Market Defined

What is Market? Meaning

Usually, Market means a place where buyer and seller meets together in order to carry on transactions of goods and services. But in Economics, it may be a place, perhaps may not be. In Economics, market can exist even without direct contact of buyer and seller. This fact can be explained with the help of the following statement.

Image credits © Uncle Buddha. "Market refers to arrangement, whereby buyers and sellers come in contact with each other directly or indirectly, to buy or sell goods." Thus, above statement indicates that face to face contact of buyer and seller is not necessary for market. E.g. in stock or share market, buyer and seller can carry on their transactions through internet. So internet, here forms an arrangement and such arrangement also is included in the market.

Classification or Types of Market - Chart

The classification or types of market are depicted below.

On the basis of Place, market is classified into: 1. Local Market or Regional Market. 2. National Market or Countrywide Market. 3. International Market or Global Market. On the basis of Time, market is classified into: 1. Very Short Period Market. 2. Short Period Market. 3. Long Period Market. 4. Very Long Period Market. On the basis of Competition, market is classified into: 1. Perfectly competitive market structure.

Imperfectly competitive market structure.

What is Consumer

Buying Behavior?
Definition of Buying Behavior: Buying Behavior is the decision processes and acts of people involved in buying and using products. Need to understand:

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why consumers make the purchases that they make? what factors influence consumer purchases? the changing factors in our society.

Consumer Buying Behavior refers to the buying behavior of the ultimate consumer. A firm needs to analyze buying behavior for:
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Buyers reactions to a firms marketing strategy has a great impact on the firms success. The marketing concept stresses that a firm should create a Marketing Mix (MM) that satisfies (gives utility to) customers, therefore need to analyze the what, where, when and how consumers buy. Marketers can better predict how consumers will respond to marketing strategies.

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Stages of the Consumer Buying Process
Six Stages to the Consumer Buying Decision Process (For complex decisions). Actual purchasing is only one stage of the process. Not all decision processes lead to a purchase. All consumer decisions do not always include all 6 stages, determined by the degree of complexity...discussed next. The 6 stages are: 1. Problem Recognition(awareness of need)--difference between the desired state and the actual condition. Deficit in assortment of products. Hunger-Food. Hunger stimulates your need to eat. Can be stimulated by the marketer through product information--did not know you were deficient? I.E., see a commercial for a new pair of shoes, stimulates your recognition that you need a new pair of shoes. 2. Information search-o Internal search, memory. o External search if you need more information. Friends and relatives (word of mouth). Marketer dominated sources; comparison shopping; public sources etc. A successful information search leaves a buyer with possible alternatives, the evoked set. Hungry, want to go out and eat, evoked set is
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chinese food indian food

3.

4. 5. 6.

burger king klondike kates etc Evaluation of Alternatives--need to establish criteria for evaluation, features the buyer wants or does not want. Rank/weight alternatives or resume search. May decide that you want to eat something spicy, indian gets highest rank etc. If not satisfied with your choice then return to the search phase. Can you think of another restaurant? Look in the yellow pages etc. Information from different sources may be treated differently. Marketers try to influence by "framing" alternatives. Purchase decision--Choose buying alternative, includes product, package, store, method of purchase etc. Purchase--May differ from decision, time lapse between 4 & 5, product availability. Post-Purchase Evaluation--outcome: Satisfaction or Dissatisfaction. Cognitive Dissonance, have you made the right decision. This can be reduced by warranties, after sales communication etc. After eating an indian meal, may think that really you wanted a chinese meal instead.
o o

Handout...Pillsbury 1-800#s 1-800 #s gives the consumer a way of communicating with the marketer after purchase. This helps reduce cognitive dissonance when a marketer can answer any concerns of a new consumer. Return to Contents List

Types of Consumer Buying Behavior
Types of consumer buying behavior are determined by:
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Level of Involvement in purchase decision. Importance and intensity of interest in a product in a particular situation. Buyers level of involvement determines why he/she is motivated to seek information about a certain products and brands but virtually ignores others.

High involvement purchases--Honda Motorbike, high priced goods, products visible to others, and the higher the risk the higher the involvement. Types of risk:
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Personal risk Social risk Economic risk

The four type of consumer buying behavior are:

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Routine Response/Programmed Behavior--buying low involvement frequently purchased low cost items; need very little search and decision effort; purchased almost automatically. Examples include soft drinks, snack foods, milk etc. Limited Decision Making--buying product occasionally. When you need to obtain information about unfamiliar brand in a familiar product category, perhaps. Requires a moderate amount of time for information gathering. Examples include Clothes--know product class but not the brand. Extensive Decision Making/Complex high involvement, unfamiliar, expensive and/or infrequently bought products. High degree of economic/performance/psychological risk. Examples include cars, homes, computers, education. Spend alot of time seeking information and deciding. Information from the companies MM; friends and relatives, store personnel etc. Go through all six stages of the buying process. Impulse buying, no conscious planning.

The purchase of the same product does not always elicit the same Buying Behavior. Product can shift from one category to the next. For example: Going out for dinner for one person may be extensive decision making (for someone that does not go out often at all), but limited decision making for someone else. The reason for the dinner, whether it is an anniversary celebration, or a meal with a couple of friends will also determine the extent of the decision making. Return to Contents List

Categories that Effect the Consumer Buying Decision Process
A consumer, making a purchase decision will be affected by the following three factors: 1. Personal 2. Psychological 3. Social The marketer must be aware of these factors in order to develop an appropriate MM for its target market. Return to Contents List

Personal

Unique to a particular person. Demographic Factors. Sex, Race, Age etc. Who in the family is responsible for the decision making. Young people purchase things for different reasons than older people. Handout...From choices to checkout... Highlights the differences between male and female shoppers in the supermarket. Return to Contents List

Psychological factors
Psychological factors include:
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Motives--

A motive is an internal energizing force that orients a person's activities toward satisfying a need or achieving a goal. Actions are effected by a set of motives, not just one. If marketers can identify motives then they can better develop a marketing mix. MASLOW hierarchy of needs!!
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Physiological Safety Love and Belonging Esteem Self Actualization

