2Marketing Basics

PRINCIPLES OF MARKETING
Unit - II
Recommended Text Book: Philip Kotler, Gary Armstrong, Ahmed Tolba, &
Anwar Habib “Principles of Marketing” (2011), Arab World Edition, Pearson
Prentice Hall, 8e ISBN 978-1-4082-5568-1 and E-TEXT BOOK (Kotler &
Armstrong)
For BSBA/BBA/MBA Students; Notes prepared
only for general studies purpose & reference
By Dr. Sandeep S. Solanki
(Ph.D., MBA, M.Com)
Jodhpur, Rajasthan, India
1
All notes from recommended Arab World Edition book of Philip Kotler

UNIT – II
(CB Factors and Buying Decision Process)
TOPICs:
1. Defining Consumer Behavior
2. Factors Influencing Consumer Behavior – Cultural – Social - Personal –
Psychological
3. Buying Decision Process - Problem Recognition - Information Search - Evaluation
Of Alternatives - Purchase Decision - Post Purchase Behavior
4. Business Buyer Behavior
5. Steps in Business Buying Decision Process
6. Differences between Consumer Market and Business Market
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UNIT – II
DEFINITION OF CONSUMER BEHAVIOR (CB):
1. CB refers to the buying behavior of final consumers (or end user) – individuals and households that buy goods
and services for personal consumption. All these final consumers combine to make up the consumer market –
Philip Kotler
2. Definition of Consumer Behaviour According to American Marketing Association , consumer behaviour can
be defined as "the dynamic interaction of affect and cognition, behaviour, and environmental events by which
human beings conduct the exchange aspects of their lives.“ – American Marketing Association
3. Consumer behaviour entails "all activities associated with the purchase, use and disposal of goods and
services, including the consumer's emotional, mental and behavioral responses that precede or follow these
activities. – Kardes, F., Cronley, M. and Cline, T.
FACTORS INFLUENCING CONSUMER BEHAVIOR (CB):
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UNIT – II
FACTORS INFLUENCING CONSUMER BEHAVIOR (CB):
A. CULTURAL FACTORS:
1) Culture 2) Sub-Culture 3) Social Class
B. SOCIAL FACTORS:
1) Small Groups 2) Family 3) Roles and Status
C. PERSONAL FACTORS:
1) Age & Life-cycle Stage 2) Occupation 3) Economic Situation
4) Lifestyle 5) Personality and Self-Concept
D. PSYCHOLOGICAL FACTORS:
1) Motivation 2) Perception 3) Learning 4) Beliefs & Attitudes
A. CULTURAL FACTORS:
1) Culture: Culture is the scientific study of humanity concerned with human behavior and the
society, encompassing the range of phenomena transmitting through social learning. Culture is the
most basic cause of a person’s wants, values, and behavior, a child learns it from family and other
important institutions like school, teachers etc. Every group or society has a culture and vary greatly
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UNIT – II
from country to country. Buyers in different countries vary in their buying behavior and failure to
adjusting these differences can result in ineffective marketing efforts. Marketers are always trying to
spot cultural shifts in order to discover new products that might be wanted. For example, the
increasing number of fast-food chains, multinational corporations, shopping malls and hypermarkets
in the Arab world have created a significant cultural shift towards ‘Western’ behaviors. Such as
McDonalds is operating in 14 Arab countries. The Emke group, an Abu-Dhabi based retail giant (an
Inidan-owned conglomerates in Gulf), has supermarkets, hypermarkets and shopping malls including
that of LULU brand of retail stores. According to a study conducted by AC Nielsen study in 2006,
30% of UAE consumers shop at least once in a week. This gives an excellent opportunity for
retailers operating in the Arab countries.
2) Sub-Culture: Each culture contains smaller sub-cultures, or groups of people with shared value
systems based on common life experiences and situations. Subcultures include nationalities,
religions, racial groups, and geographic regions. Many subcultures make up important market
segments and marketers often design products and marketing programs tailored to their needs. For
example, based on language spoken, the Arabs speak ‘Arabic’ in Gulf countries, whereas many
Arabic people in North African countries widely speak French and Berber languages.
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UNIT – II
3) Social Class: Social classes are society’s relatively permanent and ordered divisions whose
members share similar values, interests, and behaviors. For example, the US society has been
broadly divided on the basis of income, occupation, education, and wealth. The Emirati society
(UAE) is divided into two social categories: nationals (Al-Muwateneen) and foreign immigrants or
‘incomers’ (Al-Wafedeen). Marketers tend to divide social classes, broadly based on income and
lifestyle. Because people within similar social class exhibit similar buying behavior.
