Marketing Notes For Term-1

MODULE 1
CORE
MARKETING
ISSUES
Marketing: the delivery of customer value at a profit
Marketing Vs Selling:
 Selling occurs only after a product is produced.
 Marketing starts long before a company has a product.
Core Marketing Activities

 Product development
 R&D
 Communication
 Distribution
 Pricing
 Service
TRANSACTION MARKETING: trading of values between parties (either monetary or

barter transaction)
RELATIONSHIP MARKETING: the process of creating, maintaining and enhancing

strong value-laden relationships with customers and other stakeholders
Marketing Management: The analysis, planning, implementation and control of

programmes designed to help marketing.
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MARKETING MANAGEMENT CONCEPTS
 The production concept
 The product concept
 The selling concept
 The Marketing concept
 The societal marketing concept
The production concept
It holds that management should focus on improving production and distribution

efficiency because customers favour products that are available and highly affordable (it
is behind selling). This concept works better when demand exceeds supply.
The product concept
Consumers favour goods that offer quality, performance and features. In that respect we
should devote our energy in improving products (companies that have good research and
development and technology follow this concept). It can lead to “marketing myopia”.
The selling concept
Consumers will not buy enough of a product unless we undertake a large-scale selling
and promotion effort (i.e. unsought goods: encyclopedias, insurance). It aims on creating
sales transactions in the short-term – not building relationships.
The Marketing concept
Adding value to the customer more efficiently and more effectively than competitors.
The focus is on customer needs, and creating long term relationships (i.e. Toyota). It
works better when there is a clear need and when customers know what they want.
The societal marketing concept
Balancing company profits, customer wants and society’s interests. (it questions whether
purer marketing is adequate in an age of environmental problems and shortages,
worldwide economic problems and neglected social services. It asks, what is best to do
for society in the long-term) (i.e., consumer and doctor complaints that hamburgers are
rich in fat and salt)
Marketing in the Business Sector:

1. Consumer-packaged goods and companies
2. Consumer durables
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3. Industrial equipment
4. Airline firms
5. Insurance and financial services
6. Business groups (lawyers, accountants, physicians, architects etc.)
7. Non-profit organizations (schools, churches, hospitals, museums, performing arts,
police departments)
Markets and geographical barriers:

1. North & South America
2. Europe and Asia
3. Eastern Europe
4. Former Soviet Republics
CORE MARKETING CONCEPTS
Products
Needs, Wants
Demands
Value,
Satisfaction,
Markets Quality
Exchange,
Transactions,
relationships
NEEDS: Needs are states of felt deprivation. Abraham Maslow relates a hierarchy of
needs below:
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THE HIERARCHY OF NEEDS - MASLOW
Self-
Actualization
needs
Esteem needs
Social needs
Security needs
Physiological needs
WANTS: The form that a human need takes as shaped by culture and individual
personality. (A hungry person in Mauritius may want a mango and rice; a hungry person
in Hong Kong may want a bowl of noodles and jasmine tea; a hungry person in
Eindhoven may want a ham and cheese roll).
DEMANDS: human wants that are backed by buying power.
The relation between wants, resources and scarcity:
Wants are unlimited
Finite Insatiable
(limited) (unlimited)
resources wants
Scarcity
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PRODUCTS: Physical objects + services
CUSTOMER VALUE: the consumers’ assessment of the product’s overall capacity to

satisfy his or her needs (i.e. A Mercedes car).
CUSTOMER SATISFACTION: the extent to which a product’s perceived performance

matches buyer expectations.
TOTAL QUALITY MANAGEMENT (TQM): constantly improving the quality of

products, services and processes. (i.e. Motorola: if the customer does not like the product,
the product is a defect!)
EXCHANGE: Obtaining an object by offering something in return. (Marketing occurs

when people decide to satisfy needs and wants by exchange).
The conditions for exchange:

1. There must be always two parties
2. Both parties must have something of value to offer.
3. Exchange is voluntary
4. Each party must be able to communicate and deliver.
TRANSACTION: trading of values between parties (either monetary or barter

transaction)
RELATIONSHIP MARKETING: the process of creating, maintaining and enhancing

strong value-laden relationships with customers and other stakeholders.
MARKETS: the set of all actual and potential buyers of a product or service.
The Industry and Markets
communications
Products / services
Industry Market
(sellers) (buyers)
Money
information
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Marketing management and demand
Marketing management is concerned with finding and increasing demand. It also is
connected with changing demand or reducing it.
Marketing Management and relationships:

Emphasis shifts towards retaining profitable customers and building lasting relationships
with them (example: a Ford customer might well exceed 350,000 euros).
Marketing management practices

