marketing management 0046 (autosaved)
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1. a) Explain six criteria for effective market segmentation.
Segmentation is the basis for developing effective targeted groups. Segmenting is where the marketer splits
the market into groups and targets the relevant group.
Six criteria for effective market segmentation are as follows:
1) Identity: The marketing manager must have some means of identifying members of the segment i.e., some
basis for classifying an individual as being or not being a member of the segment. There must be clear
differences between segments. Members of such segments can be readily identified by common
characteristics as they display similar behavior.
2) Accessibility: it must be possible to reach the different segments in regard to both promotion and
distribution. In other words, the organization must be able to focus its marketing efforts on the chosen
segment. Segments must be accessible in two senses. First, firms must be able to make segmented
customers aware of products or services. Second, they must get products to them through the distribution
system at a reasonable cost.
3) Responsiveness: a clearly defined segment must react to changes in any of the elements of the marketing
mix. For example if a particular segment is defined as being cost – conscious it should react negatively to
prices. If it does not, this an indication that the segment needs to be redefined.
4) Size: the segment must be reasonably large to be a profitable target. It depends upon the number of people
in it and its purchasing power.
5) Nature of demand: it refers to the different quantities demanded by various segments. Segmentation is
required only if there are market differentiation in terms of demand.
6)
Measurability: the purpose of segmentation is to measure the changing behavioral pattern of consumers.
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b) Discuss the types of target marketing strategies.
A target market is defined as a set of buyers sharing common needs or characteristics that the company decides to
serve. It is very important to select the target market, which the company decides to serve because knowledge about
how the consumers decide, what are the characteristics and lifestyle of the targeted customers help the marketers to
develop a suitable marketing strategy.
The targeting strategy largely depends on the kind of product market coverage that the firm plans for future. The
product market coverage strategies are broadly classified as undifferentiated marketing, concentrated marketing, and
differentiated marketing strategies.
Mass Marketing Strategy: In the absence of proper mechanism to classify the market into a number of
market segments and analysis their potential, many firms decide on the mass marketing strategy. In the
case, the marketer goes against the idea of a differentiated market and decides to sell the product to the
whole market. This strategy keeps the overall marketing costs low and makes it easier to manage and track
the market forces uniformly. The marketer tries to find out commonalities across various segments rather
than focusing on the differences between segments.
Concentrated marketing strategy: The marketing manager decides to enter into a selected market
segment instead of all the available market segments. When resources and market access are limited and
the company has to face intense competition, the marketing manager has to stretch the budget for market
coverage. In this case, the company is likely to follow the concentrated marketing strategy.
Differentiated Marketing Strategy: many marketers choose to target several segments or niches with a
differentiated marketing offer to suit each market segment. Maruti is the leading automobile company,
which has the distinction of having different products for different market segments.
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2. Explain the consumer buying decision process.
Consumer buying decision process is explained trough a number of stages and is influenced by one’s psychological
framework comprising the individual’s personality, learning process, levels of motivation, perception towards
products and brands, and formation of positive attitude towards the brand. The figure below depicts the process of
consumer decision making process in detail.
Problem recognition: A buying process starts when a consumer recognizes that there is a substantial
discrepancy between his/her current state of satisfaction and expectations in a consumption situation. A
need can be activated through internal or external stimuli. The basic need of common men rises to a
particular level and become a drive. From their previous experiences they know how to satisfy these needs
like hunger, thrust etc. this ia a case of internal stimulus.
NEEDLearned
NeedsBornNeeds
MotiveNon -
SpecificMotive
SpecificMotive
Problemrecognition
InformationSearch
InternalSearch
ExternalSearch
EvaluationOf
Alternatives
CognitiveEvaluation
AffectiveEvaluation
PurchaseDecision
Buy LaterDo Not
Buy
PURCHASE
PostPurchaseBehaviour
Satisfaction Dissatisfaction
HABIT FORMATION
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Information search: after need arousal the behavior of the consumer leads towards collection of available
information about various stimuli. In this case the information about the products and services are gathered
from various sources for further processing and decision making.
The marketer will find it worthwhile to study the consumers information sources when:
o A substantial percentage of target market engages in the search
o The target market shows some stable patterns of using the respective information sources.
Alternative evaluation: once interest in the product is aroused, a consumer enters the subsequent stage of
evaluation of alternatives. An evaluation leads to formation of buying intention that can be either purchased
or reject the product or brand. The final purchase will however depend on the strength of the positive –
intention which is the intention to buy.
