of top management.
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
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.
5. 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
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
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The marketing concept possibly sidesteps the potential conflicts among consumer wants, consumer
interests, and long-run societal welfare.
The fast-food hamburger industry offers tasty but 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.
The following table will help you understand the above five concepts even better.
ORIENTATION PROFIT DRIVERS TIMEFRAME DESCRIPTION
Production Production methods until the 1950s A firm focusing on a production
orientation specializes in producing as
much as possible of a given product or
service. Thus, this signifies a firm
exploiting economies of scale until the
minimum efficient scale is reached. A
production orientation may be deployed
when a high demand for a product or
service exists, coupled with a good
certainty that consumer tastes will not
rapidly alter (similar to the sales
Product Quality of the product until the 1960s A firm employing a product orientation
is chiefly concerned with the quality of
its own product. A firm would also
assume that as long as its product was
of a high standard, people would buy
and consume the product.
Selling Selling methods 1950s and 1960s A firm using a sales orientation focuses
primarily on the selling/promotion of a
particular product, and not determining
new consumer desires as such.
Consequently, this entails simply selling
an already existing product, and using
promotion techniques to attain the
highest sales possible.
Marketing Needs and wants 1970s to the The 'marketing orientation' is
of customers present day perhaps the most common orientation
used in contemporary marketing. It
involves a firm essentially basing its
marketing plans around the marketing
concept, and thus supplying products
to suit new consumer tastes. As an
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example, a firm would employ market
research to gauge consumer desires,
use R&D (research and development)
to develop a product attuned to the
revealed information, and then utilize
promotion techniques to ensure
persons know the product exists.
Holistic Marketing Everything matters 21st century
in marketing The holistic marketing concept looks
at marketing as a complex activity and
acknowledges that everything matters
in marketing - and that a broad and
integrated perspective is necessary in
developing, designing and implementing
marketing programs and activities. The
four components that characterize
holistic marketing are relationship
marketing, internal marketing,
integrated marketing, and socially
Apart from the above mentioned five concepts of marketing, in due course of time with the advent
of global market, we now come across few new terms in marketing. Let us see what they are.
The holistic marketing concept is a relatively new marketing perspective that takes into account
the entire organization in addition to its counterparts when determining or executing its overall
marketing strategy. Holistic marketing recognizes that there are many stakeholders involved in
each transaction—from suppliers, to employees, customers, shareholders, the community at large,
and the environment. In order for a company to achieve success in today’s business landscape, it
must take into consideration the complexities of its breadth and interdependencies because
businesses no longer exist in a vacuum but within a multi-dimensional, global,
Holistic marketing concept is based on development, design, and implementation of marketing
programs, processes, and activities that recognize their breadth and interdependencies. Holistic
marketing recognizes that “everything matters” with marketing and that a broad, integrated
perspective is necessary to attain the best solution
Four main compnents of holistic marketing are: relationship marketing - integrated marketing -
internal marketing - and socially responsible marketing.
1. Relationship marketing - builds mutually satisfying long-term relationships – think CRM (customer
relationship management & PRM (partner relationship management).
2. Integrated marketing - satisfies needs and surpass expectations.
3. Internal marketing - all teams work together and think customer.
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4. Performance marketing - is financially accountable and social responsible.
1. Relationship marketing: Relationship marketing is a strategy designed to foster customer
loyalty, interaction and long-term engagement. This customer relationship management (CRM)
approach focuses more on customer retention than customer acquisition. Relationship marketing
is designed to develop strong connections with customers by providing them with information
directly suited to their needs and interests and by promoting open communication. This approach
often results in increased word-of-mouth activity, repeat business and a willingness on the customer’s
part to provide information to the organization. Relationship marketing contrasts with transactional
marketing, an approach that focuses on increasing the number of individual sales. Most organizations
combine elements of both relationship and transaction marketing strategies.
2. Integrated Marketing: It is a strategy aimed at unifying different marketing methods such as
mass marketing, one-to-one marketing, and direct marketing. Its objective is to complement and
reinforce the market impact of each method, and to employ the market data generated by these
efforts in product development, pricing, distribution, customer service, etc.
3. Internal Marketing: It is the application of the principles of marketing within an organization.
Internal marketing involves the creation of an internal market by dividing departments into business
units, with control over their own operations and expenditure, with attendant impacts on corporate
culture, politics, and power. Internal marketing also involves treating employees as internal customers
with the goal of increasing employees’ motivation and focus on customers.
4. Performance Marketing: Performance marketing refers to marketing techniques and campaigns
by which the advertiser pays only for results. Performance marketing is an important part of digital
marketing due to the tracking capabilities of the Internet.
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DEVELOPING MARKETING STRATEGIES AND PLANS
It is the difference between what a customer gets from a product, and what he or she has to give in
order to get it. Woodruff defines customer value as: “a customer perceived preference for and
evaluation of those products attributes, attribute performances, and consequences arising from
use that facilitate (or block) achieving the customer’s goals and purposes in use situations”. The
definition above suggests that there are two aspects to customer value: desired value and perceived
value. Desired value refers to what customers desire in a product or service. Perceived value is the
benefit that a customer believes he or she received from a product after it was purchased.
Customer value can be examined at different levels. At a low level, customer value can be viewed
as the attributes of a product that a customer perceives to receive value from. At a higher level,
customer value can be viewed as the emotional payoff and achievement of a goal or desire. When
customers derive value from a product, they derive value from the attributes of the product as well
as from the attribute performance and the consequence of achieving desired goals from the use of
Value Delivery Process and Value Chain
STRATEGIC BUSINESS UNITS (SBUs)
In business, a strategic business unit (SBU) is a profit center which focuses on product offering
and market segment. SBUs typically have a discrete marketing plan, analysis of competition, and
marketing campaign, even though they may be part of a larger business entity.
An SBU may be a business unit within a larger corporation, or it may be a business unto itself.
Corporations may be composed of multiple SBUs, each of which is responsible for its own profitability.
General Electric is an example of a company with this sort of business organization. SBUs are
able to affect most factors which influence their performance. Managed as separate businesses,
they are responsible to a parent corporation. For example: General electric has 49 SBUs.
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SWOT analysis (alternatively SWOT Matrix) also sometimes known as TOWS, is a structured
planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved
in a project or in a business venture. A SWOT analysis can be carried out for a product, place,
industry or person. It involves specifying the objective of the business venture or project and identifying
the internal and external factors that are favorable and unfavorable to achieving that objective. The
technique is credited to Albert Humphrey, who led a convention at the Stanford Research Institute
(now SRI International) in the 1960s and 1970s using data from Fortune 500 companies. The
degree to which the internal environment of the firm matches with the external environment is
expressed by the concept of strategic fit. Setting the objective should be done after the SWOT
analysis has been performed. This would allow achievable goals or objectives to be set for the
? Strengths: characteristics of the business or project that give it an advantage over others
? Weaknesses: are characteristics that place the team at a disadvantage relative to others
? Opportunities: elements that the project could exploit to its advantage
? Threats: elements in the environment that could cause trouble for the business or project
Identification of SWOTs is important because they can inform later steps in planning to achieve the
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A marketing environment is what surrounds and creates impact on business organizations. The
market environment is a marketing term and refers to factors and forces that affect a firm’s ability
to build and maintain successful relationships with customers. Three levels of the environment are:
Micro (internal) environment - small forces within the company that affect its ability to serve its
customers. Meso environment – the industry in which a company operates and the industry’s
market and the Macro (national) environment - larger societal forces that affect the
The micro environment refers to the forces that are close to the company and affect its ability to
serve its customers. It includes the company itself, its suppliers, marketing intermediaries, customer
markets and publics.
