Commerce-V Marketing Past Paper PDF 2022

T.Y.B.COM SEMESTER - V (CBCS) COMMERCE-V MARKETING SUBJECT CODE: 23114  © UNIVERSITY OF MUMBAI Dr. Suhas Pednekar Vice Chancellor University of Mumbai, Mu...

T.Y.B.COM SEMESTER - V (CBCS) COMMERCE-V MARKETING SUBJECT CODE: 23114  © UNIVERSITY OF MUMBAI Dr. Suhas Pednekar Vice Chancellor University of Mumbai, Mumbai Prof. Ravindra D. Kulkarni Prof. Prakash Mahanwar Pro Vice-Chancellor, Director, University of Mumbai IDOL, University of Mumbai Programme Co-ordinator : Ms. Rajashri Pandit Assistant Professor (Economics) IDOL, University of Mumbai, Vidyanagari, Santacruz (E), Mumbai. Course Co-ordinator : Mr. Sambhaji Shivaji Shinde and Editor Assistant Professor, IDOL, University of Mumbai, Vidyanagari, Santacruz (E), Mumbai. Course Writers : Dr. Vishnu Nivrutti Yadav Principal, S.N. College of Arts and Commerce, Bhayander east - 401105. : CMA (Dr.) Tushar Balkrishna Raut St. Gonsalo Garcia College of Arts and Commerce, Vasai Maharashtra 401202. : Mr. Vikram Trivedi St.Gonsalo Garcia College of Arts and Commerce, Vasai Maharashtra 401202. : Mrs. Priyanka Shinde Dnyansagar Institute of Management and Research, Balewadi, Pune 45. February 2022, Print - 1 Published by: Director, Institute of Distance and Open Learning, University of Mumbai, Vidyanagari,Mumbai - 400 098. DTP composed and Printed by: Mumbai University Press ii  CONTENTS Chapter No. Title Page No. Module 1: Inreoduction to Marketing 1. Introduction to Marketing...................................................................................1 2. Consumer Behaviour........................................................................................29 Module 2: Marketing Decisions I 3. Marketing Decisions I.....................................................................................44 4. Marketing Decisions II....................................................................................68 Module 3: Marketing Decisions II 5. Marketing Decisions III..................................................................................90 6. Marketing Decisions IV................................................................................109 Module 4: Key Marketing Dimensions 7. Key Marketing Dimensions Marketing Ethics...............................................127 8. Rural Marketing..............................................................................................143 iii  T.Y.B.COM SEMESTER - V (CBCS) COMMERCE-V MARKETING SYLLABUS Sr. No. Modules / Units 1 Introduction to Marketing  Marketing, Concept, Features, Importance, Functions, Evolution, Strategic v/s Traditional Marketing  Marketing Research - Concept, Features, Process Marketing Information System-Concept, Components Data Mining- Concept, Importance  Consumer Behaviour- Concept, ,Factors influencing Consumer Behaviour Market Segmentation- Concept, Benefits, Bases of market segmentation Customer Relationship Management- Concept , Techniques Market Targeting- Concept, Five patterns of Target market Selection 2 Marketing Decisions I  Marketing Mix- Concept, Product- Product Decision Areas Product Life Cycle- Concept, Managing stages of PLC Branding- Concept , Components Brand Equity- Concept , Factors influencing Brand Equity  Packaging- Concept , Essentials of a good package Product Positioning- Concept, Strategies of Product Positioning Service Positioning- Importance & Challenges  Pricing- Concept, Objectives, Factors influencing Pricing, Pricing Strategies 3 Marketing Decisions  Physical Distribution- Concept, Factors influencing Physical Distribution, Marketing Channels (Traditional & Contemporary Channels) Supply Chain Management-Concept, Components of SCM  Promotion- Concept, Importance, Elements of Promotion mix Integrated Marketing Communication (IMC)- Concept, Scope ,Importance  Sales Management- Concept, Components, Emerging trends in selling Personal Selling- Concept , Process of personal selling, Skill Sets required for Effective Selling 4 Key Marketing Dimensions  Marketing Ethics: Concept, Unethical practices in marketing, General role of consumer organizations Competitive Strategies for Market Leader, Market Challenger, Market Follower and Market Nicher Marketing Ethics: iv  Rural Marketing- Concept, Features of Indian Rural Market, Strategies for Effective Rural Marketing Digital Marketing-Concept, trends in Digital Marketing   Promotion- Concept, Importance, Elements of Promotion mix Integrated Marketing Communication (IMC)- Concept, Scope ,Importance  Sales Management- Concept, Components, Emerging trends in selling Personal Selling- Concept , Process of personal selling, Skill Sets required for Effective Selling 4 Key Marketing Dimensions  Marketing Ethics: Concept, Unethical practices in marketing, General role of consumer organizations Competitive Strategies for Market Leader, Market Challenger, Market Follower and Market Nicher Marketing Ethics:  Rural Marketing- Concept, Features of Indian Rural Market, Strategies for Effective Rural Marketing Digital Marketing-Concept, trends in Digital Marketing Green Marketing- concept, importance  Challenges faced by Marketing Managers in 21st Century Careers in Marketing – Skill sets required for effective marketing Factors contributing to Success of brands in India with suitable examples, Reasons for failure of brands in India with suitable examples. Faculty of Commerce, University of Mumbai 25 | P a g e v  Revised Syllabus of Courses of B.Com. Programme at Semester V and VI with effect from the Academic Year 2018-2019 Question Paper Pattern (Theoretical Courses) Maximum Marks: 100 Questions to be set: 06 Duration: 03 Hrs. All Questions are Compulsory Carrying 15 Marks each. Question Particular Marks No Q-1 Objective Questions 20 Marks A) Sub Questions to be asked 12 and to be answered any 10 B) Sub Questions to be asked 12 and to be answered any 10 (*Multiple choice / True or False / Match the columns/Fill in the blanks) Q-2 Full Length Question 15 Marks OR Q-2 Full Length Question 15 Marks Q-3 Full Length Question 15 Marks OR Q-3 Full Length Question 15 Marks Q-4 Full Length Question 15 Marks OR Q-4 Full Length Question 15 Marks Q-5 Full Length Question 15 Marks OR Q-5 Full Length Question 15 Marks Q-6 A) Theory questions 10 Marks B) Theory questions 10 Marks OR Q-6 Short Notes 20 Marks To be asked 06 To be answered 04 Note: Theory question of 15 marks may be divided into two sub questions of 7/8 or 10/5 Marks. Faculty of Commerce, University of Mumbai 147 | P a g e  1 INTRODUCTION TO MARKETING Unit Structure 1.0 Objective 1.1 Introduction 1.2 Meaning of Marketing 1.3 Marketing Research 1.4 Data Mining 1.5 Market Segments 1.6 Summary 1.7 Exercise 1.8 References 1.0. OBJECTIVE To understand the concept of marketing and its objectives. To understand importance of marketing and its functions. To study the concept of marketing Research. To study the scope of marketing research and its Objectives. To explore the concept of data mining and its Importance. To Study the concept of market segments and its types. 1.1. INTRODUCTION Student will understand about marketing concepts and importance of marketing. Marketing is very helpful tool in transfer of goods and services. Goods and services are made available to customers through various medium such as wholesaler; retailer etc. in such way marketing is helpful to customer as well as producers. This chapter helps to understand the sequence of how the functions work to fulfill the objectives of the market. Marketer can also collect whatever information he wants by doing market research as well as use data mining tool to analysing customer behaviours and their insights to achieve great success and data driven business. Data mining is used to explore increasingly large data base and to improve market segmentation. 1.2. MEANING OF MARKETING Marketing is a term widely used in the management of business and in our day-to-day life. Because of this reason marketing is very important. If you go back into history then we find the existence of marketing in the beginning of the civilization, it all has started with the barter system, when 1 Commerce the buyer and seller exchange their goods and services. The simplest way to understand what is marketing is to identify and meet the needs of consumers. As a marketer, try to identify the needs of the customers and you need to fulfill the needs of the customers. To become a good marketer, need to identify & meet the needs of the customer. According to Philip Kotler – Marketing is all about CCDVTP that is Creating, Communicating, and Delivering Value to the target market for profit. Marketing is an art; marketing is research to understand what the needs of consumers are and develop the product according to the demand. EXAMPLE – When corona had come, everyone was scared and watching to see when medicine would come on the corona, then doctors and government were trying to find medicine on the corona and one day it happened successful. Because of marketing activities consumer is getting information about vaccine. Marketing is one kind of function that creates the bridge between the customer and marketer through information. Which will help to identify and defining market opportunities and problems. There has been a lot of revolution in marketing. In the old era, marketer had to market the products through door service, but with the help of technology, the marketing has now spread all over the world. Marketing became an easy. In the period of pandemic, you can see that the almost products from every field were available online. Marketers have marketed their products in good way. 1.2.1. DEFINITION Dictionary.com defines marketing as, "the action or business of promoting and selling products or services, including market research and advertising." Marketing companies are taking steps towards to attract the audience for the company’s product and services through high quality messaging. Aim of marketing to deliver a separate value for consumers through detailed information like product, demonstration, strength, brand quality aims with to increasing sales. American Marketing Association (AMA) Board of