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Marketing is important to business and non-business organisations. It is also beneficial to

customers and society, The importance of marketing is stated as follows:
Organisátional Objectives: Marketing helps to achieve organisational objectives. Systematic
marketing activities such as effective product designs, pricing, promotion and distribution helps a
firm to increase its sales, and generat,s the following objectives:
• Increase in profits
• Developing brand image
• Increase in market share,
Developing corporate image.
• Maintaining and enhancing customer loyalty, etc.
2. Customer Satisfaction: Marketing places emphasis not only on organisational objectives, but
also on customer satisfaction, A firm cannot achieve its objectives without emphasis on customer
satisfaction. Customer satisfaction has a correlation between product performance and customer
• When product performance matches with customer expectation, thcustomers are satisfied,
• When product performance is below customer expectation, the customers are dissatisfied.
• When product performance exceeds customer expectatio1 the customers are delighted.
Nowadays, marketers must work towards not only customer satisfaction, but they must delight
the customers by offering value added services. Customer value can be enhanced by providing
additional facilities at little or no extra cost, such as extension in after- sale-service and
warranties, free delivery and installation, etc.

3. Helps to Face Competition: Effective marketing helps to fac competition in the market. Professional
marketers. are proactive ii decision-making. They come up with:
• Innovative designs or models.
• Creative promotion schemes.
• Effective, customer relationship techniques, etc.
The pro-active decisions give competitive advantage to the professiona marketers.
4. Corporate Image: Effective marketing enables maintair
and impwve its coipoiatc A good coipoiate image in the minds ol customers, employees, sharehotders,
suppliers, deàlers etc., helps a 1km to expand arid grow. P01’ &istance, firms that have good corporate
• Develop trust and conlidence of the customers
• Find it easier to launch new products,
• Atiract foreign investment or;ointventures, etc.
5. Brand I Myalty: lliective marketing helps to develop brand loyalty. Brand !oralt’ refers to:
• Repeat purchases by existing customers, and
• Favourable recomnwndations by existing customers to friends, neighbours, and others.
Marketing guru Al Ries says that customer word-of-mouth ‘is the best alternative to advertising. He
calls such customer as, an evangelist (religious believer). This is becarlse; loyal customers tell other what
movie to see, which computer to purchase,.what restaurant tovisit, which doctor to consult, which cell
phone to buyQ whivh books to read, which clubs to join, and so on.
6. Brand Equity: Marketing activitie develop brand equity. Brand equity is the. incremental value of.a
brand over and abowe its physical
qualities. Customers are willing to pay premium price for efectively nitirkelud brands. For
instance, effective product dosign,exeellent afternl ervlcc, mid such other marketing activities enable a firm
to enhIiIuiIuj pit9iitiiiii price fbr its brands.
8 Marketing and Human Resource Management
7. Business Expansion: Marketing enables a firm to expand its business from local level to
national and even at international level. A firm can expand its business with the help of market
related activities such as:
• Product development strategy introduction of new products in the existing markets or new

• Market development strategy —entering in new markets with the existing products or new
• Market penetration strategy increasing marketing efforts in the current markets.

8. Helps to Introduce New Products: Reputed firms find it easier to introduce new products in
the market. This is bcause; they enjoy confidence and support of the loyal customers. Satisfied
customers are always willing to buy products and services of those companies in whom they haye
trust or faith. They provide unsolicited feedbac.k or praise.
1. Higher Standard of Living: Because of marketing, consumers can newjnl better varieties of
goods and services Membeis of the
society can get the benefit of new and better type of goods because of constant research and
development undertaken by well established companies.
2. Generates Employment: Marketing creates a number ofjobs in the country, either directly or
indirectly Employment is generated because of job opportunities in the production, distribution,
advertising, and other areas of marketing
3 Improves Quality and Reduces Cost Marketing makes it possible to improve quality of the
‘products because of research and development. It also facilitates reduction in prices because of
stiff competition in the market and also due to the economies of large scale production and
4. Spread Effect: Because of marketing, the supporting sectors also expand. This includes
expansion of sectors like banking, communication, transport and so on. Such spread effect offers
more job opportunities.

