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MB0046 Marketing Management Q.1 What is Marketing Information System? Explain its characteristics, benefits and information types.

Ans. A Marketing Information System can be defined as a system in which marketing information is formally gathered, stored, analysed and distributed to managers in accord with their informational needs on a regular basis . Set of procedures and practices employed in analyzing and assessing marketing information, gathered continuously from sources inside and outside of a firm. Timely marketing information provides basis for decisions such as product development or improvement, pricing, packaging, distribution, media selection, and promotion. Characteristics of MIS Philip Kotler defines MIS as a system that consists of people, equipment and procedures to gather, sort, analyze, evaluate and distribute needed, timely and accurate information to marketing decision makers. Its characteristics are as follows: 1. It is a planned system developed to facilitate smooth and continuous flow of information. 2. It provides pertinent information, collected from sources both internal and external to the company, for use as the basis of marketing decision making. 3. It provides right information at the right time to the right person. A well designed MIS serves as a company s nerve centre, continuously monitoring the market environment both inside and outside the organization. In the process, it collects lot of data and stores in the form of a database which is maintained in an organized manner. Marketers classify and analyze this data from the database as needed. Benefits of MIS(Marketing Information System) Various benefits of having a MIS and resultant flow of marketing information are given below: 1. It allows marketing managers to carry out their analysis, planning implementation and control responsibilities more effectively. 2. It ensures effective tapping of marketing opportunities and enables the company to develop

effective safeguard against emerging marketing threats. 3. It provides marketing intelligence to the firm and helps in early spotting of changing trends. 4. It helps the firm adapt its products and services to the needs and tastes of the customers. 5. By providing quality marketing information to the decision maker, MIS helps in improving the quality of decision making. Types of Marketing Information A Marketing Information System supplies three types of information. 1. Recurrent Information is the data that MIS supplies periodically at a weekly, monthly, quarterly, or annual interval. This includes data such as sales, Market Share, sales call reports, inventory levels, payables, and receivables etc. which are made available regularly. Information on customer awareness of company s brands, advertising campaigns and similar data on close competitors can also be provided. 2. Monitoring Information is the data obtained from regular scanning of certain sources such as trade journals and other publications. Here relevant data from external environment is captured to monitor changes and trends related to marketing situation. Data about competitors can also be part of this category. Some of these data can be purchased at a price from commercial sources such as Market Research agencies or from Government sources. 3. Problem related or customized information is developed in response to some specific requirement related to a marketing problem or any particular data requested by a manager. Primary Data or Secondary Data (or both) are collected through survey Research in response to specific need. For example, if the company has developed a new product, the marketing manager may want to find out the opinion of the target customers before launching the product in the market. Such data is generated by conducting a market research study with adequate sample size, and the findings obtained are used to help decide whether the product is accepted and can be launched. Q.2 a. Examine how a firm s macro environment operates. b. Mention the key points in Psychoanalytic model of consumer behaviour. Ans. The term micro-environment denotes those elements over which the marketing firm has control or which it can use in order to gain information that will better help it in its marketing operations. In other words, these are elements that can be manipulated, or used to glean information, in order to provide fuller satisfaction to the company s customers. The objective of marketing philosophy is to make profits through satisfying customers. This is accomplished through the manipulation of the variables over which a company has control in such a way as to optimise this objective. The variables are what Neil Borden has termed the marketing mix which is a combination of all the ingredients in a recipe that is designed to prove most attractive to customers. In this case the ingredients are individual elements that marketing can manipulate into the most appropriate mix. E Jerome McCarthy further dubbed the

variables that the company can control in order to reach its target market the four Ps . Each of these is discussed in detail in later chapters, but a brief discussion now follows upon each of these elements of the marketing mix together with an explanation of how they fit into the overall notion of marketing. A scan of the external macro-environment in which the firm operates can be expressed in terms of the following factors:
y y y y