Directors, 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. Dr. Philip Kotler - defines marketing as “the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit. Marketing identifies unfulfilled needs and desires. It defines measures and quantifies the size of the identified market and the profit 22 potential. It pinpoints which segments the company is capable of serving Introduction to Marketing best and it designs and promotes the appropriate products and services.” Marketing is an art and science of creating customers, while making a profit and building enterprise value. Marketing integrates, formally or informally, many disciplines and every organizational function. Marketing is the concept as well as strategy. Company apply marketing strategy to satisfy customer’s needs, increase sales and to earn maximum profit. Marketing concept includes. These are; (1) Production concept, (2) Product concept, (3) Selling concept, (4) Marketing concept, and (5) Societal marketing concept. These concepts are described below; 1. PRODUCTION CONCEPT The idea of production concept – “Consumer will select product which are easily available and affordable” This is the old concept of marketing management which will guide to sellers. Companies adopting this orientation run a major risk of focusing too narrowly on their operations and losing sight of the real objective. Production Concept example:- You see, in Amazon or retail stores, the market is crowded with cheap products from china. Everything from the cheap plastic product from China is on customer’s cart now. The best example of the production concept is Vivo, the Chinese Smartphone brand. 2. PRODUCT CONCEPT The product concept says that consumers will prefer product of best quality and which includes innovative features. Here Marketing strategies are engaging in making continuous product improvements. Important part of every marketing strategy is to improve the quality of product. Product Concept example For example, suppose a company makes the best quality Mobile Phones. But a customer does need a floppy disk? She or he needs something that can be used to store data or captured photos clearly. It can be achieved by only those mobiles that have large storage capacity and high mega pixel camera. So that the company should not look to make the best mobile phones, they should focus on meeting the customer’s data storage and capturing photos. When you think of high-quality products, Apple will be one of the top ones. Their products are so good that they set industry trends and standards. 3 Commerce 3. SELLING CONCEPT The selling concept holds the idea- The selling concept says that, if any company want to increase the product’s sale company should undertake promotion activities and selling activity at large scale if customer is not buy your product. In selling concept, the marketer consider that customers will be interested into purchasing the product &will like it; if they don’t like it, they will possibly forget their disappointment and Purchase it again later. This is usually a very poor and expensive consideration. Selling Concept example Selling Concept example every saw an ad online or TV commercial that you almost can’t escape and hide from? The Selling Concept is in play. Almost all companies eventually fall into this concept. “Fairness Creams” ads are hard to miss. If people like Fairness Creams or not, that is debatable, but you can see that PepsiCo is pushing it hard using ads. Almost all soft drinks and soda drinks follow the selling concept. These drinks have no health benefits; you can easily replace them with water. 4. MARKETING CONCEPT The marketing concept says - To achieve organizational goal, company should focus on how they can deliver the desired satisfaction about the needs and wants of target markets or customers. Organization should try to do best than the competitors are doing. Here marketing management gives first priority preference to Customers. Under the marketing concept, customer choice and value are the important routes to achieve sales and profits. 1.2.2. FEATURES OF MARKETING 1. Customer Oriented: The marketing function of a business is customer-centered. In marketing, business need to find human needs and produce a product according to demand which helps to keep customer retention for long time. Hence every activity of business is customer oriented. 2. Customer satisfaction: To achieve organizational goal, business or marketer should focus on the satisfaction of customers. that they will get benefits from the product for which they are paying money, Customers will satisfy when they will get more benefits from the product. Customer satisfaction can be increase by providing good quality service which will add some additional values and facilities. 3. Objective-oriented: Every business organisation has objective is that to earn profit. To achieve business goal, they should fixed the objective at different 44 level which will provide satisfaction of human needs. All marketing  activities are objective-oriented. To achieve objectives, marketing Introduction to Marketing activities undertaken by sellers make an attempt to analyse the sickness in the system, and measures are taken to improve the deficiency of the system. 4. Continuous and regular activity: Marketing is continuous activity. Marketing activity is addressing both the existing as well as the new customers. Thus, it is a continuous process, he has to consistently monitor environment. This helps in new coming product. 5. Easy Exchange Available: Marketing includes exchanging of goods, services and new concepts in exchange of money. Mostly exchange of goods and services are take places between sellers and purchaser. This function includes distribution, post-sale services, and packaging help in the exchange process. Channels of distribution and physical distribution play an important role in the exchange process and it creates place utility. 6. Environment: Many factors are involved in the marketing environment which will affect on the marketing environment such as political technological, demographical as well as economic policies, market conditions are influence on marketing activities. 7. Marketing mix: In marketing, product, price, promotion, and place these are the main components of marketing mix. Company’s marketing system includes these all four elements. Marketing mix is not static combination of variables. They are influenced by consumer behavior, trade factors, government regularity measures 8. Integrated approach: To achieve organizational goal, marketing activities should be coordinated with other functional areas. Otherwise, it will result in organizational conflicts. Functions such as financing function, production function, purchasing function public relation, storekeeping function etc. 9. Marketing is an art and science: In any kind of business, some extra ordinary skills are required in marketing activities, tat skills are comes under art category and Science includes systemics entity of knowledge which is based on facts and principles. The concept of marketing includes a group of social sciences such as economics, sociology, psychology and law. It indicates market operations based on some principles. Hence, marketing is an art as well as a science. 5 Commerce 1.2.3. IMPORTANC OF MARKETING 1. Marketing Helps in Transfer, Exchange and Movement of Goods: Marketing is very helpful tool in transfer of goods and services. Customers will get goods and services via various channels of marketing like wholesaler, retailer, etc. in this way marketing is helpful as well as useful to customer as well as producers. 2. Marketing Is Helpful In Raising And Maintaining The Standard Of Living Of The Community: Marketing is providing a good standard of living to the community. According to Paul Mazur – Marketing is the delivery of standard of living. By providing the good quality of goods and services to the consumer at reasonable price, marketing has played an important role in increasing and maintaining standard of living of the society. In society 3 classes of people will be there i.e poor, middle class and rich. Marketing is providing everything which used by these classes 3. Marketing Creates Employment: Marketing is work like a system, where involving many people in a form or the other. The major marketing functions are buying& selling of goods and services, financing, transport, warehousing, risk bearing and standardization, etc. In each function different activities are performed by a large number of individuals and entities. Thus, marketing gives employment to many people. 4. Marketing as a Source of Income and Revenue: Marketing does provide many opportunities to earn profits in the process of buying and selling the goods and services, by creating time and place utilities. The income and profit which will arise from the process are reinvested in the concern, thereby earning more profits in future. Marketing should be given the greatest importance, since the very survival of the firm depends on the effectiveness of the marketing function. 5. Marketing Acts as a Basis for Making Decisions: In modern times marketing has become a very complex and mind- numbing task. Marketing has emerged as new specialised activity along with production. As a result, producers are depending largely on the mechanism of marketing, to decide what to produce and sell. With the help of marketing techniques, a producer can regulate his production accordingly. 66 6. Marketing Acts as a Source of New Ideas: Introduction to Marketing The concept of marketing is a vigorous concept. Marketing a mechanism of measurement, it gives scope for understanding the new demand pattern and thereby produce and make available the goods accordingly. 7. Marketing Is Helpful in Development Of An Economy: Adam Smith has remarked that “nothing happens in our country until somebody sells something”. Marketing is the kingpin that sets the economy revolving. The marketing organisation, more scientifically organised, makes the economy strong and stable, the lesser the stress on the marketing function, the weaker will be the economy. 