Need to determine what level of the hierarchy the consumers are at to determine what motivates their purchases. Handout...Nutrament Debunked... Nutrament, a product marketed by Bristol-Myers Squibb originally was targeted at consumers that needed to receive additional energy from their drinks after exercise etc., a fitness drink. It was therefore targeted at consumers whose needs were for either love and Belonging or esteem. The product was not selling well, and was almost terminated. Upon extensive research it was determined that the product did sell well in inner-city convenience stores. It was determined that the consumers for the product were actually drug addicts who couldn't not digest a regular meal. They would purchase Nutrament as a substitute for a meal. Their motivation to purchase was completely different to the motivation that B-MS had originally thought. These consumers were at the Physiological level of the

hierarchy. BM-S therefore had to redesign its MM to better meet the needs of this target market. Motives often operate at a subconscious level therefore are difficult to measure.
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Perception--

What do you see?? Perception is the process of selecting, organizing and interpreting information inputs to produce meaning. IE we chose what info we pay attention to, organize it and interpret it. Information inputs are the sensations received through sight, taste, hearing, smell and touch. Selective Exposure-select inputs to be exposed to our awareness. More likely if it is linked to an event, satisfies current needs, intensity of input changes (sharp price drop). Selective Distortion-Changing/twisting current received information, inconsistent with beliefs. Advertisers that use comparative advertisements (pitching one product against another), have to be very careful that consumers do not distort the facts and perceive that the advertisement was for the competitor. A current example...MCI and AT&T...do you ever get confused? Selective Retention-Remember inputs that support beliefs, forgets those that don't. Average supermarket shopper is exposed to 17,000 products in a shopping visit lasting 30 minutes-60% of purchases are unplanned. Exposed to 1,500 advertisement per day. Can't be expected to be aware of all these inputs, and certainly will not retain many. Interpreting information is based on what is already familiar, on knowledge that is stored in the memory. Handout...South Africa wine.... Problems marketing wine from South Africa. Consumers have strong perceptions of the country, and hence its products.
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Ability and Knowledge--

Need to understand individuals capacity to learn. Learning, changes in a person's behavior caused by information and experience. Therefore to

change consumers' behavior about your product, need to give them new information re: product...free sample etc. South Africa...open bottle of wine and pour it!! Also educate american consumers about changes in SA. Need to sell a whole new country. When making buying decisions, buyers must process information. Knowledge is the familiarity with the product and expertise. Inexperience buyers often use prices as an indicator of quality more than those who have knowledge of a product. Non-alcoholic Beer example: consumers chose the most expensive six-pack, because they assume that the greater price indicates greater quality. Learning is the process through which a relatively permanent change in behavior results from the consequences of past behavior.
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Attitudes--

Knowledge and positive and negative feelings about an object or activitymaybe tangible or intangible, living or non- living.....Drive perceptions Individual learns attitudes through experience and interaction with other people. Consumer attitudes toward a firm and its products greatly influence the success or failure of the firm's marketing strategy. Handout...Oldsmobile..... Oldsmobile vs. Lexus, due to consumers attitudes toward Oldsmobile (as discovered by class exercise) need to disassociate Aurora from the Oldsmobile name. Exxon Valdez-nearly 20,000 credit cards were returned or cut-up after the tragic oil spill. Honda "You meet the nicest people on a Honda", dispel the unsavory image of a motorbike rider, late 1950s. Changing market of the 1990s, baby boomers aging, Hondas market returning to hard core. To change this they have a new slogan "Come ride with us". Attitudes and attitude change are influenced by consumers personality and lifestyle.

Consumers screen information that conflicts with their attitudes. Distort information to make it consistent and selectively retain information that reinforces our attitudes. IE brand loyalty. There is a difference between attitude and intention to buy (ability to buy).
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Personality--

all the internal traits and behaviors that make a person unique, uniqueness arrives from a person's heredity and personal experience. Examples include:
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Workaholism Compulsiveness Self confidence Friendliness Adaptability Ambitiousness Dogmatism Authoritarianism Introversion Extroversion Aggressiveness Competitiveness.

Traits effect the way people behave. Marketers try to match the store image to the perceived image of their customers. There is a weak association between personality and Buying Behavior, this may be due to unreliable measures. Nike ads. Consumers buy products that are consistent with their self concept.
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Lifestyles--

Recent US trends in lifestyles are a shift towards personal independence and individualism and a preference for a healthy, natural lifestyle. Lifestyles are the consistent patterns people follow in their lives. EXAMPLE healthy foods for a healthy lifestyle. Sun tan not considered fashionable in US until 1920's. Now an assault by the American Academy of Dermatology. Handout...Here Comes the Sun to Confound Health Savvy Lotion Makers..

Extra credit assignment from the news group, to access Value and Lifestyles (VALS) Program, complete the survey and Email [email protected] the results. This is a survey tool that marketers can use to better understand their target market(s). Return to Contents List

Social Factors
Consumer wants, learning, motives etc. are influenced by opinion leaders, person's family, reference groups, social class and culture.
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Opinion leaders--

Spokespeople etc. Marketers try to attract opinion leaders...they actually use (pay) spokespeople to market their products. Michael Jordon (Nike, McDonalds, Gatorade etc.) Can be risky...Michael Jackson...OJ Simpson...Chevy Chase
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Roles and Family Influences--

Role...things you should do based on the expectations of you from your position within a group. People have many roles. Husband, father, employer/ee. Individuals role are continuing to change therefore marketers must continue to update information. Family is the most basic group a person belongs to. Marketers must understand:
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that many family decisions are made by the family unit consumer behavior starts in the family unit family roles and preferences are the model for children's future family (can reject/alter/etc) family buying decisions are a mixture of family interactions and individual decision making family acts an interpreter of social and cultural values for the individual.

The Family life cycle: families go through stages, each stage creates different consumer demands:
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bachelor stage...most of BUAD301 newly married, young, no children...me full nest I, youngest child under 6 full nest II, youngest child 6 or over

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full nest III, older married couples with dependant children empty nest I, older married couples with no children living with them, head in labor force empty nest II, older married couples, no children living at home, head retired solitary survivor, in labor force solitary survivor, retired Modernized life cycle includes divorced and no children.