1. Entrepreneurial marketing: visualizing an opportunity and doing what it tales to
gain attention (i.e., Virgin Atlantic, Harley-Davidson)
2. Formulated Marketing: spending more on advertising in selected markets and
establishing marketing departments and marketing research (i.e. McDonalds)
3. Intrepreneurial Marketing: moving to the customer and re-establishing an
entrepreneurial spirit.
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MODULE 2:
STRATEGIC
MARKETING
PLANNING
1. Technologies
a. The internet
b. Cell phones
c. Fax
d. CD Roms
2. Customers
a. Selecting customers
b. Lifetime connections
c. Connect directly by use of IS
1. Marketing partners
a. Internal marketing
b. Supply chain management
c. Strategic alliances
2. Global connections
a. Global alliances
b. Connections with value & social responsibility (i.e., Mc Donald in
Beijing)
c. Broadening connections (i.e. the EURO)
Strategic planning
Planning to meet changing needs for the organization. It is the first stage of marketing
planning.
Marketing planning
It provides information and other inputs about the market to prepare the strategic plan.
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The annual plan
A short-term plan describing the company’s current situation, its objectives, the strategy,
action programme and budgets for the year ahead, and controls
The long-range plan

A plan describing the factors and forces affecting the organization during the next several
years (objectives and marketing strategies)
The strategic plan

A plan describing how a firm will adapt to take advantage of future opportunities and fit
them with company capabilities.
THE PLANNING PROCESS

1. Analysis: a complete analysis of the company’s situation. Analyze opportunities
and threats in the environment and strengths and weaknesses within the company.
2. Planning: this involves finding strategies that meet objectives (marketing,
product or brand plans).
3. Implementation: turning strategic plans into actions
4. Control: measuring and evaluating the results of plans and activities and taking
corrective action.
THE STRATEGIC PLAN

1. The mission
2. Strategic objectives
3. Strategic audit (external (PEST), internal – (value chain, balance sheet and profit
and loss account)
4. SWOT analysis
5. Portfolio analysis (Boston Consulting Group Martix)
6. Objectives and strategies (Generic Strategies matrix)
PEST Analysis
The Economic Environment

The factors that affect consumer buying power and spending patterns. Nations vary
greatly in their level of distribution of income (subsistence or agricultural Vs industrial
economies).
 Purchasing power: when consumers' purchasing power is reduced (i.e., during

recession) they tend to spend more carefully and seek greater value in the products and
services they buy.
 Income Distribution: how income is distributed among the population (middle class,
working class, upper class etc.) In general middle income groups are more careful
about their spending.
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 Changing consumer spending habits: people shift their spending as income rises
(Ernst Engel). For example as income rises people spend less for food and more for
investments.
The Natural Environment

Natural resources that are needed as inputs by marketers or that are affected by marketing
activities. These resources are:
 Shortages of raw materials: (forests, water, food, etc)
 Increased cost of energy: As oil reserves will become lesser companies are searching
for other forms of energy like solar energy, electricity, natural gas, nuclear energy,
wind etc. This also affects products and consumption patterns (i.e., from big cars to
small and economical cars)
 Increased pollution: the green movement makes companies think more about disposal
of chemicals, nuclear waste, mercury spills in seas, chemical pollutants and loitering
the environment. This enforces a trend toward “green marketing” in cosmetics,
detergents, catalysts, unleaded petrol etc.
 Government intervention in natural resources: governments enforce environmental
sustainability and environmental control (i.e., on pollution, global warming etc.)
Technological Environment
Forces that create new technologies, creating new product and market opportunities (i.e.,
the Internet creates opportunities for teleworking and e-commerce). These forces are:
 Fast pace of technological change: technology life-cycles are getting shorter (i.e., the
Pentium microprocessors). Companies that fail to anticipate and keep up with
technological change soon find their products outdated.
 Fast Research & Development budgets: Technology and innovations require more
investments in R&D (i.e., pharmaceutical firms spend 450 EURO to develop a new
drug)
 Concentration on minor improvements: as a result of the high cost of developing and
introducing new technologies companies make minor product improvements instead
of major innovations.
 Increased regulations: government agencies investigate and ban unsafe products (i.e.,
in testing new drugs)
The Political Environment

Laws, government agencies and pressure groups that influence and limit various
organizations and individuals in a given society. Such issues are
 Legislation regulating businesses: well conceived regulation can encourage
competition and ensure fair markets for goods and services. This governments develop
public policies to guide commerce (laws, regulations etc.) Examples are: packaging
&labeling, pricing, truth in advertising, product standards, fair trade.
 Growth of public interest groups: growth of environmental, feminist groups, ethic
minorities, senior citizens and handicapped people.
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 Increased stress on ethics and socially responsible actions: Beyond government
regulations companies are also governed by social codes and ethical rules (i.e. adult
oriented material to the Internet should not go to small children)
The Social Environment