1.2.4. EVOLUTION OF MARKETING CONCEPT Market Evolution: Definition, Stages of Market Evolution Evolution, in dictionary term, means the process of growth. In other words, evolution is the theory that sees in the history of all things – a development or gradual advance from a simple and rudimentary condition to one that is more complex and of higher character. Thus, market evolution means the development of the Market from an initial position to one that is more critical. In the product life cycle concept; the attention there was on the product. o. We should aware about, what will happen in different stages of the market during its evolution. Stages of Market Evolution 7 Commerce 1. Emergence Stage of Market If any marketer does not serve a particular market, it remains in a latent form. Customers have so many needs, some of which are not completed because of the lack of products capability of satisfying a particular need. This necessarily does not mean that market for a particular product capable of satisfying an not completed need is non-existent. The market for such products is termed as latent. “A latent market consists of people who share a similar need or want for something that does not yet exist People are not yet satisfied with the speed of the existing channels of transportation. They want faster channels of transportation. For example, an entrepreneur realizes this and is willing to develop something based on most modern computer technology which is capable of satisfying this need better than ever. If he is serious, he should determine the new product’s attributes – superior and faster mode of transport. After getting an idea of potential customers’ preference levels, the entrepreneur should design an optimal product to satisfy them. If you look at the following figure, you will know how customers’ preferences vary. customer preference distribution for a particular product during latent market stage In the figure, each of the zeroes represents individual preference, which clearly tells us that preferences are very different from each other. Some potential customers will be happy getting two new attributes, where others want as many as seven. We can call such a market a meandering preference market where buyers’ preferences are scatter. In such a situation, it is difficult to develop an optimal product catering to potential buyers’ needs. Here, a marketer may pursue any one of the following three strategies: 88  Single-Niche Strategy: If the marketer decides to develop the Introduction to Marketing product to satisfy one of the corners of the market, it is termed as a single-niche strategy. Multiple-Niche Strategy: If the marketer decides to develop and launch more than one new product aiming at more than one segment of the total market, we call it a multiple-niche strategy. Mass-Market Strategy: Under this strategy, the marketer aims at the middle portion of the market where concentration is heavy. If a firm decides to follow this strategy its potential sales could be expected to be much higher than the potential sales generated by the other two strategies. The decision with regards to the strategy to be pursued depends to a great extent on the size of the firm. 2. Growth Stage of Market You know that the emergence stage starts with the launching of the product. On the other hand, the growth stage begins as new firms enter the market and compete with the pioneer firm. Since this is the era of extreme competition, new firms will immediately enter the market if they see the market is profitable to operate. The new firm can decide to pursue the single-niche strategy, thus focusing on one corner of the total market. The second alternative is to pursue a mass-market strategy. Here the new entrant plans to place or position its product close to the pioneering firm. The third option is to go for the multiple-niche strategy. Here the firm first finds out few untapped corners of the market and then decides to capture a few corners. As we have mentioned before, the decision on strategy depends on the strengths of the new firm. If it finds itself stronger and larger, it may decide to go for face-to-face/direct competition with the pioneering firm. It may be successful or not depending on how it undertakes and implements the marketing programs. The new large firm may also decide to avoid direct competition and go for a multiple-niche strategy, giving it a competitive advantage. 3. Maturity Stage of Market When most of the segments of a product’s total market are tapped and served by different competing firms, the market reaches the maturity stage. It is a common picture of any market. In the primary stage, one or two firms dominate the market. Gradually new firms are attracted either because the market is 9 Commerce profitable, or some of the segments remains yet to explored. When all of the major segments are covered, marketers find it unprofitable operating in one or a few segments. They then decide to attack each other’s segments and capture the segment’s total or part (s). This leads to lower profits for the competing firms. This slows down the market growth, and customers start demanding more, leading to a more fragmented market. This again reduces competition within the segments. But as the segments’ sizes become smaller, profits further reduce, leading to market consolidation. The innovative and larger firms will try to develop new element and influence customers more with new element or feature. This will cause some customers to switch to the firm’s product, thus harden its position in the market. As a result, some of the competitors will either be carried off or pushed to certain corners of the market. This is called the market consolidation stage. The consolidated market also does not last long because other firms may imitate the firm’s new attribute, resulting in further competition. The market again may be turned into a fragmented one. This fragmentation process to consolidation to fragmentation and again to consolidation continues for some time until the market reaches the decline stage. 4. Decline Stage of Market The process of fragmentation consolidation fragmentation continues for some time. Declining stage will start when demand of market falls. There are two common reasons for the decline in market demand for a product. First, society’s need level for a particular product may decline, which reduces the need for a specific product. Second, new technology may not capable of producing better products. If people are offered new and better products, they will most likely substitute the old one for the new one. To survive, a firm should accept itself to the new technology and new demands of society 1.2.5. DIFFERENCE BETWEEN STRATEGIC MARKETING AND TRADITIONAL MARKETING Traditional Marketing Points Strategic Marketing Traditional Marketing Meaning Strategic marketing believes in focused on maximum maximizing profit of the profit at any cost for marketer by satisfying the marketer. customers. Traditional Marketing Revolves Strategic marketing revolves revolved around the around buyer and is followed seller and was in in the 21st century across the existence namely globe. before 1950s 10 10  Traditional Marketing SWOT Strategic marketing Introduction to Marketing hardly undertakes Analysis periodically undertakes SWOT analysis. SWOT analysis. Traditional marketing Marketing Strategic marketing invests lot hardly invest funds in Research of funds in marketing research marketing research. Traditional Marketing Product Strategic marketing places lot hardly place emphasis Quality of emphasis on research and on Research and develop to improve quality Develop new product. and develop new products. 1.2.6. FUNCTIONS OF MARKETING 1. Market Research: A complete research on competitors, consumer expectations and demand should be complete before launching a product into the market. Every marketer should know about the competitors like what strategies used by competitors, how many competitors are in market etc. 2. Market Planning: market objectives, marketer should prepare a plan in respect of production and promotion activities. After proper research, a proper plan is designed based on the target customers, market share to be captured so that production level will be possible. 3. Product Design and Development: the product or service designed should be created which is related with the research data Sales would happen where attractive designs will be implemented and develop it continuously. 4. Buying and Assembling: In order to produce new product according to market expectation, need to buy of raw material and assembling of parts is done to create a product or service. 5. Product Standardization: The product is marked as per its quality and the quality of its raw materials. It includes size, quality, colour, design, weight, etc. standardization would help to business for sales as well as it helps to customers to select the product according to standard and grading of product. It makes sale and purchase easy. 6. Packaging and Labeling: To make the product more attractive and self-informative, it is packed and labeled listing out the ingredients used, product use, manufacturing details, expiry date, etc. Many times, customers demand product in different quantity, it is necessary to special packing. Attractive packing helps to attract the customers and ultimately results in increase sale. Label is a slip which contains all detailed information about product. By reading the product label customers would get the details about the product. 11 Commerce 7. Branding: A fascinating brand name is given to the product because of that differentiation would become possible with the other similar products in the market. 8. Pricing of the Product: it is most important function of marketing to fixing the price of the product. The product is priced keeping in mind the value it creates for the customer and cost of production. 9. Promotion of the Product: Next step is to create awareness about product and services to the people through advertisement. To achieve business goal need to take more efforts on promotion activities to know more about the product to the customers. 