Handout...Two Income Marriages Are Now the Norm Because 2 income families are becoming more common, the decision maker within the family unit is changing...also, family has less time for children, and therefore tends to let them influence purchase decisions in order to alleviate some of the guilt. (Children influence about $130 billion of goods in a year) Children also have more money to spend themselves.
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Reference Groups--

Individual identifies with the group to the extent that he takes on many of the values, attitudes or behaviors of the group members. Families, friends, sororities, civic and professional organizations. Any group that has a positive or negative influence on a persons attitude and behavior. Membership groups (belong to) Affinity marketing is focused on the desires of consumers that belong to reference groups. Marketers get the groups to approve the product and communicate that approval to its members. Credit Cards etc.!! Aspiration groups (want to belong to) Disassociate groups (do not want to belong to) Honda, tries to disassociate from the "biker" group. The degree to which a reference group will affect a purchase decision depends on an individuals susceptibility to reference group influence and the strength of his/her involvement with the group.
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Social Class--

an open group of individuals who have similar social rank. US is not a classless society. US criteria; occupation, education, income, wealth, race, ethnic groups and possessions. Social class influences many aspects of our lives. IE upper middle class Americans prefer luxury cars Mercedes.

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Upper Americans-upper-upper class, .3%, inherited wealth, aristocratic names. Lower-upper class, 1.2%, newer social elite, from current professionals and corporate elite Upper-middle class, 12.5%, college graduates, managers and professionals Middle Americans-middle class, 32%, average pay white collar workers and blue collar friends Working class, 38%, average pay blue collar workers Lower Americans-lower class, 9%, working, not on welfare Lower-lower class, 7%, on welfare

Social class determines to some extent, the types, quality, quantity of products that a person buys or uses. Lower class people tend to stay close to home when shopping, do not engage in much prepurchase information gathering. Stores project definite class images. Family, reference groups and social classes are all social influences on consumer behavior. All operate within a larger culture.
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Culture and Sub-culture--

Culture refers to the set of values, ideas, and attitudes that are accepted by a homogenous group of people and transmitted to the next generation. Culture also determines what is acceptable with product advertising. Culture determines what people wear, eat, reside and travel. Cultural values in the US are good health, education, individualism and freedom. In american culture time scarcity is a growing problem. IE change in meals. Big impact on international marketing. Handout...Will British warm up to iced tea? No...but that is my opinion!!...Tea is a part of the British culture, hot with milk. Different society, different levels of needs, different cultural values. Culture can be divided into subcultures:
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geographic regions human characteristics such as age and ethnic background.

IE West Coast, teenage and Asian American.

Culture effects what people buy, how they buy and when they buy.
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Understanding Consumer Buying Behavior offers consumers greater satisfaction (Utility). We must assume that the company has adopted the Marketing Concept and are consumer oriented.
WHAT IS MARKETING?

Introduction

The term marketing has evolved over time, today marketing is based around providing continual benefits to the customer following a transactional exchange. The Chartered Institute of Marketing define marketing as 'The management process responsible for identifying , anticipating and satisfying customer requirements profitably'

Marketing Definitions

Philip Kotler defines marketing as 'satisfying needs and wants through an exchange process'

Customers will only undertake the exchange, if they feel that their needs are being satisfied, clearly the transactional value can not be more than the amount customers are prepared to pay to satisfy their need.

P.Tailor of www.learnmarketing.net suggests that 'Marketing is not about providing products or services it is essentially about providing changing benefits to the changing needs and demands of the customer (P.Tailor 7/00)'

Marketing is the job of the marketing department?

If we look at CIM's definition in more detail Marketing is a management responsibility and should not be left to a specific department or person. In fact everyone that works for or

represents a company are responsible for marketing, as their actions contribute towards the company's reputation.

What does marketing involve?

Marketing requires co-ordination, planning, implementation of campaigns and employees with the appropriate skills to ensure marketing success. Marketing objectives, goals and targets have to be monitored and met, competitor strategies analysed, anticipated and exceeded. Through effective use of market and marketing research an organisation should be able to identify the needs and wants of the customer and try to deliver benefits that will enhance or add to the customers lifestyle, while at the same time ensuring that the satisfaction of these needs results in a healthy turnover for the organisation.

MARKETING CONCEPTS

Introduction

The concept of marketing has evolved over time. Whilst in today’s business world "the customer is king". In the past this was not the case, some businesses put factors other than the customer first. This article examines factors that businesses may orientate their marketing around, so that you can recognise when your marketing strategy is orientated around something other than the customer.

Buying Motives

A buying motive is the reason why the customer purchase the goods. Motive is the driving force behind to purchase the goods. So, motive refers to thought, urge, feeling, emotion and drive which make the buyer to react in the form of a decision. Motivation explains the behaviourof the buyer why they are going to buy the goods. They buy the goods due to several motives such as economic, social, psychological etc. for example in winter seasons we are motivate to purchase the woolen clothes to protect from the cold. Likewise, we are motivated to purchase the fans in summer season to get the relief from the hot. Knowledge of buying motive of customers is important for the producers and suppliers. The needs and desires of customers and their buying behaviour should be properly discussed. This will help

them to take proper step for

drawing the attention and sale

the goods. So, buying motive is concerned with the reasons that impulse the buyer to take the decision for the action. It motives or induces the customers that may be affected due to several reasons such as pride, fashion, fear, safety, love and affection, comfort and convenience and economy. After analyzing and evaluating it, the producers as well as suppliers can effort to develop the product and advertisement creativity.

