This document provides an overview of key marketing concepts including definitions of marketing, the importance and functions of marketing, and the nature and scope of marketing. It defines marketing as identifying and supplying customer requirements efficiently and profitably. The key functions of marketing discussed are marketing research, advertising, sales promotion, product planning, selling, distribution, and pricing. It also discusses the nature of marketing as creating mutually beneficial relationships and being customer-focused by delivering value for money and satisfying customers.

1.  Presentation By 
Er. S.Sood (Power Group).

2. Marketing: Nature & Scope of Marketing,
Concepts - production, product, selling,
marketing & societal marketing, marketing
environment –marketing management and its
environment.

3. What is Market?
A “Market” was a public place in a town or village, where household
provisions and other objects were available for sale. The definition of
market has expanded in this globalized world. The traders may be spread
over a whole town, or city or region or a country and yet form a market. For
example, stock market, Oil & Oilseeds market, Steel or Metals market etc.
where people across the countries can participate in the business.

4. The essentials of a market are:
 A commodity / item which is dealt with (like gold, Silver, Iron,
Electronic gadgets, Eatables etc.)
 The existence of buyers and sellers
 A place; be it a certain region, a country or the entire world &…
 Interactions between buyers & sellers to facilitate transactions.

5. Classification of markets:
1. On the basis of Geographic Area –
Local Market is the place where the purchase and sale of goods / services involve buyers and
Sellers of a small local area. The example of local market is a village or a town, market. In this
Market day to day requirement like vegetable, fruits, meat and fish are sold.
Regional Market – When the purchase and sale of goods involve buyers and sellers of a region,
such as a large town market catering to needs of a group of villages or towns, such a market is
common in case of wholesale/ retail sale of food grains.
National Market – When the purchase and sale of goods involve both buyers and sellers of the
entire nation then it is called as national market. This type of market in the case of commodities
such as Cotton & Textiles Market located in Mumbai, Tea and Jute Markets located in Kolkata.
Global or World Market – When the purchase and sale of goods involve buyers and sellers of
many nations, there is said to be a World or Global Market. Many commodities such as Gold,
Silver, Tea, Coffee, Spices are sold in such global markets. Many manufactured products and
specialized services are also sold across the globe by many companies. Indian companies like
TCS, Infosys, and WIPRO sell and provide their IT enabled services to many companies in
different parts of the world. They operate in a Global Market.

6. 2. On the basis of Nature of Competition in the market –
Perfect Market –
It refers to a market or market situation where there is perfect competition.
Competition is said to be perfect when (a) the sellers & buyers of a particular
product are so many that none of them have to sell or buy at a single uniform price.
(b) Price is determined by the market forces of supply & demand.
Imperfect Market –
In contrast to the perfect competition, the imperfect market will have imbalance
between number of buyers and sellers. In this case of imperfect competition the
market can be dominated by number of Buyers or Sellers. There may be restrictive
trade practices.

7. 3. On the basis of Nature of Goods Sold –
Consumer Goods Market –
Definition: “A Consumer Goods Market is defined as a market where the final output of the
firm goes for the consumption of individual or household”.
This is a market, where the buyers who are individuals and households purchase a variety of
products and services to satisfy their needs and wants. For example, an individual buys
chocolate for his personal consumption whereas a family buys a refrigerator for household or
family consumption. Products sold in consumer goods market are classified as Nondurables,
such which are frequently purchased such as bathing soap, detergent etc. and Durables such
as refrigerator, TV Set, Washing Machine, Car, Clothing etc. Nondurables are also known as
FMCG – Fast Moving Consumer Goods e.g. Soap, detergent etc...
Industrial Goods Market –
Definition: A business market is defined as a market where output of one firm goes either as
raw material, goods in process or as consumables of another industry.
Nonprofit and Government Markets –
This market which consists of nonprofit organizations such as social service agencies,
educational organizations, charitable organizations and Government Departments and
agencies needs special skills to sell to them. These buyers have limited purchasing power which
is why pricing to this market needs to be planned carefully. Government, which is a large buyer,
makes purchases on the basis of tenders, bids and negotiation.

8. Marketing ! “Marketing is Base of Every Activity”

9. Definitions of marketing:
 “The management process that identifies, anticipates and supplies
customer requirements efficiently and profitably”
 Marketing is "the activity, set of institutions, and processes for creating,
communicating, delivering, and exchanging offerings that have value for
customers, clients, partners, and society at large.
 Marketing is the process of identifying the customer/market need, want &
desires & then converting those need wants & desires into Profitable
Products or Services.
*The Ultimate Goal of Marketing Should be the Satisfaction of Customer
Needs . The Companies that tries to ignore the need want and desire of
customer or targeted market are always prone to failure of below the line
results*