Institutions and other forces that affect society’s basic values, perceptions, preferences
and behaviors. Here we have core beliefs against secondary beliefs that are open to
change.
Example: PEST Analysis for the global airline industry
Political: DeregulationWar and Terrorist Attack

Socio-Cultural: People Perception of Airline Safety
Economic: Global Economic Slowdown
Technological: Internet
Internal Analysis
 Evaluation of company position

 The Value Chain
FINANCE
MARKETING PERSONNEL
Internal
analysis
OPERATIONS R&D
FINANCE
 Does the firm has sufficient financial resources to fund its strategy?
 Is the mix of funding flexible?
 What is the cost of capital?
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 Can the firm raise new capital?
 How effective is financial planning and control?
PERSONNEL
 Is the recruitment policy developing the number and quality of people required to
implement the strategy?
 Is the training policy developing the necessary new skills and improving existing
competencies?
 Is the management development programme providing the quality of management
necessary to implement the corporate strategy?
MARKETING
 How efficient and effective are the component parts of the marketing mix?
 How strong (in terms of market share) is the firm in the market served?
 How effective is product development?
 How good is the firm at market research and at identifying trends or gaps in the
market?
 What is the relationship between turnover and profits?
 What is the relationship between profits and the customer base?
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Strategic advantage profile
(+ indicates a strength, - a weakness, and 0 indicates the null position)
Internal Area Competitive Strength/Weakness Evaluation
Finance High profitability, good cash flow, good budgeting +

system
Marketing Excellent New Product Development with +
international distribution. -
Some problems in segmenting foreign markets 0
Limited insight about brand image
Production Modern technology +
Good operations management capabilities +
Good Inventory management +
R&D Market research oriented R&D +
HR Good motivation, superior training +
Corporate Resources Company size good for industry +
Good strategic ability +
Strategies reviewed less often -
THE VALUE CHAIN (PORTER)
Firm Infrastructure
Ma
Support Human Resource Management

Activities
rgin
Technology Development
Procurement
rgin
Ma
Inbound Operations Outbound marketing Service

Logistics Logistics and sales
Primary Activities
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THE COMPANY MICROENVIRONMENT
Company
Marketing
Suppliers Buyers
intermediaries
Competition
The public
The Forces of Competition
According to Porter, the fight for market share competition is not manifested only in the
other players.....it is rooted in its underlying economics, and competitive forces exist that
go well beyond the established combatants in a particular industry. Customers, suppliers,
potential entrants, and substitute products are all competitors. Porter’s 5 forces (buyers,
suppliers, new entrants, substitute products and services and rivalry – see table below)
help us determine the nature and level of competition in any industry, and hence the basic
attractiveness of that industry in its terms of its profit-making potential. Awareness of the
five forces may help the company stake out a position in that industry that is less
vulnerable to attack and which could serve to gain more power in the future.
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THE 5 COMPETITIVE FORCES – M. PORTER
New entrants
Threat of new
entrants
Bargaining power of suppliers
Suppliers Rivalry Buyers
Bargaining power of buyers

Jockeying
for position
Threat of substitute
products and services
Substitute
products/services
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How the competitive forces influence strategy
THREAT/FORCE HOW THEY HOW TO

INFLUENCE CONTROL? MEANS
New capacity Entry barriers Economies of scale
New entrants Reduces prices Product differentiation
Government regulation
Limited return Avoiding ceiling on Differentiation

Substitutes Placing ceiling on prices prices (marketing)
Product quality
Buy better products Lock customers in Product differentiation

Customers Force down prices (switching costs) Improved quality of
Increase competition products and services
Price reductions
Advertising, IT
Raising prices Supplier/customer Sole partnerships
Suppliers Reducing quality of alliances Use IT
goods/services Switching costs
Forward integration Price cutting
Rivalry Price competition Switching costs Product differentiation
New products takeovers Mergers/acquisitions
Advertising R&D
SWOT Analysis
A final and necessary step of the strategic analysis involves bringing together the critical
strengths, Weaknesses, Opportunities and Threats in such a way that strategy options are
immediately obvious. To discover strengths and weaknesses we look at the internal
analysis. Similarly we can obtain a good indication of opportunities and threats by
looking at PEST analysis. The SWOT is a valuable tool in visualizing strategic options
and searching possible alternative strategies for the company.
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Example of a SWOT analysis (Value Shops – Hellenic Duty Free Shops)
S Strong financial position

good financial management
O Customers becoming selective
Global market expands
Good product line/variety Demand for Duty Free
Good trading abilityy Electronic commerce
Good management team New products/growing brands
Good marketing capabilities Industry is growing
Good distribution channels Industry growth profitability
Low price capability] Duty Free market stability
Company is growing Duty Free as adventure shoping
Satisfactory market share Duty Free as sources of profit
Exclusivity at points of sale Rise in tourism
W Costs are rising