Different authors have classified buying motives in different ways. According to Malvin S.Hatrick, there are two classifications. a. Primary buying motives: Primary buying motives are related to the basic needs of human being such as hunger, thirst, sleep, sex etc. Due to these needs people get motivated to purchase the goods. b. Secondary buying motives: Secondary buying motives are those, which are influenced by the society where he is born and lives. It is created after fulfilling the basic needs. These motives are curiosity, comfort, security, love and affection. It can be further classified under three main headings. Classification of buying motives: 1. Emotional a. love and affection b. Curiosity c. Fashion d. Pride and Prestige e. Sex and Romance f. Fear 2. Rational a. Economy b. Utility c. Comfort and convenience d. Durability e. Security 3. Patronage a. Service Motive b. Quality

c. Location d. Store loyalty e. Friendliness behaviour 1. Emotional Buying Motives: Buying motives based on feelings or passions are known as emotional buying motives. These motives are not based on judgement, but they purchase on the basis of motion. There are some motives/elements which are as follows.

a. Love and affection: It is an important buying motive which includes the buyers to purchase the

goods. Due to love and affection to the children, we buy toys, dress biscuits etc. A husband may buy saris and cosmetics for his wife due to the love and affection.

b. Curiosity: Curiosity is the desire for new experience which motivates the people to buy the specific
goods. Thus, to get the new experience, customers purchase the goods.

c. Fashion: It is an important motive that can change the mind of the customers. Generally,
customers try to copy particularly the movie stars, sportsmen and athletes etc. So, all the producers advertise their products with the help of these popular personalities.

d. Pride and prestige: Due to the pride and prestige in the society, customers purchase expensive and
luxuries goods in- order to maintain their status. They purchase toyota car, Karizma motorcycle, fiftynine inch colour television etc. to get the high position in the s

ociety.

e. Sex and Romance: Sex and romance is another important emotional buying motive that induces
the customers to purchase the goods. Due to sex and romance, they purchase fancy dress, cosmetic items, perfumes, shaving lotions etc.

f. Fear: People are generally afraid of losing their health, wealth and life. Thus, it motivates to
purchase the goods such as insurance policy, hiring lockers in bank and membership of health club etc. These goods or services help them to avoid their fear. 2. Rational Buying Motives: Rational buying motives are those which are based on sound judgement. They purchase the goods through proper testing, comparing and observing the goods on the basis of price, quality, durability etc. This motive is important to the customers because it helps them to save the unnecessary cost. It includes the following motives.

a. Economy: Under this motives, the customer prefer that products which are more economy or
cheap in price. To get more profit and discount, customers purchase such goods. This element attract and encourages the customers to buy such goods in large quantities. b. Utility: Customers want to purchase that goods which have more or higher utility. Utility satisfies the wants of the customers. c. Comfort and convenience: Every people has the desire to live in comfort and convenient way as a result they get motivated to purchase such goods which provide comfort and convenience. Customers purchase T.V., DVD, motorcycle, washing machines, heater, cooler, sofa set etc. for their pleasure and comfort.

d. Durability: It is another element of rational buying motive. Due to the durability of the products, customers are motivated to purchase the goods for example toyota car, pulsar motorcycle, sony TV etc are purchased due to their durability to use. e. Security: It is important to the people. People are not feeling secure from the floods, earthquakes, theft, docoits etc. in the society. So, the customers purchase the key lockers, open the bank A/c and keep the watchman etc to be secured. 3. Patronage Buying Motive: When the customers purchase the goods or services on the basis of particular place, special discount, present price, decoration, behaviour and behaviour and other facilities are known as patronage buying motives. Following points are discussed under this motive.

a. Service motive: Service is an important motive which inspires the customers to purchase the
goods. Customers purchase the goods to get the services, such as credit facility, home delivery facility, freeinstallation, free repair and maintenance services.

b. Quality: Due to the quality of the goods, customers are motivated to purchase certain goods or
services. If products assure the quality, the customers are even ready to pay the higher price of such goods.

c. Location: Location also affects to purchase the goods. Customers prefer to buy those goods which
are easily available near their home or locality.

d. Store loyalty: Store loyalty is another important element which plays significant role in buying
motive. We purchase different goods due to the loyalty of the store such as attractive appearances, trust in weight, quality, price etc.

e. Friendliness behaviour: Friendliness behaviour of salesman also affects the customers

Buying process
The technology adoption lifecycle (TALC) describes buying behaviour for technology products in various market segments. The buying process is similar for the different segments along the TALC. Visionaries and technology enthusiasts in the Early Market follow the same stages of the buying process as pragmatists in the Chasm and Bowling Alley, although they have different motivators. Startups must understand this process and develop a sales and marketing process that fits with the buying process. The high-tech buying process is distinguished by the speed of change of technologies in the marketplace and the information asymmetry between buyer and seller. Buyers cannot possibly understand all the complexity of a hightech product. This lack of knowledge makes them anxious about buying a product that is about to become

obsolete or irrelevant to their business. The buyer’s information search is an attempt at managing the risks associated with the purchase. As a result, the seller needs to think about how best to deal with the buyer’s information needs. At this stage, the seller is more of an educator than a traditional salesperson trying to persuade a buyer.

Understanding high-tech customers
To develop effective marketing strategies, companies must understand how and why customers make purchasing decisions for high-technology products. There are three key issues in assessing their motivations:

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What factors affect customers’ purchasing decisions? What factors determine who the desirable customers are? What factors affect the timing of purchasing decisions?

Stages in the buying process

The buying process is related to buyer motivation. Once the buyer recognizes a need, the buying process begins. The buying process typically has five distinct stages: 1. Recognize a problem: The buyer recognizes a need, which is prompted by either internal or external stimuli. 2. Search for information: The buyer searches for information about how to solve the problem by identifying alternatives. 3. Evaluate the alternatives: The buyer evaluates the alternatives according to six key factors: i. Relative advantage: The benefits of adopting the new technology compared to the costs ii. Compatibility: The extent to which adopting and using the new technology is based on current methods of doing things and standard cultural norms iii. Complexity: How difficult the new technology is to use iv. Trialability: The extent to which the new technology can be tried on a limited basis v. Ability to communicate product benefits: The ease and clarity with which the benefits of owning and using the new technology can be communicated to potential customers vi. Observability: How observable the benefits are to the customer using the new technology, and how easily other customers can observe the benefits received by customers who have adopted the new technology 4. Make a purchasing decision: The buyer decides to purchase a specific technology and forms a purchasing agreement with the seller. 5. Evaluate the purchase afterward: The buyer assesses how well the purchase has lived up to its potential. (I.e., was the buyer able to learn to use the new technology? Did the technology deliver the promised benefits? Were there hidden costs to using the new technology?)