B. SOCIAL FACTORS:
1) Small Groups: Many groups influence person’s buying behavior. Small groups can be divided
into five types: membership groups, reference groups, aspirational groups, opinion leaders and
online social networks. Groups that have a direct influence and to which a person belongs are called
membership groups, for example, being member of a business club. Reference group serve as face-
to-face and/or indirect points of comparison or reference in forming a person’s attitudes or behavior,
for example, a change in buyer’s preference towards any product, after talking with colleagues at
work. People often are influenced by reference groups to which they do not belong i.e., aspirational
group, for example, Egyptian football fans created a Facebook group called ‘Abo Treka Fans’ to
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UNIT – II
share their appreciation of the Egyptian football player Mohamed Abo Treka. Opinion leaders are
people within the reference groups who exert social influence on others because of their special
skills, knowledge, personality or other characteristics. These influencers are four times more likely to
be considered as experts. An average consumer listens when such influencers talk about any product
they like. Online social networks are online communities, where people socialize or exchange
information and opinions. Social networking media range from blogs to social networking websites
such as MySpace.com, YouTube and FB. Marketers make efforts to harness the power of these
online social networks to build closer relationships with potential customers. Companies often create
their own social networks such as P&G has set up Capessa (www.capessa.com).
2) Family: Marketers are interested in the roles and influence of the husband, wife, and children on
the purchase of different products and services. Husband-wife involvement varies widely by product
category and by stage in the buying process, and buying roles change with evolving consumer life-
styles. The nature of family life in Arab world brings children into a lot of the buying decisions,
especially at supermarkets, malls or restaurants. Some advertisers have positioned their common
household products, such as soap, as directly targeting children’s influence in the buying decision.
3) Roles and Status: A person belongs to many groups – family, clubs, organizations. The person’s
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UNIT – II
position in each group can be defined in terms of both role and status. A role consists of the activities
people are expected to perform according to the persons around them. Each role carries a status
reflecting the general esteem given to it by society. People usually choose products appropriate to
their roles and status. For example, a 30-year-old Arabic gentleman, requires different clothing styles
depending on his role as father at home, as brand manager at work, and as a football fan.
C. PERSONAL FACTORS:
1) Age & Life-cycle Stage: Tastes in food, clothes, furniture and recreation are often age related.
Buying is also shaped by the stages of family life-cycle, traditionally, young singles and married
couples with children. People change the goods and services they buy over their lifetimes. For
example, in a social service club the social activities for kindergarten babies below 4 years would be
different than for teenagers interested in sports, or for young adults or for aged parents. The club
would satisfy all segments in order to maximize their use of social services.
2) Occupation: A person’s occupation affects the goods and services bought. Workers tend to buy
more rugged work clothes, whereas executives buy more business suits. A company can even
specialize in making products needed by a given occupational groups.
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UNIT – II
3) Economic Situation: Marketers of income-sensitive goods watch trends in personal income,
savings and interest rates. If economic indicators point to a recession, marketers can take steps to
redesign, reposition, and reprice their products accordingly. For example, Orascom Hotels &
Development company built and sold luxurious properties to high-end owners in Egypt, but also
built low-income housing projects for price-sensitive owners.
4) Lifestyle: People from similar subculture or social class may have quite different lifestyles.
Lifestyle is a person’s pattern or living as expressed in his or her psychographics. It involves
measuring consumer’s major AIO dimensions – activities (work, hobbies, shopping, sports, social
events), interests (food, fashion, family, recreation), and opinions (about themselves, social issues,
business, products). Lifestyle is person’s profile of whole pattern of acting and interacting with the
world. Consumers don’t buy only products, but they buy the lifestyle that product represents.
5) Personality and Self-Concept: Personality refers to the unique psychological characteristics that
lead to relatively consistent and lasting responses to one’s own environment. Personality is usually
described in terms of traits such as self-confidence, sociability, autonomy, defensiveness,
adaptability, and aggressiveness. For example, Apple is associated with ‘excitement’, the BBC with
‘competence’, and Jeep with ‘ruggedness’. Self-Concept is also called person’s self-image. People’s
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UNIT – II
possessions contribute their identity i.e., we are what we have.
D. PSYCHOLOGICAL FACTORS:
1) Motivation: A person has many needs at any given time. Some are biological arising from states
of tension such as hunger, thirst, or discomfort. Others are psychological, arising from the need for
recognition, esteem or belonging. A need becomes motive when it is aroused to a sufficient intensity.