5. Creates Utility: Marketing creates form utility, time utility, place utility and possession utility.
• Consumers get form utility in the shape, size and designs of the product.
• There is time utility because goods are available when they need
• It creates place utility because goods are available at the right place.
• Consumers also geLpossession utility due to the physical possession of the product.
6. Enhances Economic Growth: Marketing ensures optimum utilisation of resources. Through
effective production and distribution, marketing enhances economic growth and well-being of the
A non-profit organisation is a non-business organisation. It is set up to provide and promote
education, training, sports, arts, and other sociocultural activities. Examples of non-profit
organisation include educational institutions, trade associations, chambers of commerce and
industry, sports clubs, charitable trusts, religious organisations, etc. A non-profit organisation
needs to undertake marketing for the following reasons:
1. To develop image: Marketing helps the non-profit organisations to develop a good image
for the organisation.. For this purpose, the non-profit organisation must be professional in
providing its services to its members or to the members of the society. It may also undertake
advertising to promote its name and goodwill. Good image of the organisation would enable it to
achieve success.
2. To expand activities: Marketing activities are vital to expand activities of the non-profit
organisation. Some non-profit orgunisutions would not like to confine themselves to a local
area. They would like to open their centers at different parts of the state! jg,gfry and even at
international kveL
.t educate masses of its activities/objectives: Marketing activities on 11w part of a non-profit
organisation is required to educate the

Peter Drucker, a leading management expert, once stated that ‘iIie aim of niarketiuç’ is to knai’ and
itudersiani! the customer so well that the product or service/its him and sells itself ldeall,
marketing should result in a customer who is ready to bi,j 111 that slwuld be iieedei! their is to make
the product or service available.
Marketing peop’e should locate Suspects from Rest of the World, qualify them as Prospects, and Convert
them into Active Customers. It is the Active Customers that make a Company to keep going. The
tbllowing pages will

40 Marketing and Human Resource Management

help you to understand the art and science of serving Active Customers in order to maximise mutually
beneficial relationships.
Consumer behaviour is the, study of how individual customers, groups or organisatipnselct buy, use and
dispose ideas, goods and services to satisfy their needs and wants.
[ingel, Blackwell nd Mansard define “consumer behaviour as the actions and decisions processes
of people who purchase goods and services for personal consumption.
Louden and Bitta define consumer behaviour is the decision process Co
and j,hysical activity, which individuals engage in when evaluating,
acquiring, using or disposing of goods and services.”
The nature of consumer behaviour is briefly stated as follows:
1. Influenced by Various Factors: Consumer Behaviour isinfluehced by a number of factors. The factors
that influence consumer behaviour are as follows:
• Marketing factors such as product design, price, promotion, packaging, positioning, distribution, etc.
• Personal factors such as age, gender, education, income level, etc.
• Psychological factors such as buying motives, perception of the product, attitudes towards the product,
• Situational factors such as physical surroundings at the time of purchase, social surroundings, time factor,
• Social factors such as social status, reference groups, family, etc.
• Cultural factors, such as religion, social class caste and sub- castes, etc.

2. Consumer Behaviour undergoes a Change: The consumer behaviour is not static. It undergoes a
change over a period of time depending upon the nature of product. For instance, kids may prefer colourful
dresses, but as they grow up as teenagers and young adults, they may

prefer trendy clothes, and the n!ddle aged and senior citizens may prefer more of sober clothing. Change
in buying behaviour may take place due to several other factors like increase in income level, education
level, marketing factors, as stated above.
3. Different Customers behave Differently: All consumers do not behave in the same manner.
Different consumers behave differently. The differences in consumer behaviour are due to individual
factors such as nature of the consumers. lifestyles, culture, etc. For instance, some consumers are
shopaholic. They go on shopping spree beyond their means. They borrow money from friends,
relatives, banks, and at times even adopt unethical means to spend on shopping. But there are other
consumers, despite having lot ofurplus money may not go for regular shopping.
.Consumer Rehaviour Varies across Regions and Countries: The consumer behaviour varies
across states, regions and countries. F?r instance, the behaviour of urban consumers is different from that of
rural consumers. A good number of rural consuthers are conservative in buying behaviour. The rich rural
consumers may think twice to spend on luxuries despite having sufficient funds, whereas, the urban
consumer may even take bank loans to buy luxury items like cars, household appliances, etc. Also, across
the states, regions and countries, the consumer behaviour may differ depending upon the upbringing,
lifestyles, level of development, etc.
5. Consumer Behaviour Data Vital for Marketers: Marketers need to have a good knowledge of
consumer behaviour. They need to study the various factors that influence consumer behaviour of their
target customers. The knowledge of consumer behaviour will enable them to take appropriate marketing
decisions in respect of
• Product design/model.
• Pricing of the product.
• Promotion of the product.
• Packaging.
• Positioning,
• Place of distribution, etc.