The company aspect of microenvironment refers to the internal environment of the company. This
includes all departments, such as management, finance, research and development, purchasing,
operations and accounting. Each of these departments has an impact on marketing decisions. For
example, research and development have input as to the features a product can perform and
accounting approves the financial side of marketing plans and budgets.
Macro-Environment (external environment)
The macroenvironment refers to all forces that are part of the larger society and affect the
microenvironment. It includes concepts such as demography, economy, natural forces, technology,
politics, and culture.
Factors affecting organisation in Macro environment are known as PESTEL, that is: Political,
Economical, Social, Technological, Environmental and Legal. Demography refers to studying human
populations in terms of size, density, location, age, gender, race, and occupation. This is a very
important factor to study for marketers and helps to divide the population into market segments
and target markets.
Political Environment: The political environment includes all laws, government agencies, and
groups that influence or limit other organizations and individuals within a society. It is important for
marketers to be aware of these restrictions as they can be complex. Some products are regulated
by both state and federal laws. There are even restrictions for some products as to who the target
market may be, for example, cigarettes should not be marketed to younger children.
Economic Environment: Another aspect of the macroenvironment is the economic environment.
This refers to the purchasing power of potential customers and the ways in which people spend
their money. Within this area are two different economies, subsistence and industrialized.
Subsistence economies are based more in agriculture and consume their own industrial output.
Industrial economies have markets that are diverse and carry many different types of goods.
Social Environment: The social environment, social context, sociocultural context, or milieu,
refers to the immediate physical and social setting in which people live or in which something
happens or develops. It includes the culture that the individual was educated or lives in, and the
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people and institutions with whom they interact.The interaction may be in person or through
communication media, even anonymous or one-way, and may not imply equality of social status.
Therefore the social environment is a broader concept than that of social class or social circle.
Technological Environment: The technological environment is perhaps one of the fastest changing
factors in the macroenvironment. This includes all developments from antibiotics and surgery to
nuclear missiles and chemical weapons to automobiles and credit cards. As these markets develop
it can create new markets and new uses for products. It also requires a company to stay ahead of
others and update their own technology as it becomes outdated. They must stay informed of
trends so they can be part of the next big thing, rather than becoming outdated and suffering the
Environmental Factors: The natural environment is another important factor of the
macroenvironment. This includes the natural resources that a company uses as inputs that affects
their marketing activities. The concern in this area is the increased pollution, shortages of raw
materials and increased governmental intervention. As raw materials become increasingly scarcer,
the ability to create a company’s product gets much harder. Also, pollution can go as far as
negatively affecting a company’s reputation if they are known for damaging the environment.
Marketing intermediaries help to sell, promote, and distribute goods. Intermediaries take many
? Physical distribution firms
? Marketing services agencies
? Financial intermediaries
? Customer markets must be studied.
? Market types
Customer markets must be studied:
? Market types
Various publics must also be considered:
? Citizen Action Groups
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Marketing research is “the process or set of processes that links the consumers, customers, and
end users 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 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.”
It is the systematic gathering, recording, and analysis of qualitative and quantitative data about
issues relating to marketing products and services. The goal of marketing research is to identify
and assess how changing elements of the marketing mix impacts customer behavior. The term is
commonly interchanged with market research; however, expert practitioners may wish to draw a
distinction, in that market research is concerned specifically with markets, while marketing research
is concerned specifically about marketing processes.
Marketing research is often partitioned into two sets of categorical pairs, either by target market:
? Consumer marketing research, and
? Business-to-business (B2B) marketing research
Or, alternatively, by methodological approach:
? Qualitative marketing research, and
? Quantitative marketing research
Marketing Research Process
Marketing research methods
Methodologically, marketing research uses the following types of research designs:
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Based on questioning
Qualitative marketing research - generally used for exploratory purposes - small number of
respondents - not generalizable to the whole population - statistical significance and confidence
not calculated - examples include focus groups, in-depth interviews, and projective techniques
Quantitative marketing research - generally used to draw conclusions - tests a specific
hypothesis - uses random sampling techniques so as to infer from the sample to the population -
involves a large number of respondents - examples include surveys and questionnaires. Techniques
include choice modelling, maximum difference preference scaling, and covariance analysis.
Based on observations
Ethnographic studies - by nature qualitative, the researcher observes social phenomena in their
natural setting - observations can occur cross-sectionally (observations made at one time) or
longitudinally (observations occur over several time-periods) - examples include product-use analysis
and computer cookie traces. See also Ethnography and Observational techniques.
Experimental techniques - by nature quantitative, the researcher creates a quasi-artificial
environment to try to control spurious factors, then manipulates at least one of the variables -
examples include purchase laboratories and test markets
Researchers often use more than one research design. They may start with secondary research to
get background information, then conduct a focus group (qualitative research design) to explore
the issues. Finally they might do a full nation-wide survey (quantitative research design) in order to
devise specific recommendations for the client.
Customer Relationship Management
Customer relationship management (CRM) is a model for managing a company’s interactions with
current and future customers. It involves using technology to organize, automate, and synchronize
sales, marketing, customer service, and technical support. It entails all aspects of interaction that
a company has with its customer, whether it is sales or service-related. CRM is often thought of as
a business strategy that enables businesses to:
? Understand the customer
? Retain customers through better customer experience
? Attract new customer
? Win new clients and contracts
? Increase profitably
? Decrease customer management costs
How CRM is Used Today
While the phrase customer relationship
management is most commonly used
to describe a business-customer
relationship, CRM systems are used in
the same way to manage business
contacts, clients, contract wins and
sales leads. Customer relationship
management solutions provide you with the customer business data to help you provide services
or products that your customers want, provide better customer service, cross-sell and up sell more
effectively, close deals, retain current customers and understand who the customer is. Technology
and the Web has changed the way companies approach CRM strategies because advances in
technology have also changed consumer buying behavior and offers new ways for companies to
communicate with customers and collect data about them. With each new advance in technology
— especially the proliferation of self-service channels like the Web and smartphones — customer
relationships is being managed electronically.
Many aspects of CRM relies heavily on technology; however the strategies and processes of a
good CRM system will collect, manage and link information about the customer with the goal of
letting you market and sell services effectively. Organizations frequently looking for ways to
personalize online experiences (a process also referred to as mass customization) through tools
such as help-desk software, email organizers and different types of enterprise applications.
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ANALYZING CONSUMER MARKETS AND IDENTIFYING MARKET SEGMENTS
Consumer behaviour is the study of individuals, groups, or organizations and the processes they
use to select, secure, and dispose of products, services, experiences, or ideas to satisfy needs
and the impacts that these processes have on the consumer and society. It blends elements
from psychology, sociology, social anthropology and economics. It attempts to understand the
decision-making processes of buyers, both individually and in groups. It studies characteristics of
individual consumers such as demographics and behavioural variables in an attempt to understand
people’s wants. It also tries to assess influences on the consumer from groups such as family,
friends, reference groups, and society in general.
Consumer Behaviour is a branch which deals with the various stages a consumer goes through
before purchasing products or services for his end use.
Why do you think an individual buys a product?
? Social Status
? Gifting Purpose
Why do you think an individual does not buy a product?
? No requirement
? Income/Budget/Financial constraints
When do you think consumers purchase products?
? Festive season
? Marriage or other special occasions
There are in fact several factors which influence buying decision of a consumer ranging from
psychological, social, economic and so on.
