PHARMA MARKETING MANAGEMENT UNIT-1 Concepts of Marketing.pdf

UNIT-1 Concepts of Marketing

1. UNIT-I
MARKETING

e

(

un Madhav B. Korde e f
tant Professor 2
Nagpur college of = wappdongri, Nagpur, MH

2. (e) CONTENTS

> INTRODUCTION

> GENERAL CONCEPTS AND SCOPE OF MARKETING

> DISTINCTION BETWEEN MARKETING & AND SELLING
> MARKETING ENVIRONMENT

> INDUSTRY AND COMPETITIVE ANALYSIS

> ANALYZING CONSUMER BUYING BEHAVIOR

> INDUSTRIAL BUYING BEHAVIOR

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3. ) Y. XL
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“INTRODUCTION e

+ The term Marketing refers to identifying and meeting human and social needs
Profitably.

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+ "The science and art of exploring, creating, and delivering value to satisfy the needs
of a target market at a profit. Marketing identifies unfulfilled needs and desires.

+ Here are some definitions of marketing from famous organizations or marketing
thinkers.

"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 objectives. (Bennett 1995)

"Marketing is the management process responsible for anticipating and satisfying
customer requirements profitably. (The Graphered Institute of Marketing, 2009) )

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“INTRODUCTION e

— + satisfying Customer's needs.

Marketing is all about identifying customer needs and wants,

and building products that will satisfy them.

More precisely, marketing's scope is satisfying customer needs, thus retaining them,
which further leads to building long-term relationships and ultimately acquiring
more customers.

Marketing management is the analysis, planning, implementation, and control of
programs designed to bring about desired exchanges with target markets to achieve
organizational objectives. (Kotler & Armstrong 2001).

"Marketing is a social and managerial process by which individuals and groups obtain (0)
what they need and want through Marketing Strategies and Promotional Mix offered by
different Pharma companies (Kotler and Clarke, 1987); and marketing is the entirety of ws

the business from the perspective of the customer. (D: Ñ D? y

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“SCOPE OF MARKETING e

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1)

2)

3)

4

Analyzing Consumer Needs and Wants: This is necessary to fulfil consumers’ needs in the best
possible way.

Then, the Production of goods and services is carried out based on consumer preferences.

Analyzing Consumer Behaviors: Essential to identify the pattern of consumer buying.

This enables marketers to segment and target the market.

Product Planning and Development: The marketing process initiates with idea generation and ends

up with product development. It involves numerous activities such as branding, packaging, and
product line decisions.

Pricing Decisions: The pricing policy varies from product to product. Different factors like
marketing goals, stage of product life cycle, competition level, etc., are considered for determining

pricing policies.

Distribution: Designing of an effective distribution channel for improved sales and profit is also an J
important.

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¿SCOPE OF MARKETING Y

+6) Promotion: marketing is also responsible for promoting the products of an organization. Marketers use
different techniques like advertising, sales promotion, personal selling, etc. An appropriate promotion
mix is designed to achieve marketing objectives.

7) Company Analysis: In marketing, company analysis is carried out by evaluating the cost structure and
the company's resources.
The actual position of the company is estimated based on its competitors.

Marketers can also determine the profit earned through different product offerings across different customer
segments with the help of the accounting department.

Another technique of company analysis is brand auditing. This highlights the market potential of a brand in the
market.

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8) Competitor Analysis: done to determine the strengths and weaknesses of various competitors in the
market. A detailed evaluation of competitors' sources of profits, competencies, resources, cost structure,

and differentiation and positioning strategies is done to fi; out J most competitive organization.

7. Y. XL
HARMACEUTICAL MARKETING u

~~ + Pharmaceutical marketing is also called Medico-marketing or Pharma marketing
+ According to the American Marketing Association (AMA) board of directors,

+ Marketing is "the activity, set of institutions and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients, partners and
society at large".

+ The role of marketing is to influence or direct activities from the manufacturer to the patient:
At the right place
For the right price
At the right time ©

The right products )
In the right quantity

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MEE RACCUTICAL MARKETING

* Pharmaceutical marketing is a dynamic field which has gained greater complexity in recent years.
Pharmaceutical marketing like marketing in other industries is a social process manifested on the

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market.
+ Rather than in an isolated vacuum, organizations operate in a complex dynamic environment.