According to Abraham Maslow, human needs are arranged in hierarchy as shown in following
figure:
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UNIT – II
2) Perception: Perception is the process by which people select, organize, and interpret information
to form a meaningful picture of the world. Our perception can be affected and/or modified by the
flow of information through our five senses: sight, hearing, smell, touch and taste. People can form
different perceptions of the same stimulus or information. For example, attractive colorful packaging
and high price of chocolates displayed in a store may be perceived as high-quality brand in the mind
of the consumer. Or entering a garment’s retail showroom displaying neatly arranged clothes on
hangers, with a perfume around the space, may be perceived as a high-quality brand store by the
consumer.
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UNIT – II
3) Learning: Learning describes changes in an individual’s behavior arising from experience.
Learning occurs through the interplay of drives, stimuli, cues, responses and reinforcement. For
example, if your drive for photography motivates you to buy a camera (stimulus object) and you
happen to look an advertisement (cues) of Nikon brand or hear of special sale (cues), then you will
get influenced and would respond to buy it. Suppose you get a rewarding experience then your
interest to use it would be reinforced and you will use it more and more. Marketers of camera brands
can build up demand for the product by associating it with strong drives, use motivating cues and
provide positive reinforcement.
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UNIT – II
4) Beliefs and Attitudes: A belief is a descriptive thought that a person has about something. Beliefs
may be based on real knowledge, opinion or faith and may or may not carry emotional charge.
Marketers are interested in the beliefs that people formulate about specific products and services
such as Apple mobile instruments is one the highly trusted brand in Arab world. Attitude describes a
person’s relatively consistent evaluations, feelings and tendencies toward an object or idea. Attitude
put people into a frame of mind of liking or disliking things, of moving toward or away from them.
For example, a consumer may have positive attitude towards consuming fresh fruit juices rather than
canned juices.
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UNIT – II
BUYING DECISION PROCESS (how consumers make buying decisions):
Buyer decision process consists of five stages: need recognition, information search, evaluation of
alternatives, purchase decision and post-purchase behavior. Need recognition (first) can be realized
when some need or problem is triggered by internal stimuli, say biological needs – a craving to eat
chocolate or have a soft drink. Need can also be felt by external stimuli such as an advertisement or
discussion with a friend to possess a new car. Information search (second) is related to the intensity
of the need of the product or service felt. Consumers can obtain information from any of several
sources, such as personal sources (family, friends, neighbors, acquaintances), commercial sources
(advertising, sales-people, dealer websites, packaging, displays), public sources (mass media,
consumer rating agencies, internet searches), and experiential sources (handling, examining, using the
product). As more information is obtained, the consumer’s knowledge and awareness of the available
brands and features increase.
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UNIT – II
Evaluation of Alternatives (third) is how the consumer processes information to arrive at brand
choices. It depends on individual consumer and the specific buying situation. In some cases,
consumers use careful calculations and logical thinking, say to buy a laptop. At other times, the
same consumer does little or no evaluating; instead, they buy on impulse and rely on intuition, say
buying a pen or a toothpaste. Sometimes consumer make buying decisions on their own and
sometimes they turn to friends, consumer guides or salespeople for buying advise, say buying an
DSLR camera. For example, you have three brand choices to buy a car and you are primarily
interested on four attributes – styling, operating economy, warranty and price. And if one car brand
rated best on all attributes, we can predict that you would choose that brand only. The purchase
decision (fourth), generally, will be to buy the most preferred brand, but two factors can come
between the purchase intention and the final purchase decision. The first factor is the attitudes of
others. If someone important to you thinks that you should buy the lowest-priced car, then the
chances of you buying a more expensive car are reduced. The second factor is unexpected situational
factors. The consumer may from a purchase intention on factors such as expected income, expected
total price to pay, and expected product benefits. Thus, many times the preferences and even
purchase intentions may not always result in actual purchase choice.
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UNIT – II
After purchasing the product, the consumer will be satisfied or dissatisfied and will engage in post-
purchase behavior (fifth) is of interest to the marketer. This will depend on the relationship between
the consumer’s expectations and the product’s perceived performance. If the product falls short of
expectations, the consumer is disappointed; if it meets expectations, the consumer is satisfied; if it
exceeds expectations the consumer is delighted. The larger the gap between the expectations and
performance, the greater the consumer’s dissatisfaction. For example, a consumer is disappointed
when the battery of his mobile is discharged before the promised time hours. A consumer is satisfied
when his taste buds feel better of ‘fruits & cream flavor of London Dairy Ice-cream’ than any other
expensive brand. A consumer is delighted when his car gives more mileage than expected or any of
his acquaintances appreciates his car’s aerodynamics design and color.