10. Importance of marketing / Functions of Marketing:
The delivery of goods and services from producers to their ultimate consumers or users includes
many different activities. These different activities are known as marketing functions. Marketing
has proved its importance in following fields:
1 Marketing Research and Information Management -- Marketers need to take decisions
scientifically. Marketing research function is concerned with gathering, analyzing and
interpreting data in a systematic and scientific manner. The ultimate purpose of any MIS is to
gather data from market in order to build customer friendly products or services and to retain or
gain profitable market share.
2 Advertising and Sales Promotion – Advertising is a mass media tool used to inform,
persuade or remind customers about products or services. It is an impersonal message targeted
at a chosen group through paid space or time.
3 Sales Promotion is a short-term incentive given to customers or intermediaries to promote
sales. It supplements advertising and personal selling and can be used at the time of launching
a new product or even during its maturity period.
•Cont…..

11. 4 Product Planning and Management – A Marketer should identify the desires of
consumers to develop suitable products / services and make them available. Marketer is also
required to maintain the product and its variations in size, weight, package and price range
according to the changing needs and requirements of his customers. Information required for
these decisions can be obtained from MIS.
5 Selling –This function of marketing is concerned with transferring of products / services to
the customer. An important part of this function is organizing sales force and managing their
activities. Sales force management includes recruitment, training, supervision, compensation
and evaluation of salesmen. They need to be assigned targets and territories where they can
operate.
6 Physical Distribution – Moving and handling of products from factory to consumers come
under this function. Order processing, inventory, management, warehousing and
transportation are the key activities in the physical distribution system.
7 Pricing – This is perhaps the most important decision taken by marketer, as it is the only
revenue fetching function and success and failure of the product may depend upon this
decision. Therefore, the decision regarding how much to charge should be taken such that the
price is acceptable to the prospective buyers and at the same time fetches profits for the
company. While deciding on the price, the factors to be considered are competition;
competitive prices company’s marketing policy, government policy, and the buying capacity of
target market etc.

12. Scope of marketing
Product policy or planning: Sales Planning
Marketing research:
It Includes: Sales Management
Collection of data
Analysis of data
Finding /Conclusions and ATR Miscellaneous Activities:
(action taking reports) 4P’s or 8 P’s
Motivational Research:
Test Marketing:
Channels of Distribution
Mfg—Distributor– Whole seller –Retailer --- Customer
Mfg—Whole Seller—Retailer -- Customer
Mfg—Ret-Customer
& Many More
Transportation & Warehousing

13. Nature of marketing:
A marketer must deliver value for money: marketers have to track customer needs and
deliver the product as per the requirements. This is not the end in itself. The company must
satisfy the following equation: (Value= benefits/cost)
Marketing system affect company strategy marketing has its own subsystems, which
interact with each other to form complete marketing system that is responsive to company
marketing strategy.
Marketing creates mutually beneficial relationships: the customer is the focus of all
marketing activities. But, since the beginning of 1990s; the focus is shifting to the way of doing
business, the strategic aspects of marketing.
Marketing is customer focused: Marketing intends to satisfy and delight the customer.
Marketers can remain in the customer mind if they are provided value for what they spend.
Customer focus can optimize costs for the customer while allowing the organizations focus on
its core competencies.
Marketing is surrounded by customer needs: Marketing starts with the identification of
customer needs and requirements. These are turned into probable features that might satisfy
the basic needs. More the producer output matches with customer requirements more the
profitable it is.

14. Marketing Orientations/Concepts:
Companies adopt different philosophies to market their products and
services. An analysis of evolution of marketing thought over last several decades
and reliance of marketing managers on specific marketing orientations, leads us
to classify marketing concepts into several categories. The philosophy adopted by
a company should strike a balance between the interests of the company,
customers, society and public. There are five competing concepts and an
organization can choose any one of them for conducting marketing activities.
1. Product Concept:
2. Production Concept:
3. Selling Concept:
4. Marketing Concept:
5. Holistic Marketing Concept:

15. 1. The Production Concept – This is one of the oldest concepts of marketing
and assumes that consumers will prefer those products and services that are
easily available and affordable.
Companies which adopt this philosophy for their marketing should focus on
improving production and distribution efficiency. Production concept is a
useful philosophy under situations where demand is more than supply and the
companies are trying to increase production and when production costs are
high.
Companies are trying to achieve economies of scale. Under such conditions, it
is likely that quality of products is neglected and service to customers is very
impersonal.

16. 2. The Product Concept assumes that consumers will prefer those products that offer
quality, performance or innovative features. Managers in such companies focus on
developing superior products and improving the existing product lines by devoting
time to innovations. The problem with this orientation is that managers forget to read
the customer’s mind and launch products based on their own technological research
and scientific innovations. Very often it is observed that innovations enter the market
before the market is ready for the product, or is aware or clear about its benefits.
This product oriented management with excessive
attention to product rather than customer leads to shortsightedness about business.
This was termed as “Marketing Myopia”. He recommended that companies should have
a clearer and broader vision of business they are in and should adapt to the changes in
the needs of the customers and in the environment. For example, a company like
KODAK. FUJI should not think they are only in the business of selling cameras and
photographic films. They should believe that they are in the business of preserving
memories for customers and photography in general.