Need to see various futures T Pressure to reduce prices
Increased competition
The Share is falling
Threat of new entrants
Delays in privitisation
Wholesalers’ growing power
Conflict amon g different actors
Need to adjust quickly to change
Difficulty to forecast sales
Unpredictability of the future
Avoiding to reach decisions
Duty Free Abolition
Short-termism
Delay in EU integration
Failure to attract investors
Delays in Fiscal Harmonisation
Inexperience with taxed goods
Instability of Money markets
Inexperience with wholesaling
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Tows Analysis (Example of ETA/SWATCH)
Formulating Strategy at ETA- Swatch
STRENGTHS WEAKNESSES
1) Strong financial position 1) Costs are rising
2) Good financial management 2) Doubts about brand name
3) Good trading ability (fashion product)
4) Improved productivity 3) Difficulties with segmentation
5) Good management team 4) Need to see the various futures
6) Improved communication
7) Good R&D capabilities
8)Improvements in quality/productio
9) Unique product
10) Marketing capabilities good
11) Good distribution channels
12) Low price capability
OPPORTUNITIES SO STRATEGIES WO STRATEGIES

1) Demand for standard watches 1) Expand into more markets 1) Develop/produce cheaper watches
2) Demand for unfinished products (Q4Q5Q9Q11S1S2,S3,S4,S5,S9S10,S11 (Q1,Q5,Q6,Q9,W1,W2,W3)
3) Demand for luxury watches ) 2) Invest only in profitable markets
4) Opportunities in electronics 2) Diversify in standard and (Q4,Q5,Q6,Q7,Q8,Q9,Q11,W3,W4)
5) Global market expands unfinished products 3) Make alliance with industrial
6) New Technologies and materials (Q1,Q2,Q9,S7,S8,S11,S12) buyers (Q9,Q11,S4)
7) Need for improved products 3)Emphasize quality/develop watch
(Q7,Q6,Q11,S4,S7,S8,S9,S10,S12)
8)Need for quality accuracy and
4) Enter electronics market
style
(Q4,Q5,Q6,Q7,Q9,S1,S2,S4,S7,S11,S12)
9)Industrial buyers
5) Create a total Swatch
10) Demand for individualised
environment
watch
(Q10,Q5,Q6,Q7,Q9,S1,S2,S3,S5,S6,S9)
11) Product is growing
THREATS ST STRATEGIES WT STRATEGIES
1) Barriers to foreign competition 1) Differentiate on product 1) Withdraw
2) Slackening demand (T8,T9,T4,T6,T8,T10,T12,S1,S2,S4,S5,S (T1,T2,T3,T4,T6,T7,T9,T10,W1,W2,W3
3) Pressure to reduce prices 7,S8,S9,S10,S12) ,W4)
4) Increased competition 2)Sell cheaper
5) Value added shifts to distribution (T1,T2,T3,T4,T6,T8,T9,T10,S7,S8,S9,S1
0,S12)
6) Threat of New entrants
3) Consider alternative time
7) Retailer's growing power
deliveries - make alliance in related
8) Need to adjust quickly to changes
industries
9) Capacity is augmented
(T11,T12,T2,T8,T9,S4,S5,S6,S7,S8,S12)
10) Substitutes to time delivery
11)Unpredictability of the future
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Generic Strategies Martix
GENERIC STRATEGIES MATRIX (PORTER)
Competitive Advantage
Broad
Target
Cost
Leadership Differentiation
Competitive
Scope
Focus Focus
Cost Differentiation
Leader
Narrow
Target
THE MARKETING PROCESS
1. PEST (Political, Economic, Social, Technological forces)

2. Demand measurement and forecasting (marketing research)
3. Market segmentation (dividing into market segments)
4. Market targeting (evaluation of segment attractiveness)
5. Positioning (the marketing-mix – 4Ps)
The marketing mix (4Ps)
1. Product (it includes both products and services)

2. Price (how much we charge for the product or service)
3. Place (All the company activities that make a product available to customers)
4. Promotion (Activities that communicate the product or service)
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The marketing plan
1. Executive summary ( a quick overview of the plan)