Factor that influence Consumer Behaviour
Consumers do not make purchase decisions in a vacuum. Rather, they are subject to both external
and internal factors that influence them. Consumer behavior is influenced by both internal and
external factors. They are
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External Influences on Consumer Behavior
External influences include culture, socioeconomic level, reference groups, and household.
Culture: Culture is defined as the patterns of behavior and social relations that characterize a
society and separate it from others. Culture conveys values, ideals, and attitudes that help individuals
communicate with each other and evaluate situations. It is important in viewing culture to draw
legitimate generalizations about a given culture or subculture without resorting to stereotyping. An
individual’s culture provides a frame of reference concerning acceptable behaviors, and as such,
culture is a learned set of arbitrary values. The dominant culture in the United States today stresses
equality, use of resources, materialism, individualism, and youth. Difference in culture is most
apparent when a hospitality and tourism firm attempts to expand into international markets. There
are significant differences between, for example, the way that Europeans make purchase decisions
and exhibit travel behavior and the way that Americans do so. For example, in much of Europe, it
is very common for a family to take an extended vacation that might last for two, three, or more
weeks. In France, it is very common for businesses to shut down for much of August while the
entire country is on vacation. In the United States, the opposite trend is prevalent. Families are
less likely to take a vacation of more than one week and are more likely to take a series of mini
vacations that extend over three-day weekends. In fact, in the early 1990s, Stouffer Renaissance
Hotels went so far as to trademark the phrase “break-ation” to use in their promotion and advertising
to describe the mini or getaway vacations that have become common in the United States. In
addition to the general culture of the United States, marketers must also be concerned with
subcultures. Subcultures might include African Americans, Jews, Hispanics, Asians, and youths.
One example illustrates the importance of subcultures in marketing. Although families are one of
the major markets for fast-food chains, and parents pay the bills for the family, much of the advertising
for these chains is directed toward the youth subculture. Research has shown that it is often the
children who influence the decision on where to dine, once the adults have decided to dine out.
Socio-Economic Level: Socioeconomic level has a large influence in consumer decision making.
Marketing managers have long attempted to correlate socioeconomic level with dining-out habits
and travel patterns. Hospitality managers must identify the relative socioeconomic levels to which
the operation appeals and appeal directly to those groups with the marketing mix that they use.
For example, an upscale and expensive four- or five-star resort property will target its promotional
efforts to those in upper income groups. These resorts are likely to advertise in publications read
by professionals and those who are in the top 25 percent of annual household income. That is their
Reference Groups: A reference group is a group with whom an individual identifies to the point
where the group dictates a standard of behavior. Reference groups exert tremendous influence on
consumers’ hospitality and tourism purchase decisions. Every individual is influenced directly and
indirectly. Marketing research has identified three types of reference groups: comparative, status,
and normative. First, individual consumers use reference groups to compare their own feelings and
thoughts with those of others. For example, an individual may have gone to dinner at a restaurant
and felt that the food and service were excellent. Before these perceptions are internalized, however,
a reference group is often consulted to validate the perceptions. An individual may check with
friends who are members of a reference group, asking for their perceptions of the restaurant. The
individual will then compare her friends’ perceptions against her own. In many cases, the perceptions
of a reference group can influence purchase and repeat purchase behavior. Second, reference
groups also serve a status function. For example, when an individual seeks to become a member
of a group, his or her actions are likely to emulate the group members’ behaviors. If someone looks
up to a reference group as a source of status, he or she is likely to model the behavior exhibited by
the members of the reference group. Third, reference groups establish norms and values that
regulate the behavior of individuals. For example, consider a high-school-age reference group dining
out. The group norm may state that patronizing chain restaurant A is more desirable than going to
locally owned restaurant B, yet objective analysis indicates that restaurant B’s product-service
mixis superior. The group’s norms and values might still point toward the established chain restaurant.
Simply put, dining at restaurant A is “cool” and dining at restaurant B is not. What is in favor within
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the reference group will change over time. For example, 10 to 15 years ago college students
seeking the most exciting destination for a spring break getaway often went to Daytona Beach,
Florida. In recent years, Cancun, Mexico, and cruises in the Caribbean have become more
popular. A hospitality manager can also influence consumer behavior through the use of opinion
leaders. Opinion leaders include formal and/or informal leaders of reference groups, and their
opinions normally influence opinion formation in others. Common opinion leaders are leaders
within the community, such as doctors, lawyers, and politicians, and those who are viewed as
subject matter experts. For example, a travel agent is clearly an opinion leader for travel-related
products. Potential travelers often seek advice from a travel agent because they believe that the
agent has knowledge far superior to their own. Another example is the food critic who writes for a
local newspaper. The opinions that the critic expresses in a newspaper column have direct and
immediate influence on readers.
Internal Influences on Consumer Behavior
In addition to external influences, internal influences affect consumers’ choices as well—personal
needs and motives, experience, personality and self-image, and perceptions and attitudes. The
exact influence of internal factors is less well known than the external factors, as internal factors
are not as observable and therefore are not as well documented and understood.
Personal Needs and Motives: A need is defined as a lack of something or the difference between
someone’s desired and actual states. Motive is defined as a person’s inner state that directs the
individual toward satisfying a felt need. For example, consumers may be hungry and tired (their
actual state), yet they desire to be well fed and rested (desired state). This felt need would,
therefore, cause them to have the motivation to seek out a restaurant where this need could be
Need related to consumer Behaviour
Simply stated, needs lead to motivation, which leads to behavioral intentions, which ultimately
lead to observable behavior.
Consumer Decision Making Process
An individual who purchases products and services from the market for his/her own personal
consumption is called as consumer.
To understand the complete process of consumer decision making, let us understand it with the
help of the given diagram.
A consumer goes through several stages before purchasing a product or service.
Step 1: Need is the most important factor which leads to buying of products and services. Need
infact is the catalyst which triggers the buying decision of individuals.
An individual who buys cold drink or a bottle of mineral water identifies his/her need as thirst.
However in such cases steps such as information search and evaluation of alternatives are generally
missing. These two steps are important when an individual purchases expensive products/services
such as laptop, cars, mobile phones and so on.
Step 2: When an individual recognizes his need for a particular product/service he tries to gather
as much information as he can.
An individual can acquire information through any of the following sources:
? Personal Sources - He might discuss his need with his friends, family members, co workers and
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? Commercial sources -Advertisements, sales people, Packaging of a particular product in many
cases prompt individuals to buy the same, Displays (Props, Mannequins etc)
? Public sources - Newspaper, Radio, Magazine
? Experiential sources - Individual’s own experience, prior handling of a particular product
Step 3: The next step is to evaluate the various alternatives available in the market. An individual
after gathering relevant information tries to choose the best option available as per his need, taste
Step 4: After going through all the above stages, customer finally purchases the product.
Step 5: The purchase of the product is followed by post purchase evaluation. Post purchase
evaluation refers to a customer’s analysis whether the product was useful to him or not, whether
the product fulfilled his need or not?
Key Psychological Processes
Marketing and environmental stimuli enter the consumer’s consciousness and a set of psychological
processes combine with certain consumer characteristics to result in decision processes and
purchase decisions. Four key psychological processes are:
? Motivation ? Perception
? Learning ? Memory
Motivation is a psychological feature that arouses an organism to act towards a desired goal and
elicits, controls, and sustains certain goal-directed behaviors. It can be considered a driving force;
a psychological one that compels or reinforces an action toward a desired goal. For example,
hunger is a motivation that elicits a desire to eat. Motivation is the purpose or psychological cause
of an action. Motivation has been shown to have roots in physiological, behavioral, cognitive, and
social areas. Motivation may be rooted in a basic impulse to optimize well-being, minimize physical
pain and maximize pleasure. It can also originate from specific physical needs such as eating,
sleeping or resting. Motivation is an inner drive to behave or act in a certain manner. “It’s the
difference between waking up before dawn to pound the pavement and lazing around the house all
day.” These inner conditions such as wishes, desires, goals, activate to move in a particular
direction in behavior. Let us discuss some of the basic theories of Motivation.