17. 3. The Selling Concept – The Selling concept assumes that consumers generally, will
not buy a company’s products unless aggressive selling and promotion efforts are
undertaken. It also holds that consumers typically do not think of buying these
products which are nonessential goods without persuasion or aggressive selling action.
Use of this concept leads people to believe that marketing is all about selling. The
problem with this approach is the belief that the customer will certainly buy the
product after persuasion and will not complain even if dissatisfied.
In reality, this does not happen and companies pursuing this concept fail in business.
This approach is applicable in the cases of unsought goods such as life
insurance, vacuum cleaners that buyers normally do not think of buying. E.g.
Insurance policies etc..

18. 4. The Marketing Concept
The Marketing Concept proposes that a company’s task is to
create, communicate and deliver a better value proposition through its marketing
offer, in comparison to its competitors; to its target segment and that this customer
oriented approach only can lead to success in the market place. Today, marketing
function is seen as one of the most important function in the organization. Many
marketers put the customers at the center of the company and argue in favor of such
a customer orientation where all functions work together to respond, serve and
satisfy the customer.

19. 5 Holistic marketing Concept: The holistic marketing concept is based on the
development, design, and implementation of marketing programs, processes, and activities
that recognizes their breadth and interdependencies. Holistic marketing is thus an approach to
marketing that attempts to recognize and reconcile the scope and complexities of marketing
activities.
Social
Marketing
Holistic Internal
Relationship Marketing marketing
Marketing Concept
Integrated
Marketing

20. Relationship marketing- it aims at building up the good relationship for long-term
with key parties- customers, suppliers, distributors, and other marketing partners- in
order to earn and retain their business. It involves cultivating the right kind of
relationship with the right constituent group.
Integrated marketing- the marketer’s task is to device marketing activities and
assemble fully integrated marketing programs to create, communicate, and deliver value
for consumers. One traditional depiction of marketing activities is in the terms of
marketing mix, which has been defined as the set of marketing tools. These tools
broadly grouped in four, which are: product, price, place and promotion.
Internal marketing- holistic marketing incorporates internal marketing, ensuring that
everyone in the organization embraces appropriate marketing principles, especially
senior management. Internal marketing is the task of hiring, training, and motivating
able employees who want to serve customers well.
Social Responsibility marketing- holistic marketing incorporates social responsibility
marketing and understanding broader concerns and the ethical, environmental, legal,
and social context of marketing activities and programs.

21. The Marketing Environment:
 The marketing environment consists of actors and forces outside the
organization that affect management’s ability to build and maintain relationships
with target customers.
 Environment offers both opportunities and threats.
 Marketing intelligence and research used to collect information about the
environment.
 Microenvironment:
 Forces close to the company
 That affect its ability to serve customers
 Macro-environment:
 Larger, societal forces that affect the organization’s microenvironment

22. Now a question comes to mind. Why division is important?
Well Marketers build both internal and external relationships. Marketers aim to
deliver value to satisfied customers, so we need to assess and evaluate our
internal business/corporate environment and our external environment.

23. Why Environmental scanning!!
“This is the process of gathering, analyzing and forecasting of
external environments’ information to identify opportunity and
threats that company faces”.
Need for environmental scanning:
It helps in
1. Identifying the opportunities that company has in immediate future.
2. Identifying the threats faced by the company.
3. Demand forecasting
4. Developing appropriate business plans.
5. Adjusting the company strategy in changing competitive
environment.

24. Factors of Microenvironment

25. Micro-environment: The forces which are very close to company and have
impact on value creation and customer service.

26. Marketing intermediaries: The firms which distribute and sell the goods of the
company to the consumer.
Publics: These are microenvironment groups, which helps company to generate the
financial resources, creating the image, examining the companies’ policy and
developing the attitude towards the product.
Competitors: A company should monitor its immediate competitor. The product
should be positioned differently and able to provide better services.
Suppliers: suppliers are the first link in the entire supply chain of the company.
Customers: A company may sell their products directly to the customer or use
marketing intermediaries to reach them. Direct or indirect marketing depends on
what type of markets Company serves.
The company: company consists of No of resources like Human resources, financial
resources, etc. All the resources are arranged into a particular symmetry depending
upon the strategies and plans. That directly or indirectly affects the company’s micro
environment.

27. The Company’s Macro-environment

28. Company’s macro environment:

29. Demography: The study of population characteristics like size, density, location,
gender composition, age structure, occupation and religion.
Demography statistics helps companies to develop their products in better way.
These statistics are also used in developing proper supply chain, communicating
product information and changing the product attributes. Demographic
environment is analyzed on the basis of the following factors.
•Age structure of the population
•Marital status of the population
•Geographic distribution of the population
•Education level
•Occupation.