10. Warehousing and Storage: The goods are generally produced in huge amount of quantity and therefore there is need to be stored in warehouses before being sold in the market in small quantities. 11. Selling and Distribution: To reach out to the consumers spread over a vast geographical area, selling and distribution channels are to be selected accordingly. 12. Transportation: Transportation means are decided for transfer of the goods from the manufacturing units to the wholesalers, retailers and consumers. 13. Customer Support Service: The marketing team remains in contact with the customers even after selling the product or service to know the customer’s experience, and the arise satisfaction CHECK YOUR UNDERSTANDING State true or False 1. Product concept says that “Consumers will favor products that are available and highly affordable.” This concept is one of the oldest Marketing management orientations that guide sellers. 2. Adam Smith has remarked that “nothing happens in our country until somebody sells something”. 3. Strategic marketing Strategic believes in minimizing profit of the marketer by satisfying customers 4. Market evolution means the development or gradual advance of the market from an initial position to one that is more critical. Answer Key: 1- True, 2- True, 3- False, 4- True 1.3. MARKETING RESEARCH The market research is an important element of the process of marketing research. Marketing research includes the complete analysis of the market. 12 12 Information regarding the nature, size, organisation profitability of different markets, changes in markets and various factors- economic, Introduction to Marketing social and political-affecting those changes are studied. The main purpose of market research is to gather information about customers, market and product and services. Marketing research is defined as, “The systematic, search for the study of the facts relevant to any problem in the field of marketing.” Marketing research may be described as a tool of getting facts to be used by the executive in formulating policies and plans. It can also be defined as the systematically collecting, recording and analyzing of data about problems relating to marketing of goods and services. It is a systematic search for information. It includes data collection, analysis and interpretation. Research cannot draw decisions, but it helps the marketers to take proper decision related the task. 1.3.1. MARKETING RESEARCH PROCESS 1. Identification and Defining the Problem: The market research process begins with the identification “of a problem faced by the company. The statement of problem may not be possible at the outset of research process because only the symptoms of the problems are clearly visible at that stage. Then, after some explanatory research, clear definition of the problem is of crucial importance in marketing research because such research is a costly because in process involving time, energy and money. 2. Statement of Research Objectives: After identifying and defining the problem with or without explanatory research, the researcher must take a formal statement of research objectives. Such objectives may be stated in qualitative or quantitative terms and expressed as research questions, statement or hypothesis. For example, the research objective, “To study the profitability out the extent to which sales promotion schemes affected the sales” is a research objective expressed as a statement. On the other hand, a hypothesis is a statement that can be supported by empirical finding. The same research objective could be stated as, “To test the proposition that sales are positively affected by the sales promotion schemes undertaken this winter.” Example of another hypothesis may be: “The new packaging pattern has resulted in increase in sales and profits.” Once the objectives or the hypotheses are developed, the researcher is ready to choose the research design. 3. Planning the Research Design or Designing the Research Study: After defining the research problem and deciding the objectives, the research design must be developed. A research design is a master plan specifying the procedure for collecting and analysing the needed information. It represents a framework for the research plan of action. 13 Commerce The objectives of the study are included in the research design to ensure that data collected are relevant to the objectives. At this stage, the researcher should also determine the type of sources of information needed, the data collection method (e.g., survey or interview), the sampling, methodology, and the timing and possible costs of research. 4. Planning the Sample: Sampling involves procedures that use a small number of items or parts of the ‘population’ (total items) to make conclusion regarding the ‘population’. Important questions in this regard are— who is to be sampled as a rightly representative lot? Which is the target ‘population’? What should be the sample size? How to select the various units for to create the sample? 5. Data Collection: The collection of data relates to the gathering of facts to be used in solving the problem. Hence, methods of market research are essentially methods of data collection. Data can be secondary, i.e., collected from relevant reports, magazines and periodicals, especially written articles, government publications, company publications, books, etc. Data can be primary, i.e., collected from the original base through empirical research by means of various tools. There can be broadly two types of sources (i) Internal sources— existing within the firm, such as accounting data, salesmen’s reports, etc. (ii) External sources— outside the firm. 6. Data Processing and Analysis: Once data have been collected, these have to be converted into a format that will suggest answers to the initially identified and defined problem. Data processing starts with the editing of data and its coding. Editing involves inspecting the data-collection forms for omission, legibility, and consistency in classification. Before tabulation, responses need to be classified into meaningful categories. The rules for categorizing, recording and transferring the data to ‘data storage media’ are called codes. This coding process facilitates the manual or computer tabulation. If computer analysis is being used, the data can be key punched and verified. In its simplest form analysis may involve determination of consistent patterns and summarising of appropriate details. The appropriate analytical techniques chosen would depend upon informational requirements of the problem, characteristics of the research designs and the nature of the data gathered. 7. Formulating Conclusion, Preparing and Presenting the Report: In the final stage in the marketing research process is that of interpreting the information and drawing conclusion for use in managerial decision. The research report should clearly and effectively communicate the research findings and need not include complicated statement about the technical aspect of the study and 14 14  research methods. Often the management is not interested in details Introduction to Marketing of research design and statistical analysis, but instead, in the concrete findings of the research. 1.3.2. MARKETING INFORMATION SYSTEM Marketing Information System (MIS) is a permanent arrangement for provision of regular availability of relevant, reliable, adequate, and timely information so that it would become easy for making marketing decisions. Information keeps the organisation actively functioning, alive, and connected with internal and external marketing participants. It is a valuable asset for a firm as it is a base to manage other valuable assets. The firm fails to manage information (i.e., collecting, analyzing, interpreting, storing, and disseminating of information) will definitely fail to attain goals. Today’s marketing is dynamic, and manager has to undergo necessary changes to cope with the pace of changing marketing environment. Information is a basic input to know what is happening and what is going to happen. Marion Harper has rightly asserted: “To manage a business well is to manage its future, and to manage the future well is to manage the information.” A company needs information on a continuous basis to be aware of marketing developments taking place in the market. In order to learn about changing needs of customers, new competitors’ initiatives, changing distribution practices, recent trends in promotion practices, etc., a manager requires the permanent arrangement to get the needed information on a regular basis. The system or arrangement that deals with providing the information regularly is known as marketing information system (MIS). 1.3.3. DEFINITIONS Marketing Information System (MIS) has been defined as: 1. Philip Kotler: “A marketing information system is a continuing and interacting system of people, equipment’s, and procedures to gather, sort, analyze, evaluate, and distribute the pertinent, timely, and accurate information for use by marketing decision-makers to improve their marketing planning, implementation, and control.” Philip Kotler gives alternative definition, such as: “A marketing information system (MIS) consists of people, equipment’s, and procedures to gather, sort, analyze, evaluate, and distribute the needed, timely, and accurate information to marketing decision makers.” 