Political Economic Social Technological

The acronym PEST (or sometimes rearranged as STEP ) is used to describe a framework for the analysis of these macroenvironmental factors. A PEST analysis fits into an overall environmental scan as shown in the following diagram: Environmental Scan / \ External Analysis Internal Analysis /\ Macroenvironment Microenvironment | P.E.S.T. Political Factors Political factors include government regulations and legal issues and define both formal and informal rules under which the firm must operate. Some examples include:
y y y y y

tax policy employment laws environmental regulations trade restrictions and tariffs political stability

Economic Factors Economic factors affect the purchasing power of potential customers and the firm s cost of capital. The following are examples of factors in the macroeconomy:
y y y y

economic growth interest rates exchange rates inflation rate

Social Factors

Social factors include the demographic and cultural aspects of the external macro environment. These factors affect customer needs and the size of potential markets. Some social factors include:
y y y y y

health consciousness population growth rate age distribution career attitudes emphasis on safety

Technological Factors Technological factors can lower barriers to entry, reduce minimum efficient production levels, and influence outsourcing decisions. Some technological factors include:
y y y y

R&D activity automation technology incentives rate of technological change

External Opportunities and Threats The PEST factors combined with external micro environmental factors can be classified as opportunities and threats in a SWOT analysis. The Psychoanalytical Model: The psychoanalytical model draws from Freudian Psychology. According to this model, the individual consumer has a complex set of deep-seated motives which drive him towards certain buying decisions. The buyer has a private world with all his hidden fears, suppressed desires and totally subjective longings. His buying action can be influenced by appealing to these desires and longings. The psychoanalytical theory is attributed to the work of eminent psychologist Sigmund Freud. Freud introduced personality as a motivating force in human behavior. According to this theory, the mental framework of a human being is composed of three elements, namely, 1. The id or the instinctive, pleasure seeking element. It is the reservoir of the instinctive impulses that a man is born with and whose processes are entirely subconscious. It includes the aggressive, destructive and sexual impulses of man. 2. The superego or the internal filter that presents to the individual the behavioral expectations of society. It develops out of the id, dominates the ego and represents the inhibitions of instinct which is characteristic of man. It represents the moral and ethical elements, the conscience. 3. The ego or the control device that maintains a balance between the id and the superego. It is the most superficial portion of the id. It is modified by the influence of the outside world. Its processes are entirely conscious because it is concerned with the perception of the outside world.

The basic theme of the theory is the belief that a person is unable to satisfy all his needs within the bounds of society. Consequently, such unsatisfied needs create tension within an individual which have to be repressed. Such repressed tension is always said to exist in the subconscious and continues to influence consumer behavior. 4. The Sociological Model: According to the sociological model, the individual buyer is influenced by society or intimate groups as well as social classes. His buying decisions are not totally governed by utility He has a desire to emulate, follow and fit in with his immediate environment. 5. The Nicosia Model: In recent years, some efforts have been made by marketing scholars to build buyer behavior models totally from the marketing man s standpoint. The Nicosia model and the Howard and Sheth model are two important models in this category. Both of them belong to the category called the systems model, where the human being is analyzed as a system with stimuli as the input to the system and behavior as the output of the system. Francesco Nicosia, an expert in consumer motivation and behavior put forward his model of buyer behavior in 1966. The model tries to establish the linkages between a firm and its consumer how the activities of the firm influence the consumer and result in his decision to buy. The messages from the firm first influence the predisposition of the consumer towards the product. Depending on the situation, he develops a certain attitude towards the product. It may lead to a search for the product or an evaluation of the product. If these steps have a positive impact on him, it may result in a decision to buy. This is the sum and substance of the activity explanations in the Nicosia Model. The Nicosia Model groups these activities into four basic fields. Field one has two subfields the firm s attributes and the consumer s attributes. An advertising message from the firm reaches the consumer s attributes. Depending on the way the message is received by the consumer, a certain attribute may develop, and this becomes the input for Field Two. Field Two is the area of search and evaluation of the advertised product and other alternatives. If this process results in a motivation to buy, it becomes the input for Field Three. Field Three consists of the act of purchase. And Field Four consists of the use of the purchased item. Q.3 Explain the key roles played and various steps involved in organizational buying. Ans. Point 1 Introduction. The need for an understanding of the organizational buying process has grown in recent years due to the many competitive challenges presented in business-to-business markets. Since 1980 there have been a number ofkey changes in this area, including the growth of outsourcing, the increasing power enjoyed by purchasing departments and the importance given to developing partnerships with suppliers. Point 2 The organizational buying behaviour process. The organizational buying behaviour process is well documented with many models depicting the various phases, the members involved, and the decisions made in each phase. The basic five phase