30. Political & Legal Environment:
Government policies, legislations, regulations, and stability will directly affect the
business. Therefore it is inevitable for the firm to closely monitor this environment.
Economic & Natural Environment:
It will include Monthly per capita consumption in rural area & urban Areas, Interest
rate, Inflation, Changes in Income.
Social and Cultural Environment:
Social and cultural environment refers to the influence exercised by certain social
factor which are “beyond the companies gate” Culture refers to dance, drama,
music and festival include Knowledge, belief, art, moral, law, customs & others
capability
Technology Environment:
Growth of information technology and biotechnology industries:
Information technology has revolutionized the lives of the people. It bought
dramatic changes in the way organizations operates. It helped in cost reduction,
automation, better communication and efficiency in the organizations. Indian
banks few years ago use to take lengthy time to process the customer requests
reduced it to few hours because of information technology.

31. Chapter 2
Consumer buying behavior: consumer decision making
process (five step model), factors affecting buying behavior,
purchase behavior, buyer’s role.

32. Consumer Buying behavior:
Consumer behavior is the study of when, why, how, and where people do or do not
buy product. It blends elements from psychology, sociology, social anthropology
(discipline) and economics. It attempts to understand the buyer decision making
process, both individually and in groups.
It helps to study:
What are the needs of consumer & what they are buying?
Why they are buying?
Who is actually buying or influencing the decision?
When do the customers make purchase?
From where the buy?
How do the buy?
What factors affect their purchasing decision?
How often they buy & use a particular product?

33. Types of consumers:
We can broadly divide into two types:
1 Individual consumer: these consumers purchase goods or services for their
personal usage, household consumption, and consumption by any family member
or presenting a gift to friend or family. E.g. LCD, Home theatre etc. a consumer
basically buys these products for final usage & may be called as end user or ultimate
consumer.
2 Organizational consumers: these included industrial houses & govt. agencies or
institutions. (I.e. both profitable and non profitable organizations) these
organizations buy good & services to run their daily operations. E.g. manufacturing
firm’s buys raw material, & advertising agency may require some office material like
decorations, lights or furniture’s.

34. Types of consumer buying behavior:
1. Routine Response/Programmed Behavior--buying low involvement,
frequently purchased low cost items; need very little search and decision effort;
purchased almost automatically. Examples include soft drinks, snack foods,
milk etc.
2. Limited Decision Making--buying product occasionally. When you need to
obtain information about unfamiliar brand in a familiar product category,
perhaps. Requires a moderate amount of time for information gathering.
Examples include Clothes--know product class but not the brand.

35. 3. Extensive Decision Making/Complex high involvement, unfamiliar, expensive
and/or infrequently bought products. High degree of
economic/performance/psychological risk. Examples include cars, homes,
computers, education. Spend a lot of time seeking information and deciding.
Information from the companies MM; friends and relatives, store personnel etc. Go
through all five stages of the buying process.
4. Impulse buying: no conscious planning. The purchase of the same product does
not elicit the same buying behavior. Product can shift from one category to next.
E.g. going out for a dinner for one person may be extensive decision making, but
limited decision making for someone else. The reason for dinner, whether it is a
celebration purpose or a meal with couple of friends also determine the extent if
decision making.
Elicit (draw, bring out, Extract)

36. Consumer Buying Behavior model:

37. 1. Problem Recognition (awareness of need)—the process of buyer’s
decision making initiates when the buyer recognizes a particular need.
This need may be a new one or an existing problem which a customer is
facing & want a solution for it. E.g. a person does not have vehicle for going
to office & he is facing a problem of being late. So here the need of that
person is to purchase vehicle which ne never feel while he was in college days.
Or need can be stimulated by the marketer through product
information--? i.e. see a commercial for a new pair of shoes, stimulates your
recognition that you need a new pair of shoes.

38. 2. Information search--
Internal sources like memory.
External sources, if you need more information. Friends and relatives (word
of mouth). Marketer dominated sources; comparison shopping; public sources
etc. A successful information search leaves a buyer with possible alternatives,
the evoked set. Evoke(call to mind, Suggest, remind or inducing)
Hungry, want to go out and eat, evoked set is
Chinese food, Indian food, burger king or somewhere in canteen or dhabha.
Or just remember the advertisement of some pain reliever like fast relief
or volini (cream or spray)

39. 3. Evaluation of Alternatives--need to establish criteria for evaluation, features the
buyer wants or does not want. Rank/weight alternatives or resume search. May
decide that you want to eat something spicy, Indian (Punjabi) gets highest rank
etc. If not satisfied with your choice then returns to the search phase. Can you
think of another restaurant? Selection of alternatives can be done on the basis of
following factors. (Benefit selection, Features selection, brand selection & Price
selection)

40. 4. Purchase decision—after evaluation all the alternatives, consumer is now ready
to make the final purchase decision about the brand or product. The actual
purchase decision about the product or brand. At this stage questions like “when
to buy” “from where to buy” also affects the purchasing decisions. After all deep
consideration finally a customer takes a decision to purchase the selected product
or service.