1.3.4. COMPONENTS OF MIS MIS is made of parts, subparts or subsystems which are called the components. Typically, according to Philip Kotler, a marketing information system consists of four interrelated components – Internal Reports (Records) System, Marketing Research System, Marketing 15 Commerce Intelligence System, and Marketing Decision Support System, as shown in Figure 1. All components are interrelated and interdependent. Components of marketing information system 1. Internal Records System: Internal records system is a major and easily accessible source of information. It provides the results data. It includes all records of marketing operations which will be available within organisation. This system concerns with collecting, analyzing, interpreting, and distributing required information from records of various departments of the company. Main sources include various records on sales and purchase, ordering system, sales force reporting system, inventory level, receivable-payables, marketing staff, costs, the past research works, and other literatures/reports available within organisation. To manage the internal record system, some companies appoint internal MIS committee to deal with all aspects of internal information. The committee: (1) Attends request for all type of information required by managers, (2) Determines sources of the information and tools needed to collect, evaluate, and analyze information, (3) Deals with presenting, distributing and updating the information, (4) Handles complaints of employees, and (5) Performs all types functions related to information. Internal records system keeps continues followup of the information throughout the organization without much expense and efforts. Managers can get the up-to-date information about marketing operations. Once the system is set up properly, it can serve the purpose continually. 2. Marketing Intelligence System: While internal report system concerns with information available from internal records of organisation, the marketing intelligence system supplies the managers with happening data. It provides information about external happenings or external environment. 16 16  Marketing intelligence system is: Introduction to Marketing While internal report system concerns with information available from internal records of organisation, the marketing intelligence system provides the managers with occurrence or current data. It provides information about external happenings or external environment. Marketing intelligence system consists of various methods, procedures and sources used by managers to obtain every- day information regularly about appropriate developments in the marketing environment. A manager can try to expose external environment in various ways. Marketing intelligence system includes of various methods. A manager can use one or more below mentioned methods: i. Reading newspapers, books, and other publications. ii. Watching TV, hearing radio, or Internet surfing. iii. Talking to customers, dealers, suppliers, and other relevant parties. iv. Talking to other managers and employees of his company as well as of other companies. v. Maintaining live contacts with other officials and agencies. vi. Purchasing useful information from professional sources. vii. Assigning marketing intelligence task to professional agencies, etc. Effective marketing intelligence system can facilitate managers to take immediate actions like reacting to competitors, meeting changing needs of customers, solving dealers’ problems, and so on. 3. Marketing Research System: Marketing research is a very strong and separate branch of the MIS. It is a formal study of specific problems, opportunities, or situations. Normally, it is carried out for solving the specific problem. In this sense, it is not a part of routine activity. It collects need-based information. Nowadays, it is treated as the separate discipline or subject. Philip Kotler defines: “Marketing Research is the systematic design for collection, analysis, and reporting of data and findings relevant to specific marketing situations facing the company.” In marketing research, for collection of data primary and secondary source and various tools and methods can be used. For presenting the report collected date should be analyse properly by using appropriate statistical tools and present finding in the form of report. It is conducted by internal expert staff or external professionals. 4. Marketing Decision Support System (MDSS): Previously, the element was known as Analytical Marketing System. While former three components supply data, the marketing decision support system concerns more with processing or analyzing available data. This component can improve efficiency and utility of the whole marketing information system. The system is used to help managers in the decision-making process. John D. C. Little defines: “A marketing decision support system (MDSS) is coordinated collection of data, systems, tools, and techniques with supporting software and hardware by which an 17 Commerce organisation gathers and interprets relevant information from environment and turns it into a basis for making decisions.” 1.3.5. FEATURES OF MARKETING RESEARCH 1. Continuous process: Marketing research is not only continuous but also a scientific and system-atic process. It is scientific and systematic because it has well-defined procedures. It is a process of generating and evaluating data, and then refining it. It is professionally organized. It is a continu-ous process because every firm is faced with problems and opportunities. 2. Wide scope: Marketing is a specialized activity. It encompasses several functions. Thus, market-ing research has a wide scope. It includes product research, market research, consumer research, promotion research, international market research, price research and distribution research. 3. Aid to decision-making: It helps the managers take practical decisions. Decisions based on experience and research is better than decisions based on intuition. Functions such as descrip-tion, evaluation, explanation and prediction by the marketing researcher help in practical decision- making. Thus, it an essential tool not only for marketing managers but also for other functional managers. 4. Uncertainty of conclusions: Consumer is the focal point of marketing research. However, con-sumer behaviour is difficult to judge precisely. It is not a physical science, but social science. Due to this inherent nature, it suffers from certain levels of inaccuracy. 5. Applied research: Marketing research is not fundamental research because it does not reveal conceptual aspects. It is applied research, as it begins with defining or identifying a problem or opportunity, and ends with a follow-up of recommendations made from research. Moreover, it is related to the commercial aspects. 6. Commercial intelligence: Marketing research is equivalent of military intelligence. It provides vital insights and information of product, price, place and promotional aspects. It is the soul of modem marketing management. 7. Statistical tools: Various mathematical and statistical tools are used for data analysis and inter-pretation. Percentages, ratios, averages, z-test, t-test, chi- square tests, etc. are used for presenta-tion and interpretation of 18 18  findings. The use of computer software has made it more convenient Introduction to Marketing for in-depth analysis, cross-sectional studies, detection of errors in sampling and questionnaires. 8. Research approaches: A researcher has several options of research methodology. Methods include the field survey method, the observation method and the experimental research. The choice depends on factors such as time availability, funds, number of respondents to be covered, location of respondents and literacy levels. 9. Links a company to the consumers and public: Marketing research is a function that links a company to the consumers, customers and public, through information. It evaluates marketing actions, marketing performances and marketing processes. This evaluation results in collection of information that brings company closer to its customer and society. 1.4. DATA MINING data mining is process that companies are used to turn collected raw data into useful information. By using software to look for patterns in large batches of data, businesses can learn more about their customers to develop more effective marketing strategies, increase sales and decrease costs Marketing data mining is used to search large databases and to improve market segmentation. It is possible to predict their behavior by analyzing the relationship between parameters such as customer's age, gender preferences, etc. to guide personal loyalty campaigns. Will unsubscribe from a service and what should be included in the mailing list based on what they are interested in or to get high response based on their search. Data Mining also finds out which offers are most valued by customers or increase in the checkout sales queue. Examples: 1. Marketing Data mining is used to explore increasingly large databases and to improve market segmentation. By analysing the relationships between parameters such as customer age, gender, tastes, etc., it is possible to guess their behaviour in order to direct personalised loyalty campaigns. Data mining in marketing also predicts which users are likely to unsubscribe from a service, what interests them based on their searches, or what a mailing list should include to achieve a higher response rate. 2. Retail. Supermarkets, for example, use joint purchasing patterns to identify product associations and decide how to place them in the aisles and on the shelves. Data mining also detects which offers are most valued by customers or increase sales at the checkout queue. 19 Commerce 1.4.1. IMPORTANCE OF DATA MINING 1. Data mining helps in cluster analysis: Data Mining Helps Cluster Analysis By dividing your business database. You can identify the right information like advertising messages and specific emails with the right audience and meet their needs. Cluster Analysis enables you to select information based on your exact requirements 2. Data mining provides a competitive advantage: No business uses business intelligence it will fall behind in this difficult situation competitive business environment Online presence with most organizations is strong Data is modernized Currency format trend determines and builds or breaks down businesses that know how to take advantage of information and follow the data trend gaining competitive advantage puts them at the top of the food chain. They are more about the audience than the business and these trends show you how to improve your marketing and business strategies to become highly competitive. 