2. Current marketing situation (the marketing audit that presents background data
on the market, product, competition and distribution– see Textbook, p. 100 –
Table 3.2)
3. SWOT analysis (identifying opportunities, threats, strengths and weaknesses)
4. Objectives (define the company’s objectives in Sales, Market share, profits, etc.)
5. Marketing strategy (the broad marketing approach that will be used to achieve
objectives)
6. Action programs (what will be done? Who will do it? When?)
7. Budgets (profit and loss)
8. Controls (monitor the progress of the plan)
The Global Market: Global challenges for firms today
As international trade becomes more liberalized, firms are facing tougher foreign
competition in the domestic market (i.e., Indian banks trying to stop HSBC from
spreading to the Indian market). They must develop the ability to fight off competition in
their own country or to exploit business opportunities in foreign markets.
A global industry
Where the strategic positions of competitors in given geographic or national markets are
affected by their overall global positions.
The global firm
A firm that, by operating in more than one country, gains R&D, production, marketing
and financial advantages that are not available to purely domestic competitors (seeing the
world as one market)
Global Marketing
Global marketing is concerned with integrating or standardizing marketing actions across

a number of geographic markets.
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The global environment
The international trade system:
 Tariff: the tax levied by a foreign government against certain important products.
Tariffs are designed to raise revenue or to protect domestic firms.
 Quota: a limit in the amount of goods that an importing country will accept in
certain product categories. A Quota is designed to conserve on foreign exchange
and to protect local industry and employment.
 Embargo: a ban on the import of a certain product. (i.e., The Arab countries oil
embargo in 1973).
 Exchange controls: government limits on the amount of its country’s foreign
exchange with the countries and on its exchange rate against other currencies.
 Non tariff trade barriers: (i.e. bias against a foreign company’s product
standards).
The General Agreement on Tariffs and Trade (GATT)

A 50 year old treaty designed to promote world trade by reducing tariffs and other trade
barriers.
Regional free trade zones
 EU and the EURO

 NAFTA (North American Free Trade Association)
 MERCOSUR (Brazil, Argentina, Paraguay, Uruguay)
 EFTA (European Free Trade Association – Norway, Switzerland, Iceland,
Liechtenstein, FYROM, Ukraine, Croatia)
 AFTA (Asian Free trade Association – Philippines, Malaysia, Indonesia,
Singapore, Thailand, Vietnam, Cambodia, Laos, Myanmar)
The economic environment factors
 Industrial structure (agriculture economies, raw materials economies, exporting

economies)
 Income distribution
Political, Legal, and Environmental factors
 Attitudes towards international buying (India toward US firms)

 Government bureaucracy (is the system efficient for helping foreign companies?)
 Political stability (democracy? dictatorship?)
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 Monetary regulations (how much local money government lets go away?)
 Countertrade: paying with other items instead of cash (Boeing 747 with Rolls
Royce engines exchanged with Saudi oil).
The Cultural environment
Different cultures: a culture is a set of basic values, perceptions, wants and behavior
learned by a member of society from family and other important institutions.
 Class system in the UK
 Caste system in India
 Religion in Islam
 Social welfare in Sweden
 In Belgium baby girls wear blue and baby boys wear pink!
Basic questions in going global
 Should we go international?
 Which markets we enter?
 How we enter these markets?
How to enter?
 Exporting
Indirect (working through independent home-based international marketing
intermediaries
Direct: (the company itself handles its exports)
 Joint-venturing (Entering foreign markets by joining with foreign companies

to produce or market a product or service.)
 Licensing (the company enters into an agreement with a licensee in another

country (i.e., a trademark)
 Contract manufacturing: (a joint venture in which a company contracts with

manufacturers in another country to produce the product.)
 Management contracting (where the domestic firm supplies the management

know-how to a foreign company that supplies the capital)
 Joint ownership (when a company joins investors in a foreign market to create a

local business in which the company shares ownership/control)
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 Direct investment (entering a foreign market by developing foreign based
assembly or manufacturing facilities)
Which markets we enter?
Demographics
The study of human populations in terms of:
 Size (a growing population means growing human needs to satisfy, offering marketers
an indication of demand for certain goods and services.
Chinese have reached 1.5 billion
 Age (the changing age structure of the population)
Baby boomers in the USA grow older; the GenXers entered the picture; at the
same time Echo boomers grow. - this means there is movement from
consumerism to better quality of life or from food etc., to electronics and PCs.
 The aging population (the older people become more)
 Family
- There is a shift from the traditional family to the nuclear family with only one child
- fewer married couples
- growth of one person and non-family households
- more single parents
- adult-live-togethers of one or both sexes
- widowed, separated, divorced, single
Education
- the rising number of educated people