Maslow’s Hierarchy of Needs
Content theory of human motivation includes both Abraham Maslow’s hierarchy of needs and
Herzberg’s two-factor theory. Maslow’s theory is one of the most widely discussed theories of
The American motivation psychologist Abraham H. Maslow developed the hierarchy of needs
consisting of five hierarchic classes. According to Maslow, people are motivated by unsatisfied
needs. The needs, listed from basic (lowest-earliest) to most complex (highest-latest) are as
? Physiology (hunger, thirst, sleep, etc.) ? Safety/Security/Shelter/Health
? Belongingness/Love/Friendship ? Self-esteem/Recognition/Achievement
? Self actualization
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Physiological Needs: Physiological needs are the physical requirements for human survival. If
these requirements are not met, the human body cannot function properly, and will ultimately fail.
Physiological needs are thought to be the most important; they should be met first. Air, water, and
food are metabolic requirements for survival in all animals, including humans. Clothing and shelter
provide necessary protection from the elements. While maintaining an adequate birth rate shapes
the intensity of the human sexual instinct, sexual competition may also shape said instinct
Safety Needs: With their physical needs relatively satisfied, the individual’s safety needs take
precedence and dominate behavior. In the absence of physical safety – due to war, natural disaster,
family violence, childhood abuse, etc. – people may (re-)experience post-traumatic stress disorder
or transgenerational trauma.
Safety and Security needs include:
? Personal security
? Financial security
? Health and well-being
? Safety net against accidents/illness and their adverse impacts
Love and belonging: After physiological and safety needs are fulfilled, the third level of human
needs is interpersonal and involves feelings of belongingness. This need is especially strong in
childhood and can override the need for safety as witnessed in children who cling to abusive
parents. According to Maslow, humans need to feel a sense of belonging and acceptance among
their social groups, regardless if these groups are large or small.
Esteem Needs: All humans have a need to feel respected; this includes the need to have self-
esteem and self-respect. Esteem presents the typical human desire to be accepted and valued by
others. People often engage in a profession or hobby to gain recognition. These activities give the
person a sense of contribution or value. Low self-esteem or an inferiority complex may result from
imbalances during this level in the hierarchy. People with low self-esteem often need respect from
others; they may feel the need to seek fame or glory. However, fame or glory will not help the
person to build their self-esteem until they accept who they are internally. Psychological imbalances
such as depression can hinder the person from obtaining a higher level of self-esteem or self-
Self Actualization Needs: “What a man can be, he must be.” This quotation forms the basis of
the perceived need for self-actualization. This level of need refers to what a person’s full potential is
and the realization of that potential. Maslow describes this level as the desire to accomplish
everything that one can, to become the most that one can be. Individuals may perceive or focus on
this need very specifically. For example, one individual may have the strong desire to become an
ideal parent. In another, the desire may be expressed athletically. For others, it may be expressed
in paintings, pictures, or inventions. As previously mentioned, Maslow believed that to understand
this level of need, the person must not only achieve the previous needs, but master them.
Herzberg’s two-factor theory
Frederick Herzberg’s two-factor theory, a.k.a. intrinsic/extrinsic motivation, concludes that certain
factors in the workplace result in job satisfaction, but if absent, they don’t lead to dissatisfaction
but no satisfaction. The factors that motivate people can change over their lifetime, but “respect for
me as a person” is one of the top motivating factors at any stage of life.
He distinguished between:
? Motivators; (e.g. challenging work, recognition, responsibility) which give positive satisfaction, and
? Hygiene factors; (e.g. status, job security, salary and fringe benefits) that do not motivate if present,
but, if absent, result in demotivation.
The name hygiene factors is used because, like hygiene, the presence will not improve health, but
absence can cause health deterioration. Herzberg’s theory has found application in such
occupational fields as information systems and in studies of user satisfaction such as computer
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MARKET SEGMENTATION AND TARGETS
Levels of Market Segmentation
Level of Market segmentation can be anything in the below list based on the marketing plan of the
marketer and the product attributes. For some products, it can be marketed to all the customers
and some products it can only be marketed to only high income group. Product attributes and
branding play an important role while finalizing the level of market segmentation.
Level of Market Segmentation can be
? Mass Marketing
? Segment Marketing
? Niche Marketing
? Local Marketing
Individual Direct Marketing
Mass Marketing: In mass marketing the seller or the marketer of the product targets the mass
market or the entire consumer base. Here the seller engages in mass production and uses the
mass distribution system to reach all the customers in the market. The promotional and
advertisements are very much generic in nature attract the entire consumer base. Mass market
can be profitable for the seller as it leads to lower cost of production and higher margin due to mass
production. For mass marketing, the price is kept low to attract customers from all income level.
At the same time, Mass marketing leads to high competition in the market and high advertising
and promotional cost to reach to all the potential customers. One best example of mass marketing
would be Mosquito coil, Toothpaste, Detergent etc.
Segment Marketing: In Segment marketing, the seller or marketer divides the market into different
segments depending on the consumers’ buying behavior, requirements, purchasing power, location
and age level. Segment marketing helps the marketer to connect to each type of customers in the
best possible way. Most company uses different market segments to market its entire list of
products which caters to different market levels. The promotional and advertising activities for a
particular focus only to the target market for that product only.
The best example is a passenger car marker which has different range of passenger cars catering
to different segment of markets. Its low cost cars cater to comparatively lower income level consumer
group, Mid range cars cater to mid range consumer base, luxury segment caters to high net worth
consumer base and SUV segment caters to mainly tourism segment.
Niche Marketing: In Niche marketing, the seller caters to a very specific market segment which
requires more attention and very high quality of services. Here the market segment size is very
small which enables the seller to provide the niche area of services. The main requirements or
characteristics of Niche marketing are
? Customers have distinct set of needs or requires distinct set of services
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? Seller or service provider needs more skill or niche skill to provide niche services
? Niches services come up with some more specialized services
? Comes up with premium prices for higher quality and niche services
Here in Niche marketing, the competition is usually lower which helps the service providers or
sellers to ask for higher prices. Here the customers are either high net worth individuals (for product)
or any organizations needs high end services to improve its competitiveness. Examples would be
Harley Davidson which manufacturers very high end Niche bikes, Mckinsey which provides
specialized consulting services. All these have a niche market for themselves.
Local Marketing: In Local marketing, the seller or the marketer only concentrates in the local
market. The products also have the local appeal or the local usage and the promotional activities
are planned based on the location only with local flavors. Here the cost remains high due to lower
production and competition is also less. Marketer can concentrate more in the local market to
reach to all the customers in the region. The best example would be marketing of regional TV
channels; regional chain of hotels or restaurants, Locally produced food products etc.
Individual Marketing: It is almost same as Direct Marketing where the marketers target the
individual customers separately either through direct communication channels or salesmen. This
is mostly used for Business-to-Business marketing where more attention is required to market a
product or services. Sales persons are used to meet each individual prospective customer and
provide demo of the product or services. Best example would be specialized IT services or Aquaguard
water purifier. Eureka Forbes uses direct salesmen to visit different houses and sell their famous
water purifier product Aquaguard after providing the proper demo and information about the product.