3. Reduced costs: modern technology as well as artificial intelligence advanced technology plays an important role in data mining and allows them to do a lot of useful things to improve their operations including the following: Forecast the trends in financial Improve consumer experiences Reinforce security Prevent frauds Increase revenue Reduce operational costs Data mining further allows companies to take a more customer- centric approach. It helps to determine their profits, customer satisfaction, Forecast the trends in financial markets impact on sales, product positioning, customer preferences, pricing, and much more. That is why data mining is used in Healthcare Market analysis Education Manufacturing engineering CRM Fraud detection Intrusion detection 20 20  Customer segmentation Introduction to Marketing Financial banking Corporate surveillance Research analysis Criminal investigation Bioinformatics Business intelligence 4. Data Mining Improves Audience Targeting: All businesses use data mining for marketing. Data Mining helps to estimate potential risks to reduce sales costs and improve customer satisfaction. It also helps in market segmentation competition analysis and audience acquisition or customer satisfaction. Knowing what your customers want and giving them these things at the right time, this is the fastest way to achieve your business objectives. It also helps you build brand loyalty so you get strong customer base and flawless brand reputation. This can only be done by providing the right information. If you are always aware of the customer experience, you will slowly but surely build an army of loyal customers. 5. Data Mining Techniques Enable You to Forecast Sales: You can use a variety of data mining techniques and methods to gauge your customers' buying habits and when they are likely to repurchase. And to manage inventory, what products are best- selling, how to drive more traffic, how to generate more leads, and how to increase your conversion rate. This device will provide insights. 6. Data Mining Helps Detect Anomalies: Regardless of your business niche and industry, every organization is exposed to some risks and human error. What matters is that your business must be able to handle the consequences of mistakes made by your customers, employees, suppliers, manufacturers, partners, and so on. The modern business landscape is a sensitive environment, and just one mistake can ruin your reputation, especially if we’re talking about e-commerce. If you’re able to detect an anomaly before it occurs and escalates, you can significantly improve the overall effectiveness of your business strategy. 7. Credit Card Marketing: The best example of how useful data mining is can be seen in the way UN issues Visa credit cards to carefully selected and well- targeted wealthy travelers. Visa marketers segmented their database to target the right audience with email marketing and exceeded industry standards with the response is generated. 21 Commerce CHECK YOUR UNDERSTANDING Fill in the blanks with suitable word. 1. --------- helps predict possible risks, increase sales, reduce costs, and improves consumer satisfaction. A. Data Mining B. Consumer behaviour C. Market segmentation D. CRM 2. Data mining is a process used by companies to turn raw data into useful ---------- A. Strategy B. Information C. Process D. technique. 3. “________is the systematic, search for the study of the facts relevant to any problem in the field of marketing. A. Market Research B. Market Targeting C. Market Segmentation D. CRM 4. --------------- as a tool of getting facts to be used by the executive in formulating policies and plans. A. Market Research B. Market Targeting C. Market Segmentation D. CRM 5. --------------is the systematically collecting, recording and analyzing of data about problems relating to marketing of goods and services. A. Market Research B. Market Targeting C. Market Segmentation D. CRM 6. A _________system is a continuing and interacting system. A. Market Research B. Market Targeting C. Market Information D. CRM 7. _________ is a powerful and independent branch of the MIS. A. Marketing Research B. Market Targeting C. Market Information D. CRM Answer Key: 1- A., 2- B, 3- A, 4- A, 5- A, 6 – C, 7- A. 1.5. MARKET SEGMENTS Market segmentation can help you target people who are likely to be satisfied customers of your company or enthusiastic customers of your content when you are not done for your audience. The best way to classify the audience in this way allows for more accurate attention marketing and individual actions and content. Market segmentation is the expansion of the market. Market segmentation is a process of dividing the market of potential customers into smaller segments on the basis of certain characteristics like demographics, interests, needs, or location. 22 22 1.5.1. BASES OF MARKET SEGMENTATION Introduction to Marketing Segmenting is dividing a group into subgroups according to some set bases. These bases range from age, gender, etc. to psychographic factors like attitude, interest, values, etc. 1. Gender Gender is one of the simplest yet important bases of market segmentation. The interests, needs and wants of males and females differ at many levels. Thus, marketers focus on different marketing and communication strategies for both. This type of segmentation is usually seen in the case of cosmetics, clothing, and jewellery industry, etc. 2. Age Group Segmenting market according to the age group of the audience is a great strategy for personalized marketing. Most of the products in the market are not universal to be used by all the age groups. Hence, by segmenting the market according to the target age group, marketers create better marketing and communication strategies and get better conversion rates. 3. Income Income decides the purchasing power of the target audience. It is also one of the key factors to decide whether to market the product as a need, want or a luxury. Marketers usually segment the market into three different groups considering their income. These are High Income Group Mid Income Group Low Income Group This division also varies according to the product, its use, and area in which business has operation. 4. Place The place is where the target audience lives affect the buying decision the most. A person living in the mountains will have less or no demand for ice cream than the person living in a desert. 5. Occupation Occupation, just like income, influences the purchase decision of the audience. A need for an entrepreneur might be a luxury for a government sector employee. There are even many products which cater to an audience engaged in a specific occupation. 6. Usage Product usage also acts as a segmenting basis. A user can be labeled as heavy, medium or light user of a product. The audience can also be segmented on the basis of their awareness of the product. 23 Commerce 7. Lifestyle Other than physical factors, marketers also segment the market on the basis of lifestyle. Lifestyle includes subsets like marital status, interests, hobbies, religion, values, and other psychographic factors which affect the decision making of an individual. 1.5.2. BENEFITS OF MARKET SEGMENTATION 1. Increases clarity: Developing clarity is the first but most important advantage of market segmentation. After cleaning and mining your market data you can get the most accurate and relevant information about the market. 2. Develops consumer insights: Develops Knowing your potential customers is always challenging for every business Born in the current digital age your customers are just a click away when they are overloaded however the contact profile and customer segment where you can get to know your customers better 3. Improves brand loyalty and customer engagement: Customer engagement is one of the most important benefits of market segmentation as it is important to reach customer’s needs and influence interests Collect customer’s behavior data from social platforms, mass media or any other source that and can complete the market can do to the psychographic division. Market segmentation has improved the way to engage customers with motivational efforts and communication 4. Streamlines mass customization: Another great advantage of Market Segmentation is that the market segmentation has made it easier for businesses to provide services or products tailored to the specific needs of customers in a particular area. 5. Optimizes for cost efficiency and resource management: Market segmentation has also become an essential tool for sustaining competitive advantage and developing business intelligence for cost efficiency and resource management. Increases market segmentation data plays an important role in identifying hidden market dynamics and in developing improved marketing strategies. 6. Grows niche marketing capabilities: Market segmentation data plays an important role in identifying hidden market dynamics and developing improved marketing strategies. Segmentation of market data can help businesses open up and grow potentially specific markets. 24 24 7. Promotes the application of business data: Introduction to Marketing Currently every business generates data and can access data across industries. Companies have the advantage of using post and pre- hawk methods in segmentation. Further data visualization can also be used to improve segmentation. 8. Increases credible valuation: Market segmentation can further manage marketing efforts. It has also become easier to measure the success of department specific policies and strategies and methods. Increasing access to data can allow businesses to analyze and evaluate marketing performance and redistribute it more effectively 9. Maintains freshness and new data: At present, information is bombarded with customers. This can have a profound effect on their priorities. However, market segmentation lets you evaluate your audience based on new data and help you strategize your business accordingly. 10. Focused on goals: The whole purpose of this practice is to get to know your customers better. With accurate data and insights available, you can easily stay focused and goal-oriented. 