model can be extended to eight; purchase initiation; evaluations criteria formation; information search; supplier definition for RFQ; evaluation of quotations; negotiations; suppliers choice; and choice implementation (Matbuy, 1986). Point 3 The buying centre. The buying centre consists of those people in the organizational who are involved directly or indirectly in the buying process, i.e. the user, buyer influencer, decider and gatekeeper to who the role of initiator has also been added. The buyers in the process are subject to a wide variety and complexity of buying motives and rules of selection. The Matbuy model encourages marketers to focus their efforts on who is making what decisions based on which criteria. Point 4 Risk and uncertainty The driving forces of organizational buying behaviour. This is concerned with the role of risk or uncertainty on buying behaviour. The level of risk depends upon the characteristics of the buying situation faced. The supplier can influence the degree of perceived uncertainty by the buyer and cause certain desired behavioural reactions by the use of information and the implementation of certain actions. The risks perceived by the customer can result from a combination of the characteristics of various factors: the transaction involved, the relationship with the supplier, and his position vis-a-vis the supply market. Point 5 Factors influencing organizational buying behaviour. Three key factors are shown to influence organizational buying behaviour, these are, types of buying situations and situational factors, geographical and cultural factors and time factors. Point 6 Purchasing Strategy. The purchasing function is of great importance because its actions will impact directly on the organization s profitability. Purchasing strategy aims to evaluate and classify the various items purchased in order to be able to choose and manage suppliers accordingly. Classification is along two dimensions: importance of items purchased and characteristics of the supply market. Actions can be taken to influence the supply market. Based on the type of items purchased and on its position in the buying matrix, a company will develop different relationships with suppliers depending upon the number of suppliers, the supplier s share, characteristics of selected suppliers, and the nature of customer-supplier relationships. The degree of centralization of buying activities and the missions and status of the buying function can help support purchasing strategy. The company will adapt its procedures to the type of items purchased which in turn will influence relationships with suppliers. Point 7 The future. Two activities which will be crucial to the future development of organizational buying behaviour will be information technology and production technologies. Point 8 Conclusion.

Organizational buying behaviour is a very complex area, however, an understanding of the key factors are fundamental to marketing strategy and thus an organization s ability to compete effectively in the market place. Q.4 Explain the different marketing philosophies and its approach. Ans. Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering and freely exchanging products and services of value with others. According to the American Marketing Association, Marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational goods There are six competing philosophies under which organizations conduct marketing activities the production concept, product concept, selling concept, marketing concept, customer concept; and societal concept. 1) The Production Concept: The production concept is one of the oldest concepts in business. The production concept holds that consumers will prefer products that are widely available and inexpensive. Managers of production-oriented businesses concentrate on achieving high production efficiency, low costs and mass distribution. They assume that consumers are primarily interested in products availability and low prices. This philosophy makes sense in developing countries, where consumers are more interested in obtaining the product than its features. It is also used when a company wants to expand the market. 2. The product Concept Product concept holds that consumer will favour these products that offer the most quality, performance and innovative features. Managers in these organizations focus on making superior products and improving them over time. They assume that buyers admire well-made products and can evaluate quality and performance product oriented companies often trust that their engineers can design exceptional products. They get little or no customer input, and very often they will not even examine competitor s products. 3. The Selling Concept: The selling concept holds that consumers and businesses, if left alone, will ordinarily not buy enough of the organization s products. The organization most, therefore, undertakes an aggressive selling and promotion effort. This concept assumes that consumers typically show buying inertia or resistance and must be coaxed into buying. It also assumes that the company has a whole battery of effective selling and promotion tools to stimulate more buying. The selling concept is epitomized by the thinking that The purpose of marketing is to sell more stuff to more people for more money in order to make more profit Most firms practice the selling concept when they have over capacity. Their aim is to sell what they make rather then make what market wants. 4. The Marketing Concept: The marketing concepts hold that the key to achieving its organizational goals consists of the company being more effective then competitors in creating, delivering and communicating superior customer value to its chosen target markets.