41. 5. Post-Purchase Evaluation--outcome: Satisfaction or Dissatisfaction.
Cognitive Dissonance, have you made the right decision. This can be reduced by
warranties, after sales communication etc.
After eating an Indian meal, may think that really you wanted a Chinese meal
instead.
Dissonance (difference, conflict or disagreement) & Cognitive (possessing
the power to think or meditate; meditative; capable of perception; aware;
perceptive)

42. Factors affecting the consumer behavior:

43. Cultural factors: culture is one of the most dominating factors which build the beliefs &
the behavior of a person. These factors are related to the cultural practices & beliefs by the
society as whole in a region or country. Here culture is a set of values, beliefs, behaviors, &
customs that differentiate societies from one another. A society’s culture prescribes the rules
& regulations, which determine how companies operate in a particular region. (Customs:
background, traditions, way of life, civilization.).
Subculture: this is a smaller group that deviates from main culture & provides identity to
its members. A culture can be divided into subcultures on the basis of various factors such as
geographic region, demographic characteristics, political beliefs & religion etc. best example
of subculture is India, which is one of the most religiously diverse nations in the
world.
Social Class: refers to the hierarchical arrangement of society into various divisions, each
of which signifies social status. It is an imp determinant of buyer behaviors it affects
consumption patterns, activities & interest of consumers. We may classify them according to
income of a group like upper class, upper middle classes, medium class or base class.

44. SOCIAL FACTORS:
Family: is the strongest affecting group of consumer behavior. This group includes
parents, grandparents, spouse & children, who always derives the behavior of individual
from grandparents & parents one acquires orientation towards culture, religion,
economics, sense of personal ambition, self worth & love. Then next come to spouse &
children, who exert a more direct influence on every day buying behavior.
Reference groups: these are various groups of people with whom consumer interacts
formally or informally & learn attitude, beliefs, & ethics. Influence of these groups on
individual depends upon the frequency of interaction.
Roles & status: the role that a consumer playing in society or the status he has gained
in society directly influences the CBB.

45. Personal factors:
Age & gender: starting from the birth of child to his final stage: his tastes,
preferences & behavior never remain same. It keeps on changing from time to time
depending upon previously discussed factors. That is why marketers keep a deep focus
on particular age group. E.g. Nestle Milo for growing up children or Cerelac for
infant (toddler, baby) & Nestle classic for Men /adults.
Similarly gender plays role as age group. Tastes & preferences of males & females
always remain different. Both groups of males & females always behave differently as
their personality, style attitude, briefs & behaviors.
Occupation: buyer’s consumption patterns is also strongly influences by his
occupation or profession & his income level.
cont…..

46. Family life cycle: it plays crucial role individual decision making process. Life cycle passes
from many successive (succeeding, following, & straight) stages like introduction, growth,
maturity & decline. ( young single(young age, unmarried, earning having choices saving,
entertainment, new clothes, fashion etc.), young couple( includes newly married couple
move from single to couple, demands commitment from relationship , earn more to proceed
in life with comfort), full nest( parenthood stage which starts after the birth of first child,
include increase in responsibilities as mothers leave their job in order to give full attention to
their child), empty nest(stage comes when children grows up to adulthood & leaves the
home to established a life of their own. Mostly occurs at retirement stage.) or older single(
most difficult & harder stage as one of the spouse falls ill or even passes away & the other
spending their saving on medicines so as to maintain his/her health.)

47. PSYCHOLOGICAL FACTORS:
These factors of consumers are very individualistic in nature as these are the
factors make all persons different from others. So proper attention must be
given to these factors by marketers.
Perception: is the process of attains the awareness or understanding though
sensory mechanism. It is the means of receiving, collecting & interpretation the
information with the mind or senses. Through this process consumer assigns the
meaning to collected & observed information.
•Perception occurs in three stages: Exposure>> Attention>> Interpretation.
Cont…

48. Psychological Factors Affecting Buyers Choice:
•Motivation: A motive is a need that has a sufficient level of intensity. Creating a
tension state that drives the person to act. Or satisfying the need reduces the felt
tension.
•Beliefs and Attitudes: An attitude describes a person’s relatively consistent
evaluations, feelings, and tendencies toward an object or idea.
•Learning: Changes in an individual’s behavior arising from experience.