11. Informs Other Business Decisions: Market segmentation can give you useful insights about the customer and the market. Ultimately, it helps you better understand the needs and capabilities of the market and allows you to make well-informed business decisions. 12. Higher Customer Satisfaction: Market segmentation guides businesses to make marketing efforts marketable or customer oriented and helps them to better serve their customers. This will ultimately improve customer satisfaction. CHECK YOUR UNDERSTANDING. State true or false. 1. Market segmentation is an extension of market research that seeks to identify targeted groups of consumers to tailor products and branding in a way that is attractive to the group. 2. Market segmentation is a process of dividing the market of potential customers into smaller segments on the basis of certain characteristics like demographics, interests, needs, or location. 3. Geographic segmentation divides the market on the basis of psychographic segmentation. 4. Psychographic Segmentation divides the audience on the basis of their personality, lifestyle and attitude. Answer Key: 1- True, 2- True, 3- False, 4- True. 25 Commerce 1.6. SUMMARY According to Philip Kotler – Marketing is all about CCDVTP, that is Creating, Communicating, Delivering Value to the target market for profit. Marketing is an art and marketing it acts as link between producer and the consumers. To achieve business objective, every marketer should accept the changing business environment. A marketing concept is a strategy that a company pursues to meet customer needs, increase sales, increase profits, and win competition. There are 5 marketing concepts that organizations adopt and implement. These are; Product strategy, product strategy, sales concept, marketing concept and social marketing concept. Marketing helps to create employment opportunity, product demand, maximum profit etc. Data mining and market segmentation will help to provide information regarding market and the consumer as well as customers geographic, demographic, psychological information, and how market segments are beneficial to the marketers as well as to organization to achieve their objective. 1.7. EXERCISE FILL IN THE BLANKS 1. According to __________Marketing includes Creating, Communicating, Delivering Value to the target market for profit. A. Philip Kotler B. S.K Gupta C. O.P Agrawal D. Rajesh Viswanathan 2. The process of distribution and determination of price through the -- ------ for the studies in marketing. A. Demand & Supply B. Selling C. Maintained D. Strategy 3. -------------- is known as mother of marketing. A. Economics B. Mathematics C. Finance D. Digital Marketing 4. Under _______ concept company want to increase the product’s sale as well as company should undertake promotion activities and selling activity at large scale. 26 26  A. Promotion Concept Introduction to Marketing B. Product Concept C. Selling Concept D. Marketing Concept Answer Key: 1- A, 2- C, 3- A, 4 -A, WRITE SHORT NOTES 1. Concepts of Marketing 2. Objectives Marketing 3. Evaluation of marketing 4. Strategic Marketing 5. Market Segmentations and its benefits. 6. Market Research 7. Data Mining &Importance of Data Mining. WRITE A BRIEF ANSWERS Write definition of marketing. Explain features and objectives of marketing Elaborate concept of market evaluation and stages of market evaluation. What is market segmentation? State benefits of market segmentation. What is data mining? State it’s Importance. Write the meaning of market segmentation. Explain type of market segmentation. Write definition of market segmentation. Explain its base and importance 1.8. REFERENCES https://blog.hubspot.com/marketing/what-is-marketing https://www.yourarticlelibrary.com/marketing/marketing-features-top-11- important-features-of-marketing-explained/32290 https://www.yourarticlelibrary.com/marketing/marketing- research/marketing-research-meaning-scope-types-and-other- details/50859 https://www.yourarticlelibrary.com/marketing/7-stages-or-steps-involved- in-marketing-research-process/27953 https://www.yourarticlelibrary.com/marketing/mis-marketing-information- system-with-diagram/48703 https://www.iedunote.com/market-evolution https://theinvestorsbook.com/marketing.html https://www.yourarticlelibrary.com/marketing/12-important-functions-of- marketing/1074 27 Commerce https://www.lotame.com/what-is-market-segmentation/ https://www.bython.com/benefits-of-market-segmentation/ https://www.investopedia.com/terms/m/marketsegmentation.asp https://www.feedough.com/market-segmentation-definition-basis-types- examples/ https://www.investopedia.com/terms/d/datamining.asp#:~:text=Data%20 mining%20is%20a%20process,increase%20sales%20and%20decrease%2 0costs. https://www.iberdrola.com/innovation/data-mining-definition-examples- and-applications https://www.iberdrola.com/innovation/data-mining-definition-examples- and-applications https://tweakyourbiz.com/marketing/market-research/data-mining- advantages https://www.yourarticlelibrary.com/marketing/marketing-research- definitions-and-features-of-marketing-research/32280  28 28  2 CONSUMER BEHAVIOUR Unit Structure 2.0. Objective 2.1. Introduction 2.2. Influencing Factors on Consumer Behaviour 2.3. Customer Relationship Management (CRM) 2.4. CRM techniques 2.5. Market Targeting 2.6. Summary 2.7. Exercise 2.8. References 2.0. OBJECTIVE To understand the concept of consumer behaviour To Study the concept of affecting factors on consumer behaviour To study the concept of Customer Relationship Management To explore the concept of techniques of Customer Relationship Management To understand the concept of Market Targeting and its pattern 2.1. INTRODUCTION In the chapter, covers the concept of Consumer behavior that studies the actions of individual customers, groups, or organizations, how they select, use, and dispose of goods and services to meet their needs and desires. Customer Relationship Management (CRM) is not just a use of technology, but a strategy to learn more about the needs and behaviors of customers so that strong relationships can be developed with them. Customer Relationship Management (CRM) helps businesses gain insights into their customers' behavior and improve their business operations to ensure that customers are served as efficiently as possible. Aiming at marketing is a strategy that breaks a large market into smaller segments to concentrate on a specific group of customers within that audience. Instead of trying to reach an entire market, a brand uses target marketing to put their energy into connecting with a specific, defined group within that market. 29 Commerce 2.1.1. MEANING AND DEFINITION Consumer behaviour is the study of action of individual customers, groups or organizations how the select, use, and dispose goods and services to satisfy their needs and wants. Marketers are expected to understand the reasons why consumers want to purchase goods and services - to determine which products are needed in the market, which are accurate and how to present the goods to customers. The study of consumer behavior leads to the belief that consumers are market actors. The role theory approach assumes that consumers play different roles in the market. From the information provider, from the user to the payer and from the disposer, consumers play these roles in the decision-making process. Roles may vary in different consumption situations; For example, the mother plays an influential role in the child's purchasing process, while the family acts as a disposer for the products used. 2.2. INFLUENCING FACTORS ON CONSUMER BEHAVIOUR 1. Marketing campaigns: Marketing Campaigns will affect on purchasing decision of the consumers. If marketer arranges marketing campaigns regularly, with right marketing message, they can even consumers to change brands or opt for more expensive alternatives. Marketing campaigns, such as Facebook ads for e-Commerce, can even be used as reminders for products/services that need to purchase regularly but are not necessarily on customers’ top of mind (like an insurance for example). A good marketing message can influence impulse purchases. 2. Economic conditions: For expensive products especially (like houses or cars), economic conditions play a big role. A positive economic environment is known to make consumers more confident and willing to indulge in purchases irrespective of their financial liabilities. The consumer’s decision-making process is longer for expensive purchases and it can be influenced by more personal factors at the same time. 3. Personal preferences: Consumer behavior can also be influenced by personal factors: likes, dislikes, priorities, morals, and values. In industries like fashion or food, personal opinions are especially powerful. Of course, advertisements can influence behavior but, at the end of the day, consumers’ choices are greatly influenced by their 30 30  preferences. If you’re vegan, it doesn’t matter how many burger Consumer Behaviour joint ads you see, you’re not gonna start eating meat because of that. 4. Group influence: Peer pressure also influences consumer behavior. What our family members, classmates, immediate relatives, neighbors, and acquaintances think or do can play a significant role in our decisions. Social psychology impacts consumer behaviour. Choosing fast food over home-cooked meals, for example, is just one of such situations. Education levels and social factors can have an impact. 5. Purchasing power: Last but not least, our purchasing power plays a significant role in influencing our behavior. Unless you are a billionaire, you will consider your budget before making a purchase decision. The product might be excellent, the marketing could be on point, but if you don’t have the money for it, you won’t buy it. Segmenting consumers based on their buying capacity will help marketers determine eligible consumers and achieve better results. 