Purchase decision: Finally the consumer arrives at a purchase decision. Purchase decisions can be any one
of three – no buying, buying later, and buy now.
Post purchase behavior: Post – purchase behavior refers to the behavior of consumers after their
commitment to a product has been made. It originates out of consumers experience regarding the use of the
product and is indicated in terms of satisfaction. This behavior is reflected in repeated purchases or
abstinence from further purchase. A satisfied product use experience leads to repeated purchase, referrals
from satisfied customers to new customers, higher usage rate and also brand advocacy.
3. A) Discuss Henry Assael model of buying decision Behavior.
Types of Buying Decision Behavior: Henry Assael Model:
Henry Assael has come up with an explanation to analyze why consumers buy the goods they buy. He explained the
relationship between the level of involvement by the consumers in purchase of goods and services and the level at
which diverse goods and services differ from one another. He therefore came up with four different buying
behaviors’ as explained:
Complex Buying
Behavior Variety Seeking Buying
Behavior
Dissonance Reducing
Buying Behavior
Habitual Buying Behavior
Significant differences
between brands
Few differences
between brands
High Involvement Low Involvement
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Complex Buying Behavior – Consumers are highly involved in a purchase and aware of significant
differences among brands. This is usually the case when the product is expensive, bought infrequently,
risky and highly self expressive. Typically the consumers don’t know much about the product category and
have more to learn. Example: Computers, laptops etc.
Dissonance – Reducing – Sometimes, the consumer is highly involved in a purchase but sees little
differences in the brands. The high involvement is based on the fact that the purchase is expensive,
infrequent, and risky.
Habitual Buying Behavior – Many products are brought under conditions flow consumer involvement and
the absence of significant brand differences. Considering salt, consumers have little involvement in this
product category. They go to the store and reach for the brand. If they keep reaching for the same brand, it
is out of habit and not strong brand loyalty.
Variety Seeking Buying – Some buying situations are characterized by low consumer involvement but
significant brand differences. Here consumers do lot of brand switching. Consumers do the brand switching
for the sake of variety rather than dissatisfaction.
B) Explain five stages of Adoption Process.
A large number of factors are examined to know the reaction of consumers regarding adoption of a new
product. The process of accepting new product ideas by individual customers is popularly known as ADOPTION
PROCESS.
Awareness – the product innovation is explained to the consumers. This process gives
information about the new product or services.
Awareness
Interest
Evaluation
Trial
Adoption
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Interest – when consumers develop interest in the product or product category, they search for
information about how the innovation can benefit them.
Evaluation – the evaluation stage represents the kind of mental trial of the product innovation.
Only if consumer’s evaluation of the innovation is satisfactory, they will actually try the product.
In case the evaluation is unsatisfactory, the product is automatically rejected.
Trial – in this stage consumers use the product on limited basis. Their experience with the product
provides them with the critical information that they need to adopt or reject it.
Adoption – in this stage, consumers decide to make full and regular use of the product.
4. Describe the components of the micro environment of marketing.
The market environment is a marketing term and refers to factors and forces that affect a firm’s ability to build and
maintain successful relationships with customers. Micro (internal) environment - small forces within the company
that affect its ability to serve its customers. The micro environment refers to the forces that are close to the company
and affect its ability to serve its customers. It includes the company itself, its suppliers, marketing intermediaries,
customer markets and publics. The COMPANY aspect of microenvironment refers to the internal environment of
the company. This includes all departments, such as management, finance, research and
development, purchasing, operations and accounting. Each of these departments has an impact on marketing
decisions. For example, research and development have input as to the features a product can perform and
accounting approves the financial side of marketing plans and budgets.
The SUPPLIERS of a company are also an important aspect of the microenvironment because even the slightest
delay in receiving supplies can result in customer dissatisfaction. Marketing managers must watch supply
availability and other trends dealing with suppliers to ensure that product will be delivered to customers in the time
frame required in order to maintain a strong customer relationship.
MARKETING INTERMEDIARIES refers to resellers, physical distribution firms, marketing services agencies,
and financial intermediaries. Resellers are those that hold and sell the company’s product. They match the
distribution to the customers and include places such as Wal-Mart, Target, and Best Buy. Physical distribution
firms are places such as warehouses that store and transport the company’s product from its origin to its destination.
Marketing services agencies are companies that offer services such as conducting marketing research, advertising,
and consulting. Financial intermediaries are institutions such as banks, credit companies and insurance companies.