Post-purchase evaluation
The buyer’s evaluation after the purchase is critical to the development of potential brand loyalty. Most technology products present a number of challenges (i.e., technical, organizational) for the buyer. Any of these challenges provide an opportunity for a start-up to evaluate its whole product offering with respect to any missing pieces. Ask yourself: Is there a need for better product documentation and training? Does customer service need to be strengthened? Should the product be altered to provide a better customer experience?

Factors Affecting Consumer Buying Behavior
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It is important for marketers to be aware of factors affecting or influencing consumer buying behavior. Knowledge of these factors is crucial if marketers are to develop an appropriate marketing mix (putting together the right product, price, distribution/place, and promotion), with potentially effective marketing communications designed to reach a targeted market. When making purchasing decisions, consumers will be affected by factors on three primary levels: Personal, psychological, and social. This Hub will examine the four basic types of consumer buying behavior, and it will also look at factors affecting consumer behavior; a brief look at personal factors, and a more in-depth look at psychological factors.

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Types of Buying Behavior
There are four basic types of consumer buying behavior, and these are: 1. Routine Response/Automatic Behavior—This behavior is exhibited when buying low involvement products that are purchased frequently, and have low cost. Since there is little "risk" involved in making the purchase, there is little need for a search and decision-making effort. Routine items are those we purchase almost automatically. The product, or at least the product

category, is one we're familiar with, and have enough experience with purchasing that we sort of take it for granted. Examples of such routine purchases include soft drinks, snack foods, milk, eggs, water, and so on.

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2. Limited Decision Making—Consumers exhibit limited decision making when purchasing products that are bought only occasionally—and not frequently. A consumer might engage in a limited search for information when there is a need to learn something about an unfamiliar brand in a familiar product category, for example. The search process will be simple, requiring a moderate amount of time for information gathering. A good example might be an item of clothing. A customer might know the product category he/she is interested in, but, perhaps, has not settled on a brand or a style.

Purchasing a home usually involves an extensive search process. Source: By Infrogmation of New Orleans GFDL, via Wikimedia Commons.

3. Extensive Decision Making—Products/services that are bought infrequently, that involve complex considerations and high involvement on the part of consumers require more time for decision making. The more unfamiliar, expensive and/or infrequently bought products/services are, the more time that will be needed to make a purchasing decision. The time needed to make a decision is based on the amount of risk involved in making the purchase. There may be a high degree of economic, performance, and/or psychological risk involved in the purchase decision with regard to items such s cars, homes, computers, and education. Consumers will spend as much time as needed to seek information, and then to make a purchase decision. An extensive search might involve going online to gather information from the companies selling the product, talking to friends and relatives, visiting stores or outlets that carry the product or offer the service you're seeking.

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4. Impulse Buying—Sometimes consumers make purchases with no conscious planning or prior thought. When this happens, no time is spent making the purchase decision. Impulse buying can be emotional buying.

Why buy on impulse? A consumer might make an emotional connection with a product based on something he/she is passionate about, and this connection can trigger a purchase. Or, the mere sight of a product, such as candy, gum, mints, or chips--and other items prominently displayed, either in the retail outlet or at the checkout aisles, can trigger impulse buyers to buy items they may not have planned to purchase. -------------------------------------------------------------------------------------------------------The purchase of the same product does not always elicit the same buying behavior. Products can shift from one category to the next, depending on the circumstances or situation. A suit or a dress, for examples, can become a high-involvement purchase if you’re purchasing it to wear to the “fancy” wedding of someone you’re very close to. Or, going out for dinner can involve an extensive decision-making for someone who doesn’t go out often, but it could involve limited decision-making process for someone who goes out a lot. Also, the reason for the dinner will also determine the extent of the decision making. Choices might be different, for example, if the dinner is an anniversary celebration, or a meal with a group of friends you see and dine out with on a regular basis.

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Personal Factors Influence Buyer Behavior
Personal factors are things that are unique to a particular person. They include such things as demographic factors, including gender, race, age, family structure/roles, and so on. Young people purchase things for different reasons than older people. Consumers living in different regions of the country or the world might have geographic or climate-related concerns that exert influence on their lifestyle and/or interests. Or, consumer decisions might hinge on who in the family is responsible for the decision-making for certain purchases.

Maslow's Hierarchy of Needs, by Abraham Maslow (1943). Believed human motivation is based on the seeking of fulfillment and change through personal growth. Source: By J. Finkelstein GFDL, via Wikimedia Commons.

Psychological Factors Influence Buyer Behavior
Motives Psychological factors include the concept of motives. A motive is an internal energizing force; it is something that orients a person's activities toward satisfying a need or achieving a goal. The actions of individuals are usually affected by a set of motives, and not by just one. Major marketers understand that if they can identify consumer motives, then they can develop a better marketing mix that will be more effective in reaching targeted consumers. Abraham Maslow’s “Hierarchy of Needs” model (shown above) is one of the tools marketers have used to help them better understand motives. Maslow's theory says one must satisfy lower level basic needs before going on to pursue the meeting of higher level growth needs. People desire to move up the hierarchy, but can encounter setbacks along the way that can disrupt progress. For example, losing a home to foreclosure can cause an individual to fluctuate between self-actualization and the meeting of basic needs for food and shelter. Marketers desiring to utilize Maslow's model must determine what level of the hierarchy targeted consumers are at, to get a better idea about what things might motivate their purchases. Because motives often operate at a subconscious level, they are difficult to measure.