- the gap between the men and women that have a university degree has closed
especially in developed counties
Diversity
There is more economic integration both regional and national (EU, NAFTA, etc.). This
requires careful planning when standardizing marketing efforts.
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T echn ological
C h aracteristics
D em ographic •Skills
C h aracteristics •P roduction tech
•S ize •C onsum ption
•G row th •Education
•U rban/rural
•D ensity
•A ge structure
Socio/cu ltu ral
C haracteristics
•V alues
•Lifestyles
G eograp hic •Ethnic groups
•Linguistic groups
C haracteristics
•S ize’
•T opography
•clim ate
E conom ic N ation al goals
Factors •Industry p riorities
•G D P •Infrastructure
•Incom e distribution •In vestm ent p lans
•R ate of grow th
•Investm ents
Global Marketing Programs
 Standardization: selling the same products and using the same marketing
approaches worldwide
 Adaptation: we adjust the Marketing Mix elements (Product, Place, Price,

Promotion - to each market)
PRO D UC T
D o n o t c h an g e p ro d u c t A d ap t p r o d u c t D e ve l o p n e w p r o d u c t
S tra ig h t P ro d u c t
e x te ns io n a d a p ta tio n P ro d u c t
P R O M O T IO N inv e ntio n
C o m m u nic a tio n D ual
a d a p ta tio n a d a p ta tio n
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 Straight extension: Marketing a product in a foreign market without any change
 Product adaptation: adapting a product to meet local conditions
Price Issues
 Dumping: pricing exports at levels less than their costs, or less than prices
charged in its home (i.e., Renault in France)
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MODULE 3:
CONSUMER
BUYING
BEHAVIOUR
The buying behaviour of final consumers that buy goods and services for personal
consumption.
Consumer market
All the individuals and households who buy or acquire goods and services for personal
consumption.
M O DEL O F BU Y IN G B EHAV IOUR
Buyer’s
R esponses
M arketing Other -Product

Stim uli Stimuli Buyer’s Black Choice
box -Brand
Product Political Choice
Price Econom ic Buyer Buyer -Dealer’s
Place Social Characte- D ecision Choice
ristics -Purchase
Prom otion T echnological process
Choice
-Purchase
am m ount
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Marketing Stimuli: The 4Ps (Product, Price, Place, Promotion)
Other Stimuli: the significant forces and events in the buyer’s environment, economic,
technological, political, cultural.
Buyer’s black box: where stimuli are changed into responses.
Buyer’s Responses: product choice, brand choice, etc.
F A C T O R S IN F L U E N C IN G B E H A V IO U R
C u ltu ra l
S o cia l
P er so n a l
P sy c h o lo g ic a l
C u ltu re R e fe re n ce
G rou p s •A ge
•M otiva tion
•L ife -c yc le
•P e rc e p tion
S u b c u ltu re •O c c u p a tion
•L e a rn in g B u y er
F a m ily •E c on o m ic
•B e lie fs
c irc u m sta n ce s
•A ttitu d e s
•L ife style
S oc ia l R ole s & •P e rson a lity
C la ss S ta tu s •S e lf-c on se n t
Cultural Factors
Culture: the set of values, perceptions, wants and behaviour learned by a member of
society from family and other important institutions (i.e., bringing green baseball cap
gifts to Taiwanese people when green is wore by men with unfaithful wives)
How culture helps us?

Marketers are always trying to spot cultural shifts in order to imagine new products (i.e.
the concern about health and fitness)
Subculture: each culture contains smaller subcultures or groups of people with shared
values based on common life experiences and situations (i.e., nationalities, religion, racial
groups).
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How subculture helps us?
Subcultures make up important market segments and marketers often design products and
marketing programs tailored to their needs (i.e. Hispanics in USA)
Social Class: permanent and ordered divisions in a society whose members share similar
values, interests and behaviour. Examples are
 Social classification in Britain
 Pyramid – rich v poor in Latin America and Africa
 Diamond shaped classification (few people at the top and bottom with many in the
middle in developed countries)
 Caste system in India
How social class helps marketers: It tells us about customer income and buying power
UK National statistics classification
CLASSIFICATION MEMBERSHIP
1 Higher managerial and professional
1.1 Employers and managers in large firms (both private and