Another aspect of microenvironment is the customers. There are different types of customer markets including
consumer markets, business markets, government markets, international markets, and reseller markets. The
CONSUMER MARKET is made up of individuals who buy goods and services for their own personal use or use
in their household. Business markets include those that buy goods and services for use in producing their own
products to sell. This is different from the reseller market which includes businesses that purchase goods to resell as
is for a profit. These are the same companies mentioned as market intermediaries. The government market consists
of government agencies that buy goods to produce public services or transfer goods to others who need them.
International markets include buyers in other countries and includes customers from the previous categories.
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5. A) Explain the types of Marketing Information systems
MIS supplies three types of information, those are:
Monitoring Information: Monitoring information is the information obtained from scanning external
sources which includes newspapers, trade publications, technical journals, magazines, directories, balance
sheets of the companies, and syndicated and published research reports. Data are captured to monitor changes and trends related to marketing situation. Some of these data can be purchased at a price from
commercial sources such as market research agencies or from government sources.
Recurrent Information: Recurrent information is the information that is generated at regular intervals like
monthly sales reports, stock statements, trial balance etc. In MIS, recurrent information is the data that MIS
supplies at weekly, monthly, quarterly, or annual interval, which are made available regularly. It can also
provide information on customer awareness of company’s brands, advertising, campaigns, and similar data
on close competitors.
Customized Information: Is also called problem related, which is developed in response to some specific
requirements related to marketing problem or any particular data requested by manager.
B) Discuss the different components of MIS.
"A marketing information system is a continuing and interacting structure of people, equipment and
procedures to gather, sort, analyze, evaluate, and distribute pertinent, timely and accurate information for
use by marketing decision makers to improve their marketing planning, implementation, and control".
Internal reporting systems: All enterprises which have been in operation for any period of time nave a
wealth of information. However, this information often remains under-utilized because it is
compartmentalized, either in the form of an individual entrepreneur or in the functional departments of
larger businesses. That is, information is usually categorized according to its nature so that there are, for
example, financial, production, manpower, marketing, stockholding and logistical data.
Marketing research systems: Marketing research is a proactive search for information. That is, the
enterprise which commissions these studies does so to solve a perceived marketing problem. In many cases,
data is collected in a purposeful way to address a well-defined problem (or a problem which can be defined
and solved within the course of the study). The other form of marketing research centers not on a specific
marketing problem but is an attempt to continuously monitor the marketing environment.
Marketing intelligence systems: Whereas marketing research is focused, market intelligence is not. A
marketing intelligence system is a set of procedures and data sources used by marketing managers to sift
information from the environment that they can use in their decision making. Marketing intelligence is the
province of entrepreneurs and senior managers within an agribusiness. It involves them in scanning
newspaper trade magazines, business journals and reports, economic forecasts and other media. In addition
it involves management in talking to producers, suppliers and customers, as well as to competitors.
Nonetheless, it is a largely informal process of observing and conversing.
Marketing models: Within the MIS there has to be the means of interpreting information in order to give
direction to decision. These models may be computerized or may not. Typical tools are: · Time series sales
modes· Brand switching models
· Linear programming
· Elasticity models (price, incomes, demand, supply, etc.)
· Regression and correlation models
· Analysis of Variance (ANOVA) models
· Sensitivity analysis
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· Discounted cash flow
· Spreadsheet 'what if models
6. Describe the factors to be considered while developing an Effective marketing mix.
To develop an effective marketing mix the company should consider the following factors and then choose the most
appropriate mix of elements to target the customers.
Company’s resources: these are one of the prime factors affecting the company’s marketing mix. The
financial, human, and technological resources available with the company affect the composition of the
marketing mix. The firm needs to conduct strength, weakness, opportunity and threat analysis for the
business unit.
Demographics: It implies to the change in the composition of the market, the demand of the population,
the opportunities in the country, etc. that affect the marketing mix.
Current and projected economic conditions: it connotes the economic factors like inflation,
employment, taxes, and other economic factors that influence marketing mix decisions.
Market potential: Analysis of market potential for new products considers market growth, prospects need
for your offering, the benefits of the offering, and the number of barriers to immediate use, the credibility
of the offering and the impact on the customer’s daily operations.
Competitors: They are important considerations that affect the marketing mix of a firm as the potential for
competitive retaliation is based on the competitor’s resources, commitment to the industry, cash position,
predictability, and status of the market.