Artistic impression of the perception process. “Seeing the world through colored glass." Source: By Laurens van Lieshout (eigen werk / self-made) Public domain, via Wikimedia Commons

Perception Perception is another psychological element that marketers must be concerned with. Why? Because, your perception is your reality. What you think you see is as important to you as is what is actually there. And what you see from observing something might be different from what I see. What you hear might be different from what I hear, even when listening to the same thing. Why? Because we're individuals, and we process information as individuals. Our own unique impressions and ability to comprehend come to bear, while the information inputs we receive and process are the result of sensations we get through sight, taste, hearing, smell and touch. Perception is the process of selecting, organizing and interpreting information as inputs, to produce meaning. As individuals, we can "selectively" choose what information we pay attention to. After that, we organize and interpret what we see. ---------Selective Exposure Through "selective exposure," we select inputs to be exposed to our awareness. For example, you might be more likely to notice marketing efforts that are linked to an event. While watching hundreds of television commercials in a day, the one you remember might be advertising an event you've wanted to attend in the past, and plan to go to in the near future. Or, you might pay closer attention to marketing messages about food as it gets closer to lunch time. If you've placed yourself on a tight budget, messages announcing sharp price drops in items you need might be more likely to get your attention.

Source: By Sbn1984 at en.wikipedia, Public domain, from Wikimedia Commons

--------Selective Distortion Perception also involves something called "selective distortion." Marketers need to be aware of this because people tend to change/twist information that is inconsistent with their beliefs. Because this is true, advertisers using comparative advertisements (pitching one product against another), have to be very careful that consumers don't selectively distort the facts, perceiving the advertisement was forthe competitor. The old "Energizer Bunny" television commercials provide a good example of this. Using a cute pink bunny pounding a drum, the product (a battery) was pitted against rival Duracell. But, many consumers, when asked, said they thought the bunny commercial was for Duracell batteries. Perhaps some of the confusion was caused by the fact that the energizer ads were based on a commercial by Duracell in which a group of small rabbit toys were shown and said to be powered by Duracell batteries. ---------Selective Retention People are also selective in what they remember. Called "selective retention," we tend to remember inputs that support our beliefs, and we forget those that don't. We are exposed, on the average, to close to two thousand advertisement per day. We will remember only some of them. Interpreting information is based on what is already familiar, on knowledge that is stored in the memory. Along with knowledge come attitudes that can also drive perception. Consumers screen information that conflicts with their attitudes. We also distort information to make it consistent with our beliefs, and selectively retain information that reinforces our attitudes. This can be good for marketers we like, because it's the foundation of brand loyalty. Attitude involves positive and negative feelings about people and things: An object, an activity, a person, a place, a time of year, etc. Attitude involves learned behavior. Note, however, that there is a difference between attitude and intention to buy (ability to buy). As consumers, our attitudes toward a company/marketer and its products can greatly influence the success or failure of the

company's marketing strategy. Attitudes and attitude change are influenced by consumers’ personality and lifestyle.

Production Orientation

The focus for the business is to reduce costs through mass production. A business orientated around production believes that the "economies of scale" generated by mass production will reduce costs and maximise profits. A production orientated business needs to avoid production efficiency processes which affect product design and quality. Compromising product design and quality for the sake of production is likely to reduce the product's appeal to customers.

Product Orientation

A product orientated company believes that its product's high quality and functional features make it a superior product. Such a company believes that if they have a superior product customers will automatically like it as well. The problem with this approach is that superiority alone does not sell products; superior products will not sell unless they satisfy consumer wants and needs.

Sales Orientation

A sales orientated company's focus is simple; make the product, and then sell it to the target market. This type of orientation involves the organisation making what they think the customer needs or likes without relevant research. However as we know sales usually aren't this simple. An effective marketing strategy requires market and marketing research, prior to product development and finally an effective promotion strategy.

Market Orientation

A market orientated company puts the customer at the "heart" of the business; all activities in the organisation are based around the customer. The customer is truly king!. A market orientated organisation endeavours to understand customer needs and wants, then implements marketing strategy based on their market research; from product development through to product sales. Once sales have begun further research will be conducted to find out what consumers think about the product and whether product improvements are required. As markets continuously change, market research and product development is an ongoing process for a market orientation company.

Conclusion

In today’s competitive world, it is more important than ever to implement a market orientated strategy. In this digital age customers are able to research the products available on the market fairly quickly. If an organisation does not offer customers what they are looking for (product and customer service) they will buy from a competitor that does.

THE MARKETING ENVIRONMENT

Introduction

Firms are affected by lots of different things; a firm's marketing environment is made up of all of the things that affect the way it operates. Some of the factor's in a firm's marketing environment can be controlled by the firm but some are uncontrollable. Firms need to understand their marketing environment so that they can make the most of positive factors and manage the impact of negative factors. A firm's marketing environment can be spilt into three parts: internal environment, macro environment and micro environment.

Internal Environment

The internal environment is made up of factors within the firm itself. Examples include employees, company policy, capital assets, the firm's structure and the firm's products (materials). These factors can be controlled by the firm.

Micro Environment

The micro environment is made up of factors that are close to the firm and affect it on a 'day to day' basis; usually these factors interract with the firm or are involved in the same industry. Micro environment examples include customers, banks and trade unions as they all interract with the firm. Competitors are also part of the micro environment because they are selling competing products, their activity could have a direct impact on the firm's daily business. Some of the factors within the micro environment can be controlled whilst other's can not. For more information about the micro environment and how to analyse a firm's micro environment through a stakeholder analysis, click here.

Macro Environment

The macro environment is made up of factors that affect the firm on a long term basis. In general macro environment factors are not close to the firm. Micro environment factors could be national or global measures and affect many industries and groups. Macro environment examples include legislation, the economy (e.g. recession, inflation, VAT changes), and technological change such as the internet. Macro environment factors are uncontrollabe factors but still influence company strategy. For more information about the macro environment including how to analyse a firm's macro environment through a PEST Analysis, click here.

Conclusion

One factor can be part of a firm's micro environment and macro environment. The media can be used to illustrate this:

- A one off media story about the firm may affect daily operations and will therefore be part of the firm's micro environment;

- Whilst a general desire to avoid a negative media story may influence a firm's long term business operations and therefore make up the firm's macro environment.

Firms should not concern themselves too much about which of the three categories a factor fits into. Instead firms should ensure that they have correctly identified all of the factors which make up their marketing environment and plan how to manage them for the firm's benefit.