public)
1.2 Higher professional (in law firms etc)
2 Lower managerial professional (middle managers)
3 Intermediate occupations (secretaries, policemen, etc.)
4 Small employers and sole traders
5 Lower supervisory, craft, etc.
6 Semi-routine occupations (assistants)
7 Routine occupations (semi-skilled, unskilled workers)
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Social Factors
 Membership groups: groups having a direct influence on a person’s behaviour and to

which a person belongs (primary {family) v secondary (religion) etc)
 Reference groups: groups having a direct or indirect influence on the person’s attitude
and behaviour (i.e., a teenager following David Beckham – also called Aspiration
Groups)
Group Influence on Product/Brand Choice
G r o u p in f lu e n c e
O n b r a n d c h o ic e
S tr o n g W eak
P u b lic L u x u r ie s P r iv a te L u x u r ie s
S tr o n g
A yacht T V v id e o g a m e s
G rou p
I n f lu e n c e
On
P rod u ct P u b lic N e c e s s itie s P r iv a te N e c e s s itie s
c h o ic e
C a rs
W eak D r e s s c lo th e s R e f r ig e r a to r
Family
 Family of orientation: the buyer’s parents providing with orientation toward religion,
politics, economics, self-worth and love.
 Family of procreation: the buyer’s spouse and children have a direct influence on
everyday buying behaviour.
Consumers’ buying roles

 Initiator: the person who first thinks about buying a product.
 Influencer: the one who influences buying behaviour.
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 Decider: the person who decides to buy
 Buyer: He who makes an actual purchase
 User: he who uses the product.
Roles and Status
Role: the activities a person is expected to perform according to the people around him or
her.
Status: the general esteem given to a role in society.
Personal factors
Age and life cycle stage (family-life cycle)
The stages through which families might pass as they mature over time. An example
follows below:
Example: A family life cycle for financial services.

Stage in family life cycle .
Life cycle stage Buying or behavioural pattern
1. Bachelor stage - Young, single Few financial burdens. Fashion opinion leaders. Recreation
people not living at home oriented. Buy: basic kitchen equipment, basic furniture, cars,
equipment for the mating game, vacations.
2. Newly married couples - Better off financially than they will be in the near future. Highest
Young, no children purchase rate and highest average purchase of durables. Buy: cars,
refrigerators, stoves, sensible and durable furniture, vacations.
3. Full nest I - Youngest child Home purchasing at peak. Liquid assets low. Dissatisfied with
under six financial position and amount of money saved. Interested in new
products. Buy: washers, dryers, TV, baby food, chest rubs and
cough medicines, vitamins, dolls, wagons, sleds, skates.
4. Full nest II - Youngest child Financial position better. Some wives work. Less influenced by
six and over advertising. Buy larger-sized packages, multiple unit deals, many
foods, cleaning materials, bicycles, music lessons, pianos.
5. Full nest III - Older married Financial position still better. More wives work. Some children get
couples with dependent children jobs. Hard to influence with advertising. High average purchase of
durables. Buy: new, more tasteful furniture, auto travel,
unnecessary appliances, boats, dental services, magazines.
6. Empty nest I - Older married Home ownership at peak. Most satisfied with financial position and
couples, no children living with money saved. Interested in travel, recreation, self-education. Make
them, head in labour force. gifts and contributions. Not interested in new products. Buy:
vacations, luxuries, home improvements.
7. Empty nest II - Older married, Drastic cut in income. Keep home. Buy: medical appliances,
no children at home, head retired medical-care products that aid health, sleep and digestion.
8. Solitary survivor - In labour Income still good but likely to sell home.
force
9. Solitary survivor Retired Same medical and product needs as other retired group; drastic cut
in income. Special need for attention, affection and security.
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Psychological life cycles
Adults experience certain passages as they go through life (weddings, graduations,

having children). Marketers must take advantage of that and market products related to
them.
Occupation
People, profession particulars (i.e. floor workers buy more work clothes while managers
buy more smart clothes)
Economic circumstances
Market growth or recession influence buying habits
Lifestyle
A person’s pattern of living as expressed in his/her activities, interests and opinions.