Bases for Segmenting Consumer Markets
Marketers may segment according to geographic criteria—nations, states, regions, countries,
cities, neighborhoods, or postal codes. The geo-cluster approach combines demographic data
with geographic data to create a more accurate or specific profile. With respect to region, in rainy
regions merchants can sell things like raincoats, umbrellas and gumboots. In hot regions, one can
sell summer wear. In cold regions, someone can sell warm clothes. A small business commodity
store may target only customers from the local neighborhood, while a larger department store can
target its marketing towards several neighborhoods in a larger city or area, while ignoring customers
in other continents.
Demographic segmentation consists of dividing the market into groups based on variables such as
age, gender family size, income, occupation, education, religion, race and nationality. As you
might expect, demographic segmentation variables are amongst the most popular bases for
segmenting customer groups. This is partly because customer wants are closely linked to variables
such as income and age. Also, for practical reasons, there is often much more data available to
help with the demographic segmentation process. The main demographic segmentation variables
are summarised below:
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Age: Consumer needs and wants change with age although they may still wish to consumer the
same types of product. So Marketers design, package and promote products differently to meet
the wants of different age groups. Good examples include the marketing of toothpaste (contrast
the branding of toothpaste for children and adults) and toys (with many age-based segments).
Life-cycle stage: A consumer stage in the life-cycle is an important variable - particularly in
markets such as leisure and tourism. For example, contrast the product and promotional approach
of Club 18-30 holidays with the slightly more refined and sedate approach adopted by Saga Holidays.
Gender: Gender segmentation is widely used in consumer marketing. The best examples include
clothing, hairdressing, magazines and toiletries and cosmetics.
Income: Another popular basis for segmentation. Many companies target affluent consumers with
luxury goods and convenience services. Good examples include Coutts bank; Moet & Chandon
champagne and Elegant Resorts - an up-market travel company. By contrast, many companies
focus on marketing products that appeal directly to consumers with relatively low incomes. Examples
include Aldi (a discount food retailer), Airtours holidays, and discount clothing retailers such as TK
Social class: Many Marketers believe that a consumers “perceived” social class influences their
preferences for cars, clothes, home furnishings, leisure activities and other products & services.
There is a clear link here with income-based segmentation.
Lifestyle: Marketers are increasingly interested in the effect of consumer “lifestyles” on demand.
Unfortunately, there are many different lifestyle categorisation systems, many of them designed
by advertising and marketing agencies as a way of winning new marketing clients and campaigns!
Psychographics involves using sciences like psychology and demographics to better understand
consumers. Psychographic segmentation divides consumers according to their lifestyles,
personality, values and social class. Consumers within the same demographic group can exhibit
very different psychographic profiles.
Behavioral segmentation divides consumers into groups according to their knowledge of, attitude
towards, use of or response to a product.
Segmentation by occasions
Segmentation according to occasions relies on the special needs and desires of consumers on
various occasions - for example, for products for use in relation with a certain holiday. Products
such as Christmas decorations or Diwali lamps are marketed almost exclusively in the time leading
up to the related event, and will not generally be available all year round. Another type of occasional
market segments are people preparing for a wedding or a funeral, occasions which only occur a
few times in a person’s lifetime, but which happen so often in a large population that ongoing
general demand makes for a worthwhile market segment.
Segmentation by benefits
Segmentation can take place according to benefits sought by the consumer or according to
perceived benefits which a product/service may provide.
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BRANDS AND BRAND EQUITY
Brand is the “name, term, design, symbol, or any other feature that identifies one seller’s product
distinct from those of other sellers”. Initially, Branding was adopted to differentiate one person’s
cattle from another’s by means of a distinctive symbol burned into the animal’s skin with a hot iron
stamp, and was subsequently used in business, marketing and advertising. A modern example of
a brand is Coca Cola which belongs to the Coca-Cola Company. A brand is often the most valuable
asset of a corporation. Brand owners manage their brands carefully to create shareholder value,
and brand valuation is an important management technique that ascribes a money value to a
brand, and allows marketing investment to be managed (e.g.: prioritized across a portfolio of
brands) to maximize shareholder value. Although only acquired brands appear on a company’s
balance sheet, the notion of putting a value on a brand forces marketing leaders to be focused on
long term stewardship of the brand and managing for value.
Brand awareness refers to customers’ ability to recall and recognize the brand under different
conditions and link to the brand name, logo, jingles and so on to certain associations in memory.
It consists of both brand recognition and brand recall. It helps the customers to understand to
which product or service category the particular brand belongs and what products and services are
sold under the brand name. It also ensures that customers know which of their needs are satisfied
by the brand through its products. Brand awareness is of critical importance since customers will
not consider your brand if they are not aware of it.
Brands typically are made up of various elements, such as:
? Name: The word or words used to identify a company, product, service, or concept.
? Logo: The visual trademark that identifies the brand.
? Tagline or Catchphrase: “The Quicker Picker Upper” is associated with Bounty paper towels. “Can
you hear me now” is an important part of the Verizon brand.
? Graphics: The dynamic ribbon is a trademarked part of Coca-Cola’s brand.
? Shapes: The distinctive shapes of the Coca-Cola bottle and of the Volkswagen Beetle are
trademarked elements of those brands.
? Colors: Owens-Corning is the only brand of fiberglass insulation that can be pink.
? Sounds: A unique tune or set of notes can denote a brand. NBC’s chimes are a famous example.
? Scents: The rose-jasmine-musk scent of Chanel No. 5 is trademarked.
? Tastes: Kentucky Fried Chicken has trademarked its special recipe of eleven herbs and spices for
? Movements: Lamborghini has trademarked the upward motion of its car doors.
? Customer relationship management
The brand name is quite often used interchangeably with “brand”, although it is more correctly
used to specifically denote written or spoken linguistic elements of any product. In this context a
“brand name” constitutes a type of trademark, if the brand name exclusively identifies the brand
owner as the commercial source of products or services. A brand owner may seek to protect
proprietary rights in relation to a brand name through trademark registration and such trademarks
are called “Registered Trademarks”.
Types of brand names
Brand names come in many styles. A few include:
? Initialism: A name made of initials such, as UPS or IBM
? Descriptive: Names that describe a product benefit or function, such as Whole Foods or Airbus
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? Alliteration and rhyme: Names that are fun to say and stick in the mind, such as Tip n Top.
? Evocative: Names that evoke a relevant vivid image, such as Amazon or Crest
? Neologisms: Completely made-up words, such as Wii or Kodak
? Foreign word: Adoption of a word from another language, such as Volvo or Samsung
? Founders’ names:Using the names of real people, (especially a founder’s name), such as
Hewlett-Packard, Dell or Disney
? Geography: Many brands are named for regions and landmarks, such as Cisco and Fuji Film
? Personification: Many brands take their names from myths, such as Nike; or from the minds of
ad execs, such as Betty Crocker
The outward expression of a brand – including its name, trademark, communications, and visual
appearance – is brand identity. Because the identity is assembled by the brand owner, it reflects
how the owner wants the consumer to perceive the brand – and by extension the branded company,
organization, product or service. This is in contrast to the brand image, which is a customer’s
mental picture of a brand. The brand owner will seek to bridge the gap between the brand image
and the brand identity. Effective brand names build a connection between the brand personality as
it is perceived by the target audience and the actual product/service. The brand name should be
conceptually on target with the product/service (what the company stands for). Furthermore, the
brand name should be on target with the brand demographic. Typically, sustainable brand names
are easy to remember, transcend trends and have positive connotations. Brand identity is fundamental
to consumer recognition and symbolizes the brand’s differentiation from competitors.