49. Chapter 3rd >>Market Segmentation: need,
concept, nature, basis & strategies, mass
marketing vs. Segmentation.

53. MARKET SEGMENTATION:
Market
A market is (1) people and organizations with (2) needs or wants and with
(3) the ability and (4) willingness to buy. A group of people or an
organization lacks any one of these characteristics is not a market
Market Segment
Within a market, a market segment is a subgroup of people
or organizations sharing one or more characteristics that cause them to
have similar product needs. At one extreme, we can define every person and
every organization in the world as a market segment because each is unique.
At the other extreme, we can define the entire consumer market as one large
market segment and the business market as another large segment. All
people have some similar characteristics and needs, as do all organizations.
4-53

54. What is Market Segmentation?
Market Segmentation
The process of dividing a market into meaningful, relatively similar,
and identifiable segments or groups is called market segmentation. The
purpose of market segmentation is to enable the marketer to shape marketing
mixes to meet the needs of one or more specific segments.
4-54

55. The Importance of Marketing Segmentation
Until the late 1960s, few firms practiced market segmentation. When they did, it
was more likely a haphazard effort than a formal marketing strategy. Before 1960,
for example, the Coca-Cola Company produced only one beverage and aimed it at
the entire soft drink market. Today, Coca-Cola offers over a dozen different
products to market segments based on diverse consumer preferences for flavors
and calorie and caffeine content. Coca-Cola offers traditional soft drinks, energy
drinks, (such as Power Ade),flavored teas, and fruit drinks (Fruitopia).Marketing
segmentation plays a key role in the marketing strategy of almost all successful
organizations and is a powerful marketing tool fro several reasons. Most
importantly, nearly all markets include groups of people or organizations with
different product needs and wants more precisely. Because market segments differ
in size and potential, segmentation helps decision makers more accurately define
marketing objectives and better allocate resources. In turn, performance can
be better evaluated when objectives are more precise.

56. Market MIX

57. Market MIX

58. Market segmentation and the identification of target markets, however,
are an important element of each marketing strategy. They are the basis
for determining any particular marketing mix. Literature suggests the
following steps:

59. Why segmentation:
Market segmentation is used by marketers as a strategic
marketing tool for defining the market & thereby allocating
the resources effectively.
No company can control global market by considering it a single
unit. Co’s have to divide a global market into segments.
As shown in map previously India is a Complete market that
consists for four zones viz. NORTH, SOUTH , WEST & EAST.
But to provide services effectively & in order to fulfill the
demands of each segment segmentation is done.

60. Reasons for Market Segmentation/ Benefits
As already stated, segmentation is the basis for developing targeted and effective
marketing plans. Furthermore, analysis of market segments enables decisions
about intensity of marketing activities in particular segments.
Better serving customers needs and wants
1. It is possible to satisfy a variety of customer needs with a limited product range by
using different forms, bundles, incentives and promotional activities. The
computer manufacturer Dell, for instance, does not organize its website by
product groups (desktops, notebooks, servers, printers etc), but by customer
groups (privates, small businesses, large businesses, public/state organizations).
They offer the same products to all customer groups. Nevertheless, they suggest
product bundles and supporting services that are individually tailored for the
needs of each particular group. As an example, Dell offers to take on all IT-
administration for companies. This service provides a huge potential for savings
for corporate customers. However, it would be absolutely useless for private
customers. Thus, segment-specific product bundles increase chances for cross
selling.

61. 2. Higher Profits
It is often difficult to increase prices for the whole market. Nevertheless, it is
possible to develop premium segments in which customers accept a higher
price level. Such segments could be distinguished from the mass market by
features like additional services, exclusive points of sale, product variations
and the like. A typical segment-based price variation is by region. The
generally higher price level in big cities is evidence for this.
3. Opportunities for Growth
Targeted marketing plans for particular segments allow to individually
approach customer groups that otherwise would look out for specialized niche
players. By segmenting markets, organizations can create their own ‘niche
products’ and thus attract additional customer groups.

62. 4. Sustainable customer relationships in all phases of customer life cycle
Customers change their preferences and patterns of behavior over time.
Organizations that serve different segments along a customer’s life cycle can
guide their customers from stage to stage by always offering them a special
solution for their particular needs.
For example, many car manufacturers offer a product range that caters for the
needs of all phases of a customer life cycle: first car for early twenties, fun-car
for young professionals, family car for young families, etc. Skin care cosmetics
brands often offer special series for babies, teens, normal skin, and elder skin.
5. Targeted communication
It is necessary to communicate in a segment-specific way even if product
features and brand identity are identical in all market segments. Such a
targeted communications allows to stress those criteria that are most
relevant for each particular segment (e.g. price vs. reliability vs. prestige).