Some examples of lifestyle are:
 SINUS classification in Germany. It divides people according to the following
lifestyles:
o Traditional: to preserve
o Materialist: to have
o Hedonist: to indulge
o Postmaterialist: to be
o Postmodernist: to have, to be and to indulge
Personality and self-concept
 Personality: a person’s distinguishing psychological characteristics that lead to

responses to his/her environment.
 Self-concept: self-image or the mental picture that one has of himself (we are
what we have)
Psychological factors
Motivation
A need that is sufficiently pressing to direct the person to seek satisfaction of the need.
Theories of motivation
 Freud: people are largely unconscious of the real psychological forces shaping
behaviour (a person does not really understand his motivation)
 Maslow: the hierarchy of needs
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Perception
The process by which people select, organize and interpret information to form a
meaningful picture of the world.
 Selective attention: the tendency of people to screen out most of the information
to which they are exposed
 Selective distortion: the tendency of people to adapt information to their personal
meanings
 Selective retention: the tendency of people to retain only part of the information
to which they are exposed, usually information that supports their attitudes or
beliefs.
Learning
Changes in individual’s behaviour arising from experience. Learning happens through the
interplay of:
 Stimuli: a motive directing toward a particular thing
 Cues: stimuli saying when, where and how we respond.
 Responses: buying a product
Beliefs and attitudes

 Belief: A descriptive thought that a person holds about something (Marketers are
interested in the beliefs that people formulate about specific products and services
because these beliefs make up product and brand images that affect buying
behaviour).
 Attitudes: favourable or unfavourable evaluation, feelings and tendencies toward

an object or idea.
The consumer decision process
 Complex buying behaviour: consumer behaviour in situations characterized by

high consumer involvement in a purchase and significant perceived differences
among brands.
 Dissonance-reducing behaviour: Consumer behaviour in situations
characterized by high involvement but few perceived differences among brand
 Habitual buying behaviour: Consumer buying behaviour characterized by low

consumer involvement and few significant perceived brand differences.
 Variety seeking buying behaviour: Consumer buying behaviour in situation

characterized by low consumer involvement but significant perceived brand
differences.
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T h e B u y e r d e c is io n p r o c e s s
1. N eed
r e c o g n itio n
2 . In fo r m a tio n
S earch
5 . P o s t- p u r c h a s e
b e h a v io u r
3 . E v a lu a tio n o f
a lte r n a tiv e s
4 . P u rc h a se
d e c is io n
Need Recognition: the consumer recognizes a problem or need
Information search: the consumer searches for more information
Evaluation of alternatives: the consumer uses information to evaluate alternative brands

in the choice set.
Purchase decision: the buyer actually buys the product or service.
Post-purchase behaviour: when consumers take further action after the purchase based
on their satisfaction or dissatisfaction.
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Marketing Notes For Term-1

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MODULE 1

Marketing: the delivery of customer value at a profit

Core Marketing Activities

TRANSACTION MARKETING: trading of values between parties (either monetary or

RELATIONSHIP MARKETING: the process of creating, maintaining and enhancing

Marketing Management: The analysis, planning, implementation and control of

The production concept

It holds that management should focus on improving production and distribution

The product concept

The selling concept

The Marketing concept

The societal marketing concept

Marketing in the Business Sector:

Markets and geographical barriers:

CORE MARKETING CONCEPTS

DEMANDS: human wants that are backed by buying power.

The relation between wants, resources and scarcity:

Wants are unlimited

CUSTOMER VALUE: the consumers’ assessment of the product’s overall capacity to

CUSTOMER SATISFACTION: the extent to which a product’s perceived performance

TOTAL QUALITY MANAGEMENT (TQM): constantly improving the quality of

EXCHANGE: Obtaining an object by offering something in return. (Marketing occurs

The conditions for exchange:

TRANSACTION: trading of values between parties (either monetary or barter

RELATIONSHIP MARKETING: the process of creating, maintaining and enhancing

The Industry and Markets

Marketing Management and relationships:

Marketing management practices

The long-range plan

The strategic plan

THE PLANNING PROCESS

THE STRATEGIC PLAN

The Economic Environment

 Purchasing power: when consumers' purchasing power is reduced (i.e., during

The Natural Environment

The Political Environment

The Social Environment

Example: PEST Analysis for the global airline industry

Political: DeregulationWar and Terrorist Attack

 Evaluation of company position

Finance High profitability, good cash flow, good budgeting +

THE VALUE CHAIN (PORTER)

Support Human Resource Management

Inbound Operations Outbound marketing Service

The Forces of Competition

Suppliers Rivalry Buyers

Bargaining power of buyers

THREAT/FORCE HOW THEY HOW TO

Limited return Avoiding ceiling on Differentiation

Buy better products Lock customers in Product differentiation

S Strong financial position

W Costs are rising

Formulating Strategy at ETA- Swatch

OPPORTUNITIES SO STRATEGIES WO STRATEGIES

GENERIC STRATEGIES MATRIX (PORTER)

THE MARKETING PROCESS

1. PEST (Political, Economic, Social, Technological forces)

The marketing mix (4Ps)

1. Product (it includes both products and services)

1. Executive summary ( a quick overview of the plan)

The Global Market: Global challenges for firms today

The global firm