Brand identity is what the owner wants to communicate to its potential consumers. However, over
time, a product’s brand identity may acquire (evolve), gaining new attributes from consumer
perspective but not necessarily from the marketing communications an owner percolates to targeted
consumers. Therefore, brand associations become handy to check the consumer’s perception of
the brand. Brand identity needs to focus on authentic qualities – real characteristics of the value
and brand promise being provided and sustained by organizational and/or production characteristics.
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Brand equity is a phrase used in the marketing industry which describes the value of having a well-
known brand name, based on the idea that the owner of a well-known brand name can generate
more money from products with that brand name than from products with a less well known name,
as consumers believe that a product with a well-known name is better than products with less well
known names. Some marketing researchers have concluded that brands are one of the most
valuable assets a company has, as brand equity is one of the factors which can increase the
financial value of a brand to the brand owner, although not the only one. Elements that can be
included in the valuation of brand equity include (but not limited to): changing market share, profit
margins, consumer recognition of logos and other visual elements, brand language associations
made by consumers, consumers’ perceptions of quality and other relevant brand values.
Consumers’ knowledge about a brand also governs how manufacturers and advertisers market the
brand. Brand equity is created through strategic investments in communication channels and
market education and appreciates through economic growth in profit margins, market share, prestige
value, and critical associations.
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CRAFTING THE BRAND POSITIONING
In marketing, positioning is the process by which marketers try to create an image or identity in
the minds of their target market for its product, brand, or organization.
Re-positioning involves changing the identity of a product, relative to the identity of competing
De-positioning involves attempting to change the identity of competing products, relative to the
identity of your own product.
Although there are different definitions of brand positioning, probably the most common is: identifying
and attempting to occupy a market niche for a brand, product or service utilizing traditional marketing
placement strategies (i.e. price, promotion, distribution, packaging, and competition).
Positioning is also defined as the way by which the marketers create an impression in the customers
Product Life Cycle (PLC)
A new product progresses through a sequence of stages from introduction to growth, maturity, and
decline. This sequence is known as the product life cycle and is associated with changes in the
marketing situation, thus impacting the marketing strategy and the marketing mix.
Introduction Stage: In the introduction stage, the firm seeks to build product awareness and
develop a market for the product. The impact on the marketing mix is as follows:
? Product branding and quality level is established, and intellectual property protection such as
patents and trademarks are obtained.
? Pricing may be low penetration pricing to build market share rapidly, or high skim pricing to
recover development costs.
? Distribution is selective until consumers show acceptance of the product.
? Promotion is aimed at innovators and early adopters. Marketing communications seeks to build
product awareness and to educate potential consumers about the product.
Growth Stage: In the growth stage, the firm seeks to build brand preference and increase market
? Product quality is maintained and additional features and support services may be added.
? Pricing is maintained as the firm enjoys increasing demand with little competition.
? Distribution channels are added as demand increases and customers accept the product.
? Promotion is aimed at a broader audience.
Maturity Stage: At maturity, the strong growth in sales diminishes. Competition may appear with
similar products. The primary objective at this point is to defend market share while maximizing
? Product features may be enhanced to differentiate the product from that of competitors.
? Pricing may be lower because of the new competition.
? Distribution becomes more intensive and incentives may be offered to encourage preference over
? Promotion emphasizes product differentiation.
Decline Stage: As sales decline, the firm has several options:
? Maintain the product, possibly rejuvenating it by adding new features and finding new uses.
? Harvest the product - reduce costs and continue to offer it, possibly to a loyal niche segment.
? Discontinue the product, liquidating remaining inventory or selling it to another firm that is willing
to continue the product.
The marketing mix decisions in the decline phase will depend on the selected strategy. For
example, the product may be changed if it is being rejuvenated, or left unchanged if it is being
harvested or liquidated. The price may be maintained if the product is harvested, or reduced
drastically if liquidated.
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The Consumer Value Hierarchy
? Core benefit: The customer in search of a hotel room demand only rest and sleep from a marketer.
? Now the marketer must turn the core benefit into Basic product. For example customer need
basic things like bed, bathroom, chair, fan etc.
? At the third level marketer must prepare for the expected product of the clients. For example if
bed, bathroom, fan are the basic product, then clean bed sheet, neat and clean bathroom are the
? At the fourth level, the marketers prepare an augmented product that exceeds customers
expectations. For example, beautiful wall hanging, lovely balcony, Television set etc. In western
countries particularly in USA and UK, marketers focused more on augmented product relatively
different to the Brazil and Indian counterpart.
? At the fifth level stands the potential product that the marketer needs to search for the future
operation. For example high speed internet, telephone line etc.
Durability and Tangibility: Themarketers classify products into three groupsaccording to durability
? Durable Goods: A durable good or a hard good is a good that does not quickly wear out, or more
specifically, one that yields utility over time rather than being completely consumed in one use.
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Items like bricks could be considered perfectly durable goods, because they should theoretically
never wear out. Highly durable goods such as refrigerators, cars, or mobile phones usually continue
to be useful for three or more years of use.
? Non-Durable Goods: Nondurable goods or soft goods (consumables) are the opposite of durable
goods. They may be defined either as goods that are immediately consumed in one use or ones
that have a lifespan of less than 3 years.
? Services: Services are intangible, inseparable, variable and perishable products. Examples: Haircut,
legal advice and appliance repairs.
Consumer Goods Classification: The vast of goods consumers buy can be classified on the
basis of shopping habits. We can distinguish among convenience, shopping, specialty and unsought
? Convenience Goods: A category of consumer goods which are bought frequently, quickly and
with a minimum of emotional involvement. Most are nondurable goods of low value that are frequently
purchased in small quantities.
Examples: include tobacco products, soaps and newspaper.
Further, convenience goods can be sub-categorized into:
o Staple Convenience Consumer Goods: Goods which come under the basic demands of human
beings are called staple convenience goods. For ex: milk, bread, sugar, toilet paper etc.
o Impulse Convenience Consumer Goods: Goods which are brought without any prior planning
or which are brought impulsively are called impulse convenience goods. For ex: potato wafers,
candies, ice creams, cold drinks, magazines etc.
o Emergency Convenience Consumer Goods: A category of consumer goods consisting of items
purchased quickly in necessity. Ex: Umbrellas during rainy season, sweaters during winter season.
o Shopping Goods: In shopping consumer goods, consumer do lot of selection and comparison
based on various parameters such as cost, brand, style, comfort etc, before buying an item.
Shopping goods are purchased only after the buyer compares the products of more than one store
or looks at more than one assortment of goods before making a deliberate buying decision. These
goods are usually of higher value than convenience goods, bought infrequently, and are durable.
Price, quality, style, and color are typically factors in the buying decision. Consumer goods
companies usually try to set up their shops and show rooms in active shopping area to attract
customer attention and their main focus is to do lots of advertising and marketing to become
Examples: Goods like clothing items, Televisions, computers, lawnmowers, bedding, camping
equipment, home furnishing, jewelleries etc.
Shopping goods can be further divided:
-> Homogeneous Shopping Goods: Homogeneous shopping goods are those that are similar in
quality but different enough in other attributes (such as price, brand image, or style) to justify a
search process. This difference in characteristics is sufficient for the customer to justify a search
for the item. After the consumer has decided on desired characteristics, he or she then looks for
the most favorable price.
Examples: Televisions of Sony and Konka brands, their quality is same, both are delivering well
picture but their price, brand image and style are different.