Marketing Environment - PEST Analysis

Introduction

An organisation’s success is influenced by factors operating in it’s internal and external environment; an organisation can increase it’s success by adopting strategies which manipulate these factors to it’s advantage. A successful organisation will not only understand existing factors but also forecast change, so that it can take advantage of change within the environments in which it operates. PEST & Micro environmental Factors

The following type of forces influence an organisation’s operating environment: • Pest Factors – These are external forces which the organisation does not have direct control over these factors. PEST is an acronym and each letter represents a type of factor (Political, Economical Social and Technological). • Micro environmental factors – These are internal factors, which the organisation can control. PEST & PESTLE analysis

A PEST analysis is used to identify the external forces affecting an organisation .This is a simple analysis of an organisation’s Political, Economical, Social and Technological environment. A PEST analysis incorporating legal and environmental factors is called a PESTLE analysis. Political

The first element of a PEST analysis is a study of political factors. Political factors influence organisations in many ways. Political factors can create advantages and opportunities for organisations. Conversely they can place obligations and duties on organisations. Political factors include the following types of instrument: - Legislation such as the minimum wage or anti discrimination laws. - Voluntary codes and practices - Market regulations - Trade agreements, tariffs or restrictions - Tax levies and tax breaks - Type of government regime eg communist, democratic, dictatorship Non conformance with legislative obligations can lead to sanctions such as fines, adverse publicity and imprisonment. Ineffective voluntary codes and practices will often lead to governments introducing legislation to regulate the activities covered by the codes and practices. Economical

The second element of a PEST analysis involves a study of economic factors. All businesses are affected by national and global economic factors. National and global interest rate and fiscal policy will be set around economic conditions. The climate of the economy dictates how consumers, suppliers and other organisational stakeholders such as suppliers and creditors behave within society. An economy undergoing recession will have high unemployment, low spending power and low stakeholder confidence. Conversely a “booming” or growing economy will have low unemployment, high spending power and high stakeholder confidence. A successful organisation will respond to economic conditions and stakeholder behaviour. Furthermore organisations will need to review the impact economic conditions are having on their competitors and respond accordingly. In this global business world organisations are affected by economies throughout the world and not just the countries in which they are based or operate from. For example: a global credit crunch originating in the USA contributed towards the credit crunch in the UK in 2007/08.

Cheaper labour in developing countries affects the competitiveness of products from developed countries. An increase in interest rates in the USA will affect the share price of UK stocks or adverse weather conditions in India may affect the price of tea bought in an English café. A truly global player has to be aware of economic conditions across all borders and needs to ensure that it employs strategies that protect and promote its business through economic conditions throughout the world.

Social

The third aspect of PEST focuses its attention on forces within society such as family, friends, colleagues, neighbours and the media. Social forces affect our attitudes, interest s and opinions. These forces shape who we are as people, the way we behave and ultimately what we purchase. For example within the UK peoples attitudes are changing towards their diet and health. As a result the UK is seeing an increase in the number of people joining fitness clubs and a massive growth for the demand of organic food. Products such as Wii Fit attempt to deal with society’s concern, about children’s lack of exercise. Population changes also have a direct impact on organisations. Changes in the structure of a population will affect the supply and demand of goods and services within an economy. Falling birth rates will result in decreased demand and greater competition as the number of consumers fall. Conversely an increase in the global population and world food shortage predictions are currently leading to calls for greater investment in food production. Due to food shortages African countries such as Uganda are now reconsidering their rejection of genetically modified foods. In summary organisations must be able to offer products and services that aim to complement and benefit people’s lifestyle and behaviour. If organisations do not respond to changes in society they will lose market share and demand for their product or service.

Technological

Unsurprisingly the fourth element of PEST is technology, as you are probably aware technological advances have greatly changed the manner in which businesses operate. Organisations use technology in many ways, they have 1. Technology infrastructure such as the internet and other information exchange systems including telephone 2. Technology systems incorporating a multitude of software which help them manage their business.

3. Technology hardware such as mobile phones, Blackberrys, laptops, desktops, Bluetooth devices, photocopiers and fax machines which transmit and record information. Technology has created a society which expects instant results. This technological revolution has increased the rate at which information is exchanged between stakeholders. A faster exchange of information can benefit businesses as they are able to react quickly to changes within their operating environment. However an ability to react quickly also creates extra pressure as businesses are expected to deliver on their promises within ever decreasing timescales.. For example the Internet is having a profound impact on the marketing mix strategy of organisations. Consumers can now shop 24 hours a day from their homes, work, Internet café’s and via 3G phones and 3G cards. Some employees have instant access to e-mails through Blackberrys but this can be a double edged sword, as studies have shown that this access can cause work to encroach on their personal time outside work. The pace of technological change is so fast that the average life of a computer chip is approximately 6 months. Technology is utilised by all age groups, children are exposed to technology from birth and a new generation of technology savvy pensioners known as “silver surfers” have emerged. Technology will continue to evolve and impact on consumer habits and expectations, organisations that ignore this fact face extinction. PESTLE

A PEST analysis is sometimes expanded to incorporate legal and environmental factors; this is known as a pestle analysis. There are many statutes books containing company law as almost every aspect of an organisation’s operation is controlled through legislation from treatment of employees through to health and safety. Legal factors are important as organisations have to work within legislative frameworks. Legislation can hinder business by placing onerous obligations on organisations. On the other hand legislation can create market conditions that benefit business.

Diagram: PEST analysis and the marketing mix.

For information regarding environmental factors please refer to environmental marketing mix.

Micro environment factors, are factors close to a business that have a direct impact on its business operations and success. Before deciding corporate strategy businesses should carry out a full analysis of their micro environment. In this article we discuss common micro environment factors. To learn about other factors (Macro Environment factors and Internal environment factors) that are part of a firm'sMarketing Environment click here.