63. 6. Stimulating Innovation
An undifferentiated marketing strategy that targets at all customers in
the total market necessarily reduces customers’ preferences to the
smallest common basis. Segmentations provides information about
smaller units in the total market that share particular needs. Only the
identification of these needs enables a planned development of new or
improved products that better meet the wishes of these customer
groups. If a product meets and exceeds a customer’s expectations by
adding superior value, the customers normally is willing to pay a higher
price for that product. Thus, profit margins and profitability of the
innovating organizations increase.

64. 7. Higher Market Shares
In contrast to an undifferentiated marketing strategy, segmentation
supports the development of niche strategies. Thus marketing
activities can be targeted at highly attractive market segments in the
beginning. Market leadership in selected segments improves the
competitive position of the whole organization in its relationship with
suppliers, channel partners and customers. It strengthens the brand
and ensures profitability. On that basis, organizations have better
chances to increase their market shares in the overall market.

65. ADVANTAGES OF MARKET SEGMENTATION
1. Better Knowledge of the Customer: for grouping the whole
heterogeneous market into different homogeneous segments,
marketers need to know deeply the needs & wants of consumers.
They analyze the consumers & their needs very minutely & get the
information about which product consumer will prefer to buy or
which one not.
2. Adjustment/Installation of products to market needs: a better
understanding of consumer helps the marketers to adjust their
products & services according to their needs of different market
segments, which ultimately helps in increasing brand loyalty &
decreasing the brand switching.
3. Earn more profits: when different products serves the different needs
of all consumers, it automatically helps the org. to capture major
market share & helps in earning more profits.
4. Develop effective marketing plan: segmentation allows the marketers
to develop a better & effective marketing plan through matching a
product or service to the needs of the target market.

66. 5. Better Targeting & positioning of the product: segmentation is the first
step in STP process or framework. After dividing the entire market
into different homogeneous segments , it becomes easy for co’s to
target particular market & developing marketing strategies
according to market or consumer needs.
6. Segmentation improves the market position: it improves the
positioning of the co’s by finding how well products & services will
meet the target market needs, compared to how well its competitors
products or services meet those needs. This provides a clear picture
about their market position & effective ways to maintain or improve
their position.
7. Helps to come out cut throat competition effectively: it helps a co to
understand the target market. & improving the competitive
positioning by differentiating their products from competitors. It also
reduces competition by competing in more narrowly defined markets.
8. Better resources allocation: co. resources are MEN, MONEY, MACHINE,
MATERIAL. Or Products & services. Clearly defined segments helps to
install reqd. products /services or any of 4M’s by developing
appropriate marketing mix.

67. ADVANTAGES OF MARKET SEGMENTATION:
The following are the advantages of Market Segmentation for a firm:
1. Helps in better understanding of the customers’ needs and wants.
2. Better targeting and position of the product.
3. Encourages two-way communication among the potential buyer and
the organization.
4. Maintaining effective relationship with the customers.
5. Retaining the existing customers and attracting new ones.
6. Improving service delivery standards.
7. Reducing cost / expenses on various marketing activities and
increases market share; resulting in higher profits.
8. Better understanding of the consumer.
9. Lesser competition
10. Better marketing mix
11. Better Distribution channel
12. Good for medium size firms

68. Basis of Segmentation:
Or
How Segmentation is done?
Demographic
Consumer Based Psychographic
Segmentation Geographic
Basis Of
Segmentation
Benefit sought
Product based Brand Loyalty
Segmentation Product Usage
Purchase
Occasion

69. Consumer based:
It based on the characteristics of the consumers. It further includes personal,
psychographic & geographic factors. Under this , marketers can also use
single base or multiple bases according to the requirement.
1. Demographic factors: is the study of total population in terms of age ,
gender, education, income, family life cycle, martial status & religion
etc.
a) Age: Infants market(0 to 1 year) , child market( 1 to 12 years) , teenagers
market( 13 to 19 years), adolescent market(16 to 19 years), college going
market youngsters(20 to 26 years), youth market( 27 to 35 years), Mid
age market( 36 – 50 yrs) , old age market( 51 yrs & above).
b) Gender : based on the basis of the gender ( male & female) e.g. Cosmetic
market, automobile market like Scoters, bikes & Scotties.

70. d) Education: affects largely the buying preferences, tastes, attitude &
behavior of consumers. An educated customers is amore aware about
the product & services Plus its features & benefits than an less educated
person.
e)Occupation, Income: the job status you hold. Different professional will
choose different products. E.g. Top management like to have Mercedes,
BMW’s, Middle management satisfies themselves in Honda, Hyundai
Sedan Cars. & Line management likes to have Hatchback segments or
two wheelers.
f) Family life cycle: (young single, young couple, full nest, empty nest &
older single).