6, Consumer Behaviour Leads to Purchase Decision: Positive

consumer behaviour leads to purchase, decision. A consumer who is influenced by certain
factors may take a decision to buy the produët. The purchase decision leads to higher demand,
and the sales of the na.rketers increase. Therefore, marketers need to influence consumer
behaviour to increase their purchases.
7. Consumer Behaviour is Different for Different Products:
Consumer behaviour is diffbrent for different producis. There are some consumers who may
buy more quantity of certain items and very tow or no cluantity of some other items. For
instance, a college student may spend heavily on clotThng and accessories, but may not spend
for general reading (although general reading is vital br college students in the competitive
world). A middle aged icson may spend less on clothing, but may invest money in savings.
insurance schemes, pension schemes, and so on.
8. Consumer Behaviour ina.y I inprove Standard of Living: Consuluer buying behaviour may
lead to higher standard of living. The more a person buys the goods and services, the higher is
the standard 01’ living. But, if a person spends less on goods and services, despite having good
income may deprive him/her of higher standard of living.
9. Consumer Behaviour Reflects Status: Consumer behaviour is not only influenced by status of
a consumer, but it also reflects it. Those consumers who own luxury cars, watches, and other
items are considered by others as persons of higher status. The luxury items also give a sense
of pride to the owners.
10. Spread-effect: Consumer behaviour has a spread-effect. The buying behaviour of one
person may influence the behaviour of another person. For instance, a customer may always
prefor to buy premium brands of clothing, watches, and other itms such as Nike, Van I leusen,
Pierre Cardin, etc. This may int’luence some ofhis friends, neighbours. colleagues at work
place to buy the premium brands. This is one of the reasons why marketers use celebrities to
endorse their brands.
The study of consumer behaviour indicates how individuals, groups. and organisations select,
buy, use and dispose goods, services, ideas or experiences to satisfy their needs and desires.

Consumer behaviour is atTected by several factors. Marketers need to bave a good knowledge of the
factors affecting consumer behaviour. In general, the factors that affect consumer behaviour include the
1. Marketing Factors:
Each element of the market mix —product, pricing, promotion and place (distribution has the —

potential to
affect the buying process at various stages.
• Product: The uniqueness of the product, the physical appearance and packaging can influence buying
decision of a consumer.
• Pricing: Pricing strategy doses affect buying behaviour of consumers.
• Marketers must consider the price sensitivity of the target customers while fixing prices,
• Promotion: The various elements of promotion such as advertising. publicity, public relations, personal
selling, and sales promotion affect buying behaviour of consumers. Marketers select the promotion mix
after considering the nature, of customers.
• Place: The channels of distribution, and the place of distribution affects buying behaviour of consumers.
Marketers make an attempt to select the right channel and distribute the products at the right place.
II, Pesona1 Factors:
The personal factors of a consumer may affect the buying decisions. The personal factors include:
• Age Factor: The age factor greatly influences the buying behaviour. For instance, teenagers may prefer
trendy clothes, whereas, office- executives may prefer sober and formal clothing.
• Gender: The consumer behaviour varies across gender. For instance, girls may prefer certain feminine
colours such as pink, purple, peach, whereas, boys may go for blue, black, brown, and so oii.
• Education: Highly educated persons may spend on books, personal care products. and so on. Rut a
person with low or no education may spend less on personal grooming products, general reading hooks.
and so on.

• tncome Level: Normally, higher the income level, higher is the level of spending and vice-versa. But
this may not he always the case in developing countries, especially in the: rural areas.
• Status in the Society: Persons enjoying higher status in the society do spend a good amount of money
on luxury items such as luxury ears, luxury watches, premium brands of clothing, jeweilery, perfumes, etc.
• Other Personal Factors: The other personal factors such as personality, lifestyle, family size, etc.,
influence consumer behaviour.
litPsyehotogtcal Factors:
A person’s buying behaviour is influenced by psychological fhctors such as tollows:
• Learning: It refers to changes in individual behaviour that are caued by information and experience. For
example, when a customer buys a new brand of perfume, and is satisfied by its use, then he/she is more
likely to buy the same brand the next time, Through learning, people acquire beliefs and attitudes, which in
turn influence the buying behaviour.
• Attitude: It is a tendency to respond in a given manner to a particular situation or object or idea,
Consumers may develop a positive, or negative or neutral attitude towards certain product or brands, which
in turn would affect his/her buying behaviour.
• Motives: A motive is the inner drive that motivates a person to act or
behave in a certain manner. The marketer must identify the buying
motives of the target customers and influence them to act positivel’