->Heterogeneous Goods: Heterogeneous shopping goods have product features that are often
more important to consumers than price; examples include clothing, high-tech equipment, and
The item purchased must meet certain consumer-set criteria, such as size, color, or specific
functions performed. When buying heterogeneous shopping goods, consumers often seek out
information and advice from salespeople and other experts before purchasing the item. Examples:
computer hardware for computer engineers.
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? Specialty Goods: Goods which are very unique, unusual, and luxurious in nature are called
specialty goods. Specialty items have characteristics that impel consumers to make special efforts
to find them. Consumers often do not consider price at all when shopping for specialty products,
which can include almost any kind of shopping product: Particular types of food, expensive imported
cars, or items from a well-known fashion designer or manufacturer can all be considered specialty
goods. Usually, specialty goods have a brand name or other type of distinguishing characteristic.
1. Specialty goods do not involve making comparisons.
2. Buyers invest time only to reach dealers carrying the wanted products.
3. Dealers do not need convenient locations; however they must let prospective buyers know
Examples: antiques, jewelry, wedding dresses, cars, stereo components, mens suit etc
? Unsought Goods: Unsought goods are products that consumers do not want, use, or even think
about purchasing. An unsought shopping good could be a product that a consumer may not even
know about—or knows about but has never considered purchasing. Unsought goods are requiring
advertising and personnel-selling support. Unsought shopping goods are frequently brought to
customers’ attention through advertising, promotions, or chance. Sometimes they are something
new on the market, such as digital telephones.
The classic examples of known but unsought goods are life insurance, plots, gravestones,
Packaging, Labeling, Warranties, and Guarantee
Packaging: Packaging is the science, art, and technology of enclosing or protecting products for
distribution, storage, sale, and use. Packaging also refers to the process of design, evaluation,
and production of packages. Packaging can be described as a coordinated system of preparing
goods for transport, warehousing, logistics, sale, and end use. Packaging contains, protects,
preserves, transports, informs, and sells. In many countries it is fully integrated into government,
business, institutional, industrial, and personal use.
Labeling: It is Display of information about a product on its container, packaging, or the product
itself. For several types of consumer and industrial products, the type and extent of information
that must be imparted by a label is governed by the relevant safety and shipping laws.
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The purposes of packaging and package labels
Packaging and package labeling have several objectives:
? Physical protection – The objects enclosed in the package may require protection from, among
other things, mechanical shock, vibration, electrostatic discharge, compression, temperature,
? Barrier protection – A barrier from oxygen, water vapor, dust, etc., is often required. Permeation
is a critical factor in design. Some packages contain desiccants or Oxygen absorbers to help
extend shelf life. Modified atmospheres  or controlled atmospheres are also maintained in some
food packages. Keeping the contents clean, fresh, sterile and safe for the intended shelf life is
a primary function.
? Containment or agglomeration – Small objects are typically grouped together in one package
for reasons of efficiency. For example, a single box of 1000 pencils requires less physical handling
than 1000 single pencils. Liquids, powders, and granular materials need containment.
? Information transmission – Packages and labels communicate how to use, transport, recycle,
or dispose of the package or product. With pharmaceuticals, food, medical, and chemical products,
some types of information are required by governments. Some packages and labels also are used
for track and trace purposes.
? Marketing – The packaging and labels can be used by marketers to encourage potential buyers
to purchase the product. Package graphic design and physical design have been important and
constantly evolving phenomenon for several decades. Marketing communications and graphic design
are applied to the surface of the package and (in many cases) the point of sale display.
? Security – Packaging can play an important role in reducing the security risks of shipment.
Packages can be made with improved tamper resistance to deter tampering and also can have
tamper-evident features to help indicate tampering.
? Anti-counterfeiting Packaging - Packages can be engineered to help reduce the risks of package
pilferage or the theft and resale of products: Some package constructions are more resistant to
pilferage and some have pilfer indicating seals. Counterfeit consumer goods, unauthorized sales
(diversion), material substitution and tampering can all be prevented with these anti-counterfeiting
technologies. Packages may include authentication seals and use security printing to help indicate
that the package and contents are not counterfeit. Packages also can include anti-theft devices,
such as dye-packs, RFID tags, or electronic article surveillance tags that can be activated or
detected by devices at exit points and require specialized tools to deactivate. Using packaging in
this way is a means of loss prevention.
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? Convenience – Packages can have features that add convenience in distribution, handling, stacking,
display, sale, opening, reclosing, use, dispensing, reuse, recycling, and ease of disposal
? Portion control – Single serving or single dosage packaging has a precise amount of contents to
control usage. Bulk commodities (such as salt) can be divided into packages that are a more
suitable size for individual households. It is also aids the control of inventory: selling sealed one-
liter-bottles of milk, rather than having people bring their own bottles to fill themselves.
Types of Packaging
Packaging may be looked at as being of several different types. For example a transport package
or distribution package can be the shipping container used to ship, store, and handle the product
or inner packages. Some identify a consumer package as one which is directed toward a consumer
Packaging may be described in relation to the type of product being packaged: medical device
packaging, bulk chemical packaging, over-the-counter drug packaging, retail food packaging, military
materiel packaging, pharmaceutical packaging, etc.
It is sometimes convenient to categorize packages by layer or function: “primary”, “secondary”,
? Primary packaging is the material that first envelops the product and holds it. This usually is the
smallest unit of distribution or use and is the package which is in direct contact with the contents.
? Secondary packaging is outside the primary packaging, perhaps used to group primary packages
? Tertiary packaging is used for bulk handling, warehouse storage and transport shipping.
most common form is a palletized unit load that packs tightly into containers.
These broad categories can be somewhat arbitrary. For example, depending on the use, a shrink
wrap can be primary packaging when applied directly to the product, secondary packaging
combining smaller packages, and tertiary packaging on some distribution packs.
Warranties and Guarantees
All sellers are legally responsible for fulfilling a buyer’s normal or reasonable expectations. Warranties
are formal statements of expected product performance by the manufacturer. Products under
warranty can be returned to the manufacturer or designated repair center for repair, replacement or
refund. Extended warranties can be sold by the retailer or manufacturer to customers and can be
extremely lucrative for them. It represented 30% of Best Buy‘s operating profits in 2005.
Guarantees reduce the buyer’s perceived risk. They suggest that the product is of high quality and
that the company and its service performance are dependable. They can be especially helpful
when the company or product is not that well known or when the product’s quality is superior to
Guarantees is more than legal statements that guides the warranties, they can be seen as extra
benefits to induce consumer to buy the product. For instance, Procter & Gamble promises complete
satisfaction without being more specific (General Guarantee) and A. T. Cross guarantees its Cross
pens and pencils for life, repairing and replacing at no charges (Specific Guarantee).
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DESIGNING AND MANAGING SERVICES
A service is an intangible commodity. That is, services are an example of intangible economic
goods. A service is a set of one time consumable and perishable benefits
? delivered from the accountable service provider, mostly in close coaction with his internal and
external service suppliers,
? effectuated by distinct functions of technical systems and by distinct activities of individuals,
? commissioned according to the needs of his service consumers by the service customer from the
accountable service provider,
? rendered individually to an authorized service consumer at his/her dedicated trigger,
? and, finally, consumed and utilized by the triggering service consumer for executing his/her upcoming
business activity or private activity.