71. Psychographic factors:
Relates to psychology of consumers.
a) Perception: is the process of receiving & interpreting the received
information with mind or senses. Buying patterns of consumers is
largely determined by their perception. For instance, consumer
largely perceives luxury items as a status symbol. While for others it
is just a money wastage.
b) Personality characteristics: are the individual characteristics ,
attitudes & habits that differentiate them from other s. these charts
includes thriftiness(relates to Economy), extroversion (sociability) ,
introversion (nervousness), aggressiveness (violence), ambitiousness
etc.
c) Attitudes: of a person is the combination of his beliefs, affects &
behavior. It reflects that how a consumer feels& reacts about the
product & services.
d) Motives: is some unsatisfied need of a consumer that directs his
behavior to purchase something to fulfill that need. Small to small
purchase by consumer is related to a motive or need .e.g. several co’s
has launched golden eye technology TV’s or monitors in order to
fulfill the motive of eye protection needs.

72. Geographic based factors:
Done on the basis of location.
a) Geographical units: comprises of different countries, states, regions,
cities etc. within a country or region , this segmentation can further be
carried out as east zone , west, south & north, central, coastal or hilly
zone. Marketers divide the products & services according to the need
of each zone or segment. E.g. creams for cold areas moisturizing
cream, for dry it may be sun protection cream.
b) Geographical variables: like natural resources, population density
etc. or climate like( foot wares, clothing's etc. )

73. Product related segmentation:
Occasional purchase:
When a product is consumed or purchased. It may be regular occasion
like morning, afternoon or evening or special occasion like festival
season like Diwali, Valentine’s Day. For example, corn flakes have
traditionally been marketed as a breakfast-related product. Kellogg’s
have always encouraged consumers to eat breakfast items on the
"occasion" of getting up.
More recently, they have tried to extend the consumption of cereals by
promoting the product as an ideal, anytime snack food. Special Gifts
items are marketed for special occasions.
Product Usage
Some markets can be segmented into light, medium and heavy user
groups. For example domestic users or industrial users.

74. Brand Loyalty:
Loyal consumers :
Those who buy one brand all or most of the time - are valuable customers.
Many companies try to segment their markets into those where loyal
customers can be found and retained compared with segments where
customers rarely display any product loyalty. The holiday market is an
excellent example of this..
Benefits Sought
What benefit the customers are searching for in the given product also
makes a different segment. Benefit segmentation requires Marketers to
understand and find the main benefits customers look for in a product.
An excellent example is the toothpaste market where research has found
four main "benefit segments" - economic; medicinal, cosmetic and taste.

75. Kotler mentions five criteria for an effective segmentation:
Measurable: It has to be possible to determine the values of the variables
used for segmentation with justifiable efforts. This is important especially for
demographic and geographic variables. For an organization with direct sales
(without intermediaries), the own customer database could deliver valuable
information on buying behavior (frequency, volume, product groups, mode of
payment etc).
Relevant: The size and profit potential of a market segment have to be
large enough to economically justify separate marketing activities for
this segment.
Accessible: The segment has to be accessible and servable for the
organization. That means, for instance, that there are target-group specific
advertising media, as magazines or websites the target audience likes to use.
Distinguishable: The market segments have to be that diverse that they
show different reactions to different marketing mixes.
Feasible: It has to be possible to approach each segment with a particular
marketing program and to draw advantages from that.

76. STRATEGIES FOR MARKET SEGMENTATION
Undifferentiated strategy:
The organisation that follows this strategy designs a single
marketing mix for the entire market. The followers of this strategy
hold the assumption that all consumers of their segment have similar
needs for a specific kind of product. There is homogeneous market, or
demand is so diffused it is not worthwhile to differentiate, and
marketers try to make demand more homogeneous.
Single MM consists of:
1. Single Pricing strategy
2. Single Promotional program aimed at everybody
3. Single Type of product with little/no variation
4. Single Distribution system aimed at entire market
This strategy is successful only when organization are able to develop
and maintain a single marketing mix. The main objective of this
approach is to maximize the sales.

77. Concentration strategy:
An organisation that adopts concentration strategy chooses to focus its
marketing efforts on only one market segment. Only one marketing mix is
developed.
E.g. the manufacturer of Rolex watches has chosen to concentrate on the luxury
segment of the watch market. An organisation that adopts a concentration
strategy gains an advantage by being able to analyze the needs and wants of only
one segment and then focusing all its efforts on that segment. This can provide
a differential advantage over other organisations that market to this segment
but do not concentrate all their efforts on it.
The primary disadvantage of concentration is related to the demand of the
segment.
As long as demand is strong the financial position of the organisation will also
be strong but if demand declines the organization's financial position will also
declines.

78. Differentiated marketing segmentation :
also called multi segment marketing. market coverage strategy whereby a company
attempts to appeal to two or more clearly defined market segments with a specific
product and unique marketing strategy tailored to each separate segment.
Typically differentiated marketing creates more total sales than undifferentiated
marketing, but it also increases the costs of doing business.
Or
A strategy that recognizes different preferences of individual market segments
and develops a unique marketing mix for each