Customers As all businesses need customers, they should be Centred (Orientated) around customers. The firm's marketing plan should aim to attract and retain customers through products that meets their "wants and needs" and excellent customer service. Employees Employing staff with relevant skills and experience is essential. This process begins at recruitment stage and continues throughout an employee's employment via ongoing training and promotion opportunities. Training and development play a critical role in achieving a competitive edge; especially in Service Sector Marketing. If a business employs staff without motivation, skills or experience it will affect customer service and ultimately sales. Suppliers Suppliers provide businesses with the materials they need to carry out their business activities. A supplier's behaviour will directly impact the business it supplies. For example if a supplier provides a poor service this could increase timescales or product quality. An increase in raw material prices will affect an organisation's Marketing Mix strategy and may even force price increases. Close

supplier relationships are an effective way to remain competitive and secure quality products.

Shareholders As organisations require investment to grow, they may decide to raise money by floating on the stock market i.e. move from private to public ownership. The introduction of public shareholders brings new pressures as public shareholders want a return from the money they have invested in the company. Shareholder pressure to increase profits will affect organisational strategy. Relationships with shareholders need to be managed carefully as rapid short term increases in profit could detrimentally affect the long term success of the business. Media Positive media attention can “make” an organisation (or its products) and negative media attention can “break” an organisation. Organisations need to mange the media so that the media help promote the positive things about the organisation and reduce the impact of a negative event on their reputation. Some organisations will even employ public relations (PR) consultants to help them manage a particular event or incident. Consumer television programmes with a wide and more direct audience can also have a very powerful impact on the success of an organisation. Some businesses recognise this and will change their reaction when consumers mention that they are going to contact a consumer television programme or the newspapers about the business. Competitors The name of the game in marketing is differentiation. Can the organisation offer benefits that are better than those offered by competitors? Does the business have a unique selling point (USP)? Competitor analysis and monitoring is crucial if an organisation is to maintain or improve its position within the market. If a business is unaware of its competitor's activities they will find it very difficult to “beat” their competitors. The market can move very quickly for example through a change in trading conditions, consumer behaviour or technological developments. As a business it is important to examine competitors' responses to these changes so that you can maximise the impact of your response. Conclusion

Businesses can not always control micro environment factors but they should endeavour to manage them along withMacro Environment and Internal Environment factors.

HOSPITALITY SALES MANAGEMENT HA- 400

THE MARKETING CONCEPT Source: Kotler, Philip. (2000) Marketing Management. Upper Saddle River, New Jersey: Prentice Hall.

Introduction Company Orientations to the Marketplace What philosophy should guide a company marketing and selling efforts? What relative weights should be given to the interests of the organization, the customers, and society? These interest often clash, however, an organization’s marketing and selling activities should be carried out under a well-thought-out philosophy of efficiency, effectiveness, and socially responsibility. Five orientations (philosophical concepts to the marketplace have guided and continue to guide organizational activities: 1. 2. 3. 4. 5. The Production Concept The Product Concept The Selling Concept The Marketing Concept The Societal Marketing Concept

The Five Concepts Described The Production Concept. This concept is the oldest of the concepts in business. It holds that consumers will prefer products that are widely available and inexpensive. Managers focusing on this concept concentrate on achieving high

production efficiency, low costs, and mass distribution. They assume that consumers are primarily interested in product availability and low prices. This orientation makes sense in developing countries, where consumers are more interested in obtaining the product than in its features. The Product Concept. This orientation holds that consumers will favor those products that offer the most quality, performance, or innovative features. Managers focusing on this concept concentrate on making superior products and improving them over time. They assume that buyers admire wellmade products and can appraise quality and performance. However, these managers are sometimes caught up in a love affair with their product and do not realize what the market needs. Management might commit the “better-mousetrap” fallacy, believing that a better mousetrap will lead people to beat a path to its door. The Selling Concept. This is another common business orientation. It holds that consumers and businesses, if left alone, will ordinarily not buy enough of the selling company’s products. The organization must, therefore, undertake an aggressive selling and promotion effort. This concept assumes that consumers typically sho9w buyi8ng inertia or resistance and must be coaxed into buying. It also assumes that the company has a whole battery of effective selling and promotional tools to stimulate more buying. Most firms practice the selling concept when they have overcapacity. Their aim is to sell what they make rather than make what the market wants. The Marketing Concept. This is a business philosophy that challenges the above three business orientations. Its central tenets crystallized in the 1950s. It holds that the key to achieving its organizational goals (goals of the selling company) consists of the company being more effective than competitors in creating, delivering, and communicating customer value to its selected target customers. The marketing concept rests on four pillars: target market, customer needs, integrated marketing and profitability. Distinctions between the Sales Concept and the Marketing Concept: 1. The Sales Concept focuses on the needs of the seller. The Marketing Concept focuses on the needs of the buyer. 2. The Sales Concept is preoccupied with the seller’s need to convert his/her product into cash. The Marketing Concept is preoccupied with the idea of satisfying the needs of the customer by means of the product as a solution to the customer’s problem (needs).

The Marketing Concept represents the major change in today’s company orientation that provides the foundation to achieve competitive advantage. This philosophy is the foundation of consultative selling. The Marketing Concept has evolved into a fifth and more refined company orientation: The Societal Marketing Concept. This concept is more theoretical and will undoubtedly influence future forms of marketing and selling approaches. The Societal Marketing Concept. This concept holds that the organization’s task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors (this is the original Marketing Concept). Additionally, it holds that this all must be done in a way that preserves or enhances the consumer’s and the society’s well-being. This orientation arose as some questioned whether the Marketing Concept is an appropriate philosophy in an age of environmental deterioration, resource shortages, explosive population growth, world hunger and poverty, and neglected social services. Are companies that do an excellent job of satisfying consumer wants necessarily acting in the best long-run interests of consumers and society? The marketing concept possibily sidesteps the potential conflicts among consumer wants, consumer interests, and long-run societal welfare. Just consider: The fast-food hamburger industry offers tasty buty unhealthy food. The hamburgers have a high fat content, and the restaurants promote fries and pies, two products high in starch and fat. The products are wrapped in convenient packaging, which leads to much waste. In satisfying consumer wants, these restaurants may be hurting consumer health and causing environmental problems.