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UNIT – II
THE MODEL OF BUSINESS BUYER BEHAVIOR (BBB):
BUSINESS BUYER BEHAVIOR (BBB):
The above shown model of business buyer behavior explains the following concerns:
A. Major Types of Buying Situations; B. Participants in the Business Buying Process and C. Major
influences on Business Buyers.
A. Major Types of Buying Situations: There are three major types of buying situations: straight
rebuy, modified rebuy and new-task. In a straight rebuy, the buyer reorders something without any
changes. It is usually handled on a routine basis by the purchasing department. Based on past buying
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UNIT – II
satisfaction the buyer simply chooses from the various suppliers on its list. Suppliers that are given
the orders are ‘In’ suppliers who try to maintain product and service quality. They often propose
automatic reordering systems to save the reordering time of the purchasing agent of the business
buyer company. ‘Out’ suppliers try to find new ways to add value so that buyer consider them in
future. In a modified rebuy, the buyer wants to change product specifications, prices, terms or
suppliers. The ‘In’ suppliers may feel pressured to put their best foot forward to protect their business
account and ‘Out’ suppliers may see it as an opportunity to make a better offer in future. A company
buying a product or service for the first time faces a new-task situation. In such cases, the greater the
cost or risk, the larger the number of decision participants and the greater their efforts to collect
information. The marketer or the prospective supplier not only tries to reach as many key buying
influences as possible but also provides help and information to the business buyers.
B. Participants in the Business Buying Process: The decision-making unit of a buying
organization is called its buying center – all the individuals and units that play a role in the business
purchase decision-making process. Usually there are five roles that the participants of the buying
center play: users, influencers, buyers, deciders and gatekeepers. The users are the members of the
organization who will eventually use the product or service. Influencers are those who help define
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UNIT – II
product specifications and provide information for evaluating alternatives such as technical experts.
Buyers are the one who have formal authority to select the suppliers and arrange terms of purchase
or negotiation. Deciders are the final sanctioning authority to select or approve suppliers. In practice,
the buyers and deciders may be same. Gatekeepers control the flow of information to the purchasing
agents such as personal secretaries of the deciders.
C. Major influences on Business Buyers:
The above figure shows the four major influences on business buyers in the purchase decision
process: Environmental, Organizational, Interpersonal and Individual. 1) Environmental:
Business buyers are heavily influenced by factors in the economic environment such as the level of
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UNIT – II
primary demand, the economic outlook, shortage of key materials and the cost of money. Businesses
are also affected by technological, political and competitive developments, in addition to business
cultures & custom reactions. 2) Organizational factors: Each buying organizations have to follow their
own objectives, policies, procedures, structure and systems to finalize the buying order. 3)
Interpersonal: Participants of buying center in an organization influence each other in buying decision
process. Because of their special expertise, professional relationships and control over rewards and
penalties. Interpersonal factors are often very subtle (indirect). 4) Individual: Each participant in the
buying decision process brings in their personal motives, perceptions and preferences. These individual
factors are affected by their personal characteristics such as education level, professional identification,
personality and attitude towards risk. Some participants make technical in-depth analysis and others
may be intuitive negotiators.
EXAMPLES OF BUSINESS BUYING (Business to Business – B2B):
a) In the production of a single set of Dunlop Tires, many B2B transactions are involved such as supply of
rubber, steel, and other equipment. Further selling to large number of retailers and distributors across the
country.
b) Aramex has invested in complex logistics process to satisfy its business clients, including management of
purchase orders, inventory, order status checks, invoices, payments, returned merchandise, and fleets of
delivery vehicles. Aramex exceeds 50,000 companies (as business customers) all over the world.
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UNIT – II
21
STEPS IN BUSINESS BUYING DECISION PROCESS:
The following figure shows the five steps in the business buying decision process:

UNIT – II
DIFFERENCES BETWEEN CONSUMER MARKET AND BUSINESS MARKET:
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Factors Consumer Market Business Market
Basis of
Buy/Purchase
Likely to buy final goods as a
final Consumption
Likely to buy for further production or
resale
Buy on basis of description,
style, color etc
Buy exact product specification
Less frequent ,usually
single/group decision and less
formal
Complex, expensive, formal, usually
group /department decision
Basis of Demand Much Larger Customer Fewer Customer
More Global Tend to be geographically focused
Distribution channel are longer Distribution Channel are shorter
Buying specialist is not required Buying Specialist is usually needed
HERE ENDS UNIT-II All notes from recommended Arab World Edition book of Philip Kotler

2Marketing Basics

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