The marketing concept rests on four pillars: target market, customer needs, integrated marketing and profitability. There is a contrast between selling and marketing concepts: Selling focuses on the needs of the seller; marketing on the needs of the buyer . Selling is preoccupied with the seller s need to convert his product into cash; marketing with the ideas of satisfying the needs of the customers by means of the product and the whole cluster of things associated with creating, delivering and finally consuming it. 5. The customer Concept: Under customer concept, companies shape separate offers, services and messages to individual customers. These companies collect information on each customer s past transactions, demographics, psychographics and media and distribution preferences. They hope to achieve profitable growth through capturing a larger share of each customer s expenditures by building high customer loyalty and focusing on customer lifetime value. The ability of a company to deal with customers are at a time become practical as a result of advances in factory customization, computers, the internet and database marketing software. 6. The Societal Marketing Concept: The societal marketing concept holds that the organization s goal is to determine the needs, wants and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumer s and the society s well being. The societal marketing concept calls upon marketers to build social and ethical considerations into their marketing practices. They must balance and juggle the often-conflicting criteria of company profits, consumer want satisfaction and public interest. Companies see cause-related marketing as an opportunity to enhance their corporate reputation, raise brand awareness, increase customer loyalty, build sales and increase press coverage. They believe that consumers will increasingly look for signs of good corporate citizenship that go beyond supplying rational and emotional benefits. Q. 5 What are the various stages involved in decision process when a consumer is buying new product? Also, explain the adoption process. Ans. 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 1. chinese food indian food burger king klondike kates etc 2. 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.
o o o o

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. 1. Purchase decision Choose buying alternative, includes product, package, store, method of purchase etc. 2. Purchase May differ from decision, time lapse between 4 & 5, product availability. 3. 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. Adoption Process Adoption is an individual s decision to become a regular user of a product. How do potential customers learn about new products, try them, and adopt or reject them? The consumer adoption process is later followed by the consumer loyalty process, which is the concern of the established producer. Years ago, new product marketers used a mass market approach to launch products. This approach had two main drawbacks: It called for heavy marketing expenditures, and it involved many wasted exposures. These drawbacks led to a second approach, heavy user target marketing. This approach makes sense, provided that heavy users are identifiable and are early adopters. However, even within the heavy user group, many heavy users are loyal to existing brands. New product marketers now aim at consumers who are early adopters. The theory of innovation diffusion and consumer adoption helps marketers identify early adopters. An innovation is any good, service, or idea that is perceived by someone as new. The idea may have a long History, but it is an innovation to the person who sees it as new. Innovations take time to spread