4 towards the marketed products. Some of the buying motives include:

-Pride and possession
-Love and affection
• (‘omibrt and convenience
Sex and romance, etc.
• l’rreptlois: it is the impression, which one forms about a certain iiniioii or obect. A motivated person is
ready to act. But the way or
in which he acts is influenced by his/her perception of the IIIinkii. lot iiistnce, a student may perceive
examinations as an tilipurtalif event, nod therefore, he/she would make every possible effort

Consumer Behaviour and A’far/cet Segmentation 45 including purchase of new stationery like pens,
whereas, another student may be casual about the examinations, and therefore, would not make extra
• Beliefs: A belief is a descripti’.’e thought, which a person holds about certain things. It may he based on
knowledge, opinion, faith, trust and confidence. People may hold certain beliefs of certain brands/products.
Beliefs develop brand images. which in turn can affect buying behaviour.
IV. Situational Influences
Major situational influences include jhe physical surroundings, social surroundings, time, the
nature of’ the task, and inomentar moods and conditions.
• Physical Surroundings: The physical surroundings at the place of purchase affects buying behaviour.
For instance, when a customer is shopping in a store, the features that affects buying behaviour would
include the location of the store, the decor, the layout of the store, the noise level, the way merchandise is
displayed, and so on.
• Social Surroundings: The social surroundings ofa situation involve the other people with the customer
that can influence buying decision at the point of purchase. For instance, a bargain hunter shopping with an
impatient fiiend may do quack puichases and may not haggle oei the price, so as t please the impatient
• Time Factor customers may make different decisions based on when they purchase the hour of the day,
the day of the week, or the season
k of the year. For instance, a consumer who has ruceived a pay cheque
on a particular day may shop moie items, than at the end of the month
when he is short of funds.
• Task: A customer may make a different buying decision depending upon the task to be performed by the
product. For instance, if the product is meant as a gift rather than for personal use, then the customer may
buy a different brand/product depending upon to whom the gift is purchased.
• Momentary conditions: The moods and condition of the customer at the time of purchase may also affect
the buying decision. A customer who is very happy would make a different buying decision, as compared
to when he is not in a happy mood.

V. Social Factors;
The social factors such as reference groups, family, and social and status affect the buying behaviour:
• Reference Groups: A reference group is a small group of people such as colleagues at work place, club
members, friends circle, neighbours, family members, and so on, Reference groups influence its members
as follows:
-They influence members’ values and attitudes.
-They expose members to new behaviours and lifestyles.
They create pressure to choose certain products or brands.
• Family: The family is the main reference group that may influence the consumer behaviour. Nowadays,
children are well informed about goods and services through media or friend circles, and other sources.
Therefore, they influence considerably in buying decisions both FMCG products and durables.
• Roles and’ Status: A person performs certain roles ii a particular group such as family, club,
organisation, and so on. For instance, a person may perform the role of senior executive in a firm and
another person may perform the role of a junior executive. The senior executive may enjoy higher status in
the organisation, as compared tojuniorexecutive, People may purchase the products that conform to their
roles and status, especially in the case of branded clothes, luxury watches, luxury cars, and so on.
VI. Cultural Factors:
Culture includes race and religion, tradition, caste, moral values, etc. Culture also include sub-cultures such
sub-caste, religious sects, language, etc.
• Culture: It influences consumer behaviour to a great extent. Cultural values and elements are passed
from one generation to another through family, educational institutions, religious bodies, social
environment. etc. Cultural diversity influences food habits, clothing, customs and traditions, etc. For
instance, consuming alcohol and meat in certain religious communities is not restricted, but in certain
communities, consumption of alcohol and meat is prohibited.