1. Psychological Factors: Human psychology is a major determinant of consumer behavior. These factors are difficult to quantify but powerful enough to influence purchasing decisions. Some of the important psychological factors are: i. Motivation: When a person is motivated enough, it affects a person's buying behavior. A person has many needs such as social needs, basic needs, security needs, dignity needs and self-real needs. Out of all these needs, basic needs and safety needs take precedence over all other needs. So basic needs and security needs have the power to motivate the customer to buy products and services. ii. Perception: Consumer perception is a major factor that affects consumer behavior. Consumer retention is the process by which a customer gathers information about a product and interprets the information to create meaningful images about a particular product. When a customer sees ads, promotions, customer reviews, social media feedback, etc. related to a product, then they make an impression about the product. Consumer perceptions therefore have a major impact on consumer purchasing decisions. 31 Commerce iii. Learning: When a person buys a product, he / she gets to learn more about the product. Learning from experience comes over time. Consumer education depends on skills and knowledge. While a skill can be acquired through practice, knowledge can only be acquired through experience. Education can be either conditional or cognitive. In conditional learning the client has to face a situation frequently, which forces the client to respond to it. So in cognitive learning, the consumer uses his knowledge and skills to find solutions and solutions from the product he buys. iv. Attitudes and Beliefs: Consumers have certain attitudes and beliefs that influence their purchasing decisions. Based on this attitude, the consumer treats a product in a specific way. This attitude plays an important role in defining the brand image of the product. Therefore, marketers try hard to understand the attitude of the customer in order to design their marketing campaign. 2. Social Factors Social Factors Humans are social beings and they live around many people who influence their buying behavior. Human Try to imitate other people and want to be socially accepted in the society. So their buying behavior is influenced by other people around them. These factors are considered social factors. Some social factors are: i. Family: The family plays an important role in shaping a person's buying behavior. When a person buys family products, he develops preferences from an early age and keeps buying the same products even when he grows up. ii. Reference Groups: A reference group is a group of people to whom a person associates himself. In general, buying behaviour are common to all people in the reference group and they affect each other. iii. Roles and status: A person is affected by his role in the society. If a person is in a high position, his purchasing behavior is greatly affected by his position. If the person who is the CEO of the company buys according to his status, then the method of purchase of the employee or employees of the same company will be different buying pattern. 3. Cultural factors A group of people is associated with a set of values and ideologies that belong to a particular community. When a person comes from a particular community, his / her behavior is influenced by the culture 32 32  associated with that particular community. Here are some cultural Consumer Behaviour factors: i. Culture: Cultural factors have a strong influence on the behavior of the consumer buyer. Cultural factors include the core values, needs, desires, preferences, perceptions and behaviors that consumers see and learn from their immediate family members and other important people around them. ii. Subculture: There are many subcultures in a cultural group. These sub cultural groups share the same set of beliefs and values. Subcultures can consist of people from different religion, caste, geographies and nationalities. These subcultures by itself form a customer segment. iii. Social Class: Each and every society across the globe has form of social class. The social class is not just determined by the income, but also other factors such as the occupation, family background, and Education and accommodation. Social class is important for predicting consumer behavior. 4. Personal Factors Individual factors influence their buying behavior for customers. These individual factors vary from person to person, creating different perceptions and customer behaviors. Here are some individual factors:. i. Age: Age is a major factor influencing on purchasing behavior. Young people choose to shop differently than middle-aged people. The shopping behavior of older people is completely different. Teenagers will be more interested in buying colorful clothes and beauty products. Middle-aged people focus on home, property and vehicles for the family. ii. Income: Income has the potential to influence a person's purchasing power. Higher income gives consumers higher purchasing power. When a consumer's disposable income is high, it gives consumers more opportunity to spend on luxury products. Consumers in the low- income or middle-income group spend most of their income on basic necessities like groceries and clothing. iii. Business: The customer's business influences the buying behavior. A person tends to buy things that are right for his / her business. For example, if a doctor buys clothes according to profession, similarly way of purchase of a professor will be different. 33 Commerce iv. Lifestyle: Lifestyle is an attitude and a way in which a person lives in a society. Purchasing behavior is greatly influenced by the consumer's lifestyle. For example, when a consumer leads a healthy lifestyle, the products he or she buys are associated with healthier junk food options. 5. Economic Factors Consumer purchasing habits and decisions depend to a large extent on the economic situation of the country or market. When a nation is prosperous, the economy is strong, which gives more money to the market and gives consumers higher purchasing power. When consumers experience a positive financial environment, they are more confident in spending on product purchases. So, a weak economy represents a struggling market; Which is affected by unemployment and low purchasing power. Economic factors have a significant impact on a customer's purchasing decision. Here are some key financial factors: i. Personal Income: When a person's disposable income is high, purchasing power increases at the same time. Disposable income refers to the amount of money left over after spending on a person's basic needs. When disposable income increases, so does the cost of various items. But when disposable income decreases, the parallel costs on many items also decrease. ii. Family Income: Family income is the total income of all family members. When more people in the family earn, more income is available to buy basic necessities and luxuries. High family income affects family members to buy more. When extra income is available for the family, there is a tendency to buy more luxury items which one person would not have been able to buy otherwise. iii. Consumer Credit: When a customer is provides easy credit for purchasing goods, it promotes high spending. Sellers are making it easier for customers to get credit in the form of credit cards, easy installments, bank loans, rental purchases and many more. When more credit becomes available to consumers, purchases of comfort and luxury items increase. iv. Liquid Assets: Consumers who have liquid assets spend more on comfort and luxury items. Liquid assets are assets that can be easily converted into cash. Cash, bank savings and bonds are just a few examples of 34 34  liquid assets. When a customer has more liquid assets, he gets more Consumer Behaviour confidence to buy luxury items. v. Savings: How much a customer wants to save from his income has a huge impact. If the customer decides to save more, the cost of purchase decreases. Conversely, if a consumer is interested in saving more, most of his income will go to the purchase of products 2.3. CUSTOMER RELATIONSHIP MANAGEMENT Business is connected to its customers, the better we manage, the more success we will have. Therefore, an IT system that specifically addresses the problems of dealing with their customers regularly would help companies to grow popularly. Customer relationship management (CRM) is not just the application of technology but is a strategy to learn more about customers' needs and behaviours to develop stronger relationships with them. As such it is more of a business philosophy than a technical solution to assist in dealing with customers effectively and efficiently. Nevertheless, successful CRM relies on the use of technology. In the commercial world, the importance of retaining existing customers and expanding business is imperial. The more opportunities that a customer has to conduct business with your company the better and one way of achieving this is by opening up channels such as direct sales, online sales, franchises, use of agents, etc. However, the more channels you have, the greater the need to manage your interaction with your customer base. Customer relationship management (CRM) helps businesses to gain an insight into the behaviour of their customers and modify their business operations to ensure that customers are served in the best possible way. In essence, CRM helps a business to recognise the value of its customers and to capitalise on improved customer relations. The better you understand your customers, the more responsive you can be to their needs. CRM can be achieved by: finding out about your customers' purchasing habits, opinions and preferences profiling individuals and groups to market more effectively and increase sales changing the way you operate to improve customer service and marketing 35 Commerce 2.4. CRM TECHNIQUES 1. Automate Your Email Marketing Campaign Email marketing helps you reach your customers quickly, easily, and cost-effectively. It feeds into both CRM and marketing automation. A CRM (customer relationship management) is a system to manage all your company's interactions with current and prospective customers. To increase sales, to maintain customer relationship, customer retention, it would become an easy to integrate with email