through the social system. The Innovation diffusion process is defined as the spread of a new idea from its source of invention or creation to its ultimate users or adopters. The consumer adoption process is the mental process through which an individual passes from first hearing about an innovation to final adoption. Adopters of new products have been observed to move through five stages: 1. Awareness : The consumer becomes aware of the innovation but lacks information about it. 2. Interest : The consumer is stimulated to seek information about the innovation. 3. Evaluation: The consumer considers whether to try the innovation 4. Trial: The consumer tries the innovation to improve his or her estimate of its value. 5. Adoption : The consumer decides to make full and regular use of the innovation. Q. 6 Explain briefly the marketing mix elements for an automobile company giving sufficient examples. Ans. Marketing mix is the combination of elements that you will use to market your product. There are four elements: Product, Place, Price and Promotion. They are called the four Ps of the marketing mix. The objectives of this lesson about marketing mix is to give you: -The tools you need for establishing your detailed marketing plan and forecasting your sales. 1. Challenge 2. Product 3. Place 4. Price 5. Promotion 6. Sales strategy 7. Do it yourself 8. Coaching 1-CHALLENGE You have gotten a rough idea about the market situation and the possible positioning of your product. Of course, it s far to be sufficient. Now, you must write your detailed planning. It means that brainstorming is ended and that you have to go to the specifics in examining and checking all the hypothesis you had made in the preceding chapters. You will use the marketing mix. Some people think that the four Ps are old fashionable and propose a new paradigm: The four Cs! Product becomes customer needs; Place becomes convenience, price is replaced by cost to the user, promotion becomes communication. It looks like a joke but the Cs is more customer-oriented. 2-PRODUCT A good product makes its marketing by itself because it gives benefits to the customer. We can expect that you have right now a clear idea about the benefits your product can offer. Suppose now that the competitors products offer the same benefits, same quality, same price. You have then to differentiate your product with design, features, packaging, services, warranties, return and so on. In general, differentiation is mainly related to: -The design: it can be a decisive advantage but it changes with fads. For example, a fun board must offer a good and fashionable design adapted to young people.

-The packaging: It must provides a better appearance and a convenient use. In food business, products often differ only by packaging. -The safety: It does not concern fun board but it matters very much for products used by kids. -The green : A friendly product to environment gets an advantage among some segments. In business to business and for expensive items, the best mean of differentiation are warranties, return policy, maintenance service, time payments and financial and insurance services linked to the product 3-PLACE-DISTRIBUTION A crucial decision in any marketing mix is to correctly identify the distribution channels. The question how to reach the customer must always be in your mind. -Definition: The place is where you can expect to find your customer and consequently, where the sale is realized. Knowing this place, you have to look for a distribution channel in order to reach your customer. In fact, instead of place it would be better to use the word distribution but the MBA lingo uses place to memorize the 4 Ps of the marketing mix! 4-PRICE Price means the pricing strategy you will use. You have already fixed, as an hypothesis a customer price fitted to your customer profile but you will have now to bargain it with the wholesalers and retailers. Do not be foolish: They know better the market than you and you have to listen their advices. 5-PROMOTION Advertising, public relations and so on are included in promotion and consequently in the 4Ps. Sometimes, packaging becomes a fifth P. As promotion is closely linked to the sales, I will mention here the most common features about the sale strategy. -Definition: The function of promotion is to affect the customer behavior in order to close a sale. Of course, it must be consistent with the buying process described in the consumer analysis. Promotion includes mainly three topics: advertisement, public relations, and sales promotions. -Advertisement: It takes many forms: TV, radio, internet, newspapers, yellow pages, and so on. You have to take notice about three important notions:

Reach is the percentage of the target market which is affected by your advertisement. For example, if you advertise on radio you must know how many people belonging to your segment can be affected. Frequency is the number of time a person is exposed to your message. It is said that a person must be exposed seven times to the message before to be aware of it. Reach*frequency gives the gross rating point. You have to evaluate it before any advertisement campaign. Message: Sometimes, it is called a creative. Anyway, the message must: get attraction, capture interest, create desire and finally require action that is to say close the sale. Down-earth-advice: There are some magical words that you can use in any message: -Your-You I-Me-My Now-Today -Fast-Easy-Cool-New-Fun-Updated-Free-Exciting-Astonishing -Success-Love-Money-Comfort-Protection-Freedom-Luck. -Public relations: Public relations are more subtle and rely mainly on your own personality. For example, you can deliver public speeches on subjects such as economics, geo-economics, futurology to several organizations (civic groups, political groups, fraternal organizations, professional associations) 6-SALES STRATEGY Sales bring in the money. Salesmen are directly exposed to the pressure of finding prospects, making deals, beating competition and bringing money.