a Sub-Culture: Each culture consists of smaller sub-cultures that provide

specific identity to its members. Subcultures include sub-caste,
religious sects (Roman Catholics, Syrian -Catholics, Protestant
Christians, ete), geographic regions (South Indians, North Indians),
language (Marathi, Malyali, Gujarathi) etc. The behaviour of people
belong to various sub—cultures is different. Therefore, marketers may
adopt multicultural marketing approach, ie., designing and marketing
goods and services that cater to the tastes and preferences ofeonsurners
belonging to different sub-cultures.
Philip Kotler presents a five—stage model involving consumer buying decision process. The live—stage
model ofcnsumer buying process is stated as follows:
Problem/Need Identification
Inforiuation Search
Evaluation of Alternatives
Purchase Decision
Post-purchase Behaviour
the above model and other steps in consumer buying decision process are rt’ iift’(l as k1 lows:
ProlIe in/Need blent lien thin: The consumer buying process begins wIlli 11w idcnti/h a/log, of,
prolh’sis or a need. This identification iuul auw /iv,,. luleriwl %tluiuhi (such as hanger, or desire
to look go...!) ii, u U c friuul .w (,s .wh as a TI ad, suggestion from afriend,t.
When e* n,m ne-t ev iiti’ n iwed. Ilic inner—drive to fulfill the need
ic ti! le’e lii H cii ii u ut I bet e le ,i r, mat keters tutist tind out what motivates
tudi cntel o unit hwy can appeal to those motives. In order
wuid, unit letvu s liuiust have a good knowledge of buying motives

2. Information Search: When consumers identify a need, they may look for in/Irmation about
how to salisfj’ it. A consumer may look for information from five general sources:
• Internal Sources by recalling from memory, if he/she has satisfied a similar need in the past.

• Group Sources by consulting other people like family members, friends, and others.

• Marketing Sources through sales people, ads, packages, nd so on.

• Public Sources through media publicity, reports of research firms, etc.

• Experiential Sources by experiencing products, i.e., by handling them or by consuming or using

them. For example, a consumer may taste a particular item of fast food, and if he likes it, then he may make
a purchase decision.
3. ListingAlternative Brands: A consumer may list out a few alternative brands that are available in the
market. The brands may be listed after collecting necessary information from various sources. The
information of alternative brands may include:
• Features
• Price
• Model
• Aftersale-service
• Warranty, etc.
4. Evaluation of Alternatives: Based ‘on the available information. ‘onsuiners identify and evaluate
ways to satisfy their needs. A Cw1nxum’r ,iould Identi/j’ the products or brands that would satisfy
l,Is/h’r iwed or ‘alve his/her problems, and then evaluate each lmrund/,rodiwi ago lust certahui
criteria such as features, price, u’vputa ibm umlilse sonsl1auI.v /Ie’r—xals’—sL’rvlee, and so
on. Consumers is iii lsii i ry 11ev pe odewt t lint will deliver the greatest value.
AIttlmhu A thi evultini It ni, (lie consumer may develop an attitude (owni d (1w pi otiiwi All Iludcs
ieee individual feelings and beliefs that

would largely influence the consumer behaviour. The attitude may be positive or negative. If the consumer
develops positive attitude, the buying decision process will continue.
6. Trial Purchase: In case of certain products like FMCG brands, consumer may purchase the product
on trial basis. He will then evaluate the performance of the product, whether or not it matches with his
7. Purchase Decision: Once the consumer has narrowed down the possible alternatives to just
a few, he/she may iizake a decision to purchase. The consumer would dCcide whether to buy,
and if sO, then what, where, and when to buy Consumers may also postpone or forgo purchase
decision, if none of the short-listed alternatives meets his/her needs.
8. Post-purchase Behaviour: Marketer’s job is not complete with the purchase decision by the buyer.
Marketers must monitor:
• Post-purchase satisfaction: Customer may be satisfied or dissatisfied with the purchase. Customer
satisfaction takes place when product’s performance matches with customer expectations. The customer is
dissatisfied when product performance is below customer expectations. He is delighted when product
performance exceeds customer expectations, Marketer’s must obtain feedback on customer satisfaction
level, and try to maintain or enhance it (with the help of communications including publicity, advertising,
and so on)
• Post—purchase actions: A customer who is satisfied with the product may develop brand loyalty. He
may even become brand evangelist and spread good word about the product to his friends, relatives and
others. But if the customer is,dissatisfied, he may return the goods, or stop further purchases and may warn
others from purchasing the product.
• l’ost-/nirchase use and disposal: Mni’ketei’s must also monitor tlir iit’ and disposal nI the product.
Marketers imiust use tsmimmtimmiuteittlmqm tnmd like amlvertiln mind teclmmiIqmwH of sales
ptamin*mlltmia 1mm ‘mmmmt’ i)m liømpei’mim iii f)mnlalNt,