Characteristics of Services
Services can be paraphrased in terms of their key characteristics, sometimes called the “Five I’s
? Intangibility: Services are intangible and insubstantial: they cannot be touched, gripped, handled,
looked at, smelled, tasted. Thus, there is neither potential nor need for transport, storage or stocking
of services. Furthermore, a service can be (re)sold or owned by somebody, but it cannot be turned
over from the service provider to the service consumer. Solely, the service delivery can be
commissioned to a service provider who must generate and render the service at the distinct
request of an authorized service consumer.
? Inventory (Perishability): Services have little or no tangible components and therefore cannot be
stored for a future use. Services are produced and consumed during the same period of time.
? Inseparability: The service provider is indispensable for service delivery as he must promptly
generate and render the service to the requesting service consumer. In many cases the service
delivery is executed automatically but the service provider must preparatorily assign resources
and systems and actively keep up appropriate service delivery readiness and capabilities.
Additionally, the service consumer is inseparable from service delivery because he is involved in it
from requesting it up to consuming the rendered benefits. Examples: The service consumer must
sit in the hair dresser’s shop & chair or in the plane & seat; correspondingly, the hair dresser or the
pilot must be in the same shop or plane, respectively, for delivering the service.
? Inconsistency (Variability): Each service is unique. It is one-time generated, rendered and
consumed and can never be exactly repeated as the point in time, location, circumstances,
conditions, current configurations and/or assigned resources are different for the next delivery,
even if the same service consumer requests the same service. Many services are regarded as
heterogeneous or lacking homogeneity and are typically modified for each service consumer or
each new situation (consumerised). Example: The taxi service which transports the service consumer
from his home to the opera is different from the taxi service which transports the same service
consumer from the opera to his home – another point in time, the other direction, maybe another
route, probably another taxi driver and cab.
? Involvement: One of the most important Characteristic of services is the participation of the
customer in the service delivery process. A customer has the opportunity to get the services
modified according to specific requirement.
Each of these characteristics is retractable per se and their inevitable coincidence complicates
the consistent service conception and make service delivery a challenge in each and every case.
Proper service marketing requires creative visualization to effectively evoke a concrete image in the
service consumer’s mind. From the service consumer’s pointof view, these characteristics make
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it difficult, or even impossible, to evaluate or compare services prior to experiencing the service
Mass generation and delivery of services is very difficult. This can be seen as a problem of inconsistent
service quality. Both inputs and outputs to the processes involved providing services are highly
variable, as are the relationships between these processes, making it difficult to maintain consistent
service quality. For many services there is labor intensity as services usually involve considerable
human activity, rather than a precisely determined process; exceptions include utilities. Human
resource management is important. The human factor is often the key success factor in service
economies. It is difficult to achieve economies of scale or gain dominant market share. There are
demand fluctuations and it can be difficult to forecast demand. Demand can vary by season, time
of day, business cycle, etc. There is consumer involvement as most service provision requires a
high degree of interaction between service consumer and service provider. There is a customer-
based relationship based on creating long-term business relationships. Accountants, attorneys,
and financial advisers maintain long-term relationships with their clientes for decades. These repeat
consumers refer friends and family, helping to create a client-based relationship.
The range of services offered by a services marketing company is called service mix.
Category of Service Mix
As we all know, service is any act or performance that one party can offer to another that is
essentially intangible and does not result in the ownership of anything. Its production may or may
not be tied to a physical product. It is like having a massage on your body or manicure your hands.
Service is kind of product wherein we used it to fulfill one’s needs and wants without having them
a physical evidences. And as we go along, we will know the categories of offerings that I could say,
as a marketing, we should know. These are the five categories of offerings that features the service.
The component can be minor or a part of the total offering.
1. Pure tangible good - this are offering that consist tangible goods primarily. There will be no
services accompany by the product. (such as soap, toothpaste, or salt.)
2. Tangible good with accompanying services - this offering consist one tangible good accompanied
by one or two services.
3. Hybrid - the offering consist of equal parts of goods and services.
4. Major Service with accompanying minor goods and services – the offering consist of a major
service along with additional services or supporting goods.
5. Pure service – the offering consist primarily of a service.
Services marketing is a sub field of marketing, which can be split into the two main areas of goods
marketing (which includes the marketing of fast moving consumer goods (FMCG) and durables)
and the marketing of services. Services marketing typically refers to both business to consumer
(B2C) and business to business (B2B) services, and includes marketing of services like
telecommunications services, financial services, all types of hospitality services, car rental services,
air travel, health care services and professional services.
7P’s of Service Marketing
The first four elements in the services marketing mix are the same as those in the traditional
marketing mix. However, given the unique nature of services, the implications of these are slightly
different in case of services.
? Product: In case of services, the ‘product’ is intangible, heterogeneous and perishable. Moreover,
its production and consumption are inseparable. Hence, there is scope for customizing the offering
as per customer requirements and the actual customer encounter therefore assumes particular
significance. However, too much customization would compromise the standard delivery of the
service and adversely affect its quality. Hence particular care has to be taken in designing the
? Pricing: Pricing of services is tougher than pricing of goods. While the latter can be priced easily
by taking into account the raw material costs, in case of services attendant costs - such as labor
and overhead costs - also need to be factored in. Thus a restaurant not only has to charge for the
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cost of the food served but also has to calculate a price for the ambience provided. The final price
for the service is then arrived at by including a mark up for an adequate profit margin.
? Place: Since service delivery is concurrent with its production and cannot be stored or transported,
the location of the service product assumes importance. Service providers have to give special
thought to where the service would be provided. Thus, a fine dine restaurant is better located in a
busy, upscale market as against on the outskirts of a city. Similarly, a holiday resort is better
situated in the countryside away from the rush and noise of a city.
? Promotion: Since a service offering can be easily replicated promotion becomes crucial in
differentiating a service offering in the mind of the consumer. Thus, service providers offering identical
services such as airlines or banks and insurance companies invest heavily in advertising their
services. This is crucial in attracting customers in a segment where the services providers have
nearly identical offerings.
The final three elements of the services marketing mix - people, process and physical evidence -
are unique to the marketing of services.
? People: People are a defining factor in a service delivery process, since a service is inseparable
from the person providing it. Thus, a restaurant is known as much for its food as for the service
provided by its staff. The same is true of banks and department stores. Consequently, customer
service training for staff has become a top priority for many organizations today.
? Process: The process of service delivery is crucial since it ensures that the same standard of
service is repeatedly delivered to the customers. Therefore, most companies have a service blueprint
which provides the details of the service delivery process, often going down to even defining the
service script and the greeting phrases to be used by the service staff.
Physical Evidence: Since services are intangible in nature most service providers strive to incorporate
certain tangible elements into their offering to enhance customer experience. Thus, there are hair
salons that have well designed waiting areas often with magazines and plush sofas for patrons to
read and relax while they await their turn. Similarly, restaurants invest heavily in their interior
design and decorations to offer a tangible and unique experience to their guests.
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MANAGING RETAILING, WHOLESALES AND LOGISTICS
Retail is the sale of goods and services from individuals or businesses to the end-user. Retailers
are part of an integrated system called the supply chain. A retailer purchases goods or products in
large quantities from manufacturers directly or through a wholesale, and then sells smaller quantities
to the consumer for a profit. Retailing can be done in either fixed locations like stores or markets,
door-to-door or by delivery. Retailing includes subordinated services, such as delivery. The term
“retailer” is also applied where a service provider services the needs of a large number of individuals,
such as for the public. Shops may be on residential streets, streets with few or no houses or in a
shopping mall. Shopping streets may be for pedestrians only. Sometimes a shopping street has a
partial or full roof to protect customers from precipitation. Online retailing, a type of electronic
commerce used for business-to-consumer (B2C) transactions and mail order, are forms of non-