+ .Ifa pharmaceutical company wants to achieve market success, it needs to invest strongly in
marketing and sales activities. Thus, by no surprise, we may conclude that marketing and sales

activities are one of the most important operative and even more strategic priorities of the world
pharmaceutical industry.

+ The biggest, inventive world pharmaceutical companies invest, on an average, approximately 16% of
their sales into R&D and even more, about 26% or more into marketing and sales activities.

9. Anes
GENERAL CONCEPT OF MARKETING Y

Y > What is Market?

> 'Market' is a very widely used term. In simple words, it means, a place, where buying and selling
take place.

> The word 'market' is derived from the Latin word 'Marcatus' meaning merchandise trade or a
place where business is conducted.

> Different authors have defined 'market' differently

> According to Clark and Clark, "A market is a center about which or an area in which the forces
leading exchange or title to a particular product operates and towards which the actual goods tend
to travel

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10. ey 27. GENERAL CONCEPT OF MARKETING <=
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Relationship
Marketing $e

Demands

Marketing
Core
Concepts

11. Y. XL
er is marketed?

© > Goods: represents the biggest pie of the production and marketing efforts of any economy.

Ex. pharma care products, drugs, cellular phones, cars, televisions, refrigerators,
coolers, air conditioners, watches, and so on.
> Services: that has a direct correlation with the growth of any economy.
Services include Para-Medic services, Hospitals, hostels, bankers, airlines, consultancies, doctors,
lawyers, insurance, internet, telecom, software programmers, and the like.
> Experiences: A company can create, show, and market experiences.
3D movies, Disney World, joy rides, and amusement parks are some of the examples of marketing
experiences.
> Events: Events is an important category that marketers can target. u

They promote events like trade fairs (suraj kund) concerts, IPL in India, the Olympics, World Cup are
few examples.

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12. Y. a
hat is marketed?

> Places: marketing of places includes cities, states, or nations that may constitute the tourism
industry.

Some regions or places have historical monuments for tourism.
Nature's beauty or royal history like Kashmir and Rajasthan are good examples of place marketing.

Sourav Ganguly- brand ambassador Tripura

> Persons: Celebrity marketers. Persons with huge fan followers or otherwise famous and well-
recognized by people and large can become big brands themselves.
For example, people from the film industry like Shahrukh Khan, Amitabh Bachchan, Akshay Kumar,
Kareena Kapoor and Katrina Kaif are brand ambassadors of many companies.
> Data and Information: information is generally understood as what is created in school and
universities meant for the students and communities.

Such as medical transcriptions, and research agencies that may create, modify, and distribute information

at a price.

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13. a
What is marketed?
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> Organisations: many organizations that have over the years built their unique image in society
for specific areas like health, education, and child care, can become a source of developing the
brand image of marketers by enhancing the brand perceptions in the minds of the public.

For example, companies announce that a certain percentage of every purchase shall be contributed towards
UNICEF or the like.

> Properties: includes real estate as well as financial properties such as stocks or shares. The
real estate industry markets the rights of ownership and many investment and asset management
companies are marketing stocks.

> Angel One, Grow, Upstocks, etc

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14. Y XL
iz oiénce of marketing

“Oimportance to Marketers: importance to the Society: Y
LA + Financial Success + Job Opportunities
+ Enhance sales + Protection against Depression
+ Develops Company’s Image + Availability of Various Products

+ Major Component of Product Pricing
+ To survive in the changing market environment

+ Marketing is often route to the top

O Importance to the Consumers:
+ Availability of Global Goods
+ Promotes Product Awareness

+ Creating Utilities

15. XL
ELLING 8 MARKETING
Selling is a narrower concept. Selling means providing the customer with the goods he/she needs in \_/
© exchange for a price.
+ It is usually between two parties. Selling is more like an agreement wherein the buyer receives the
product in exchange for money.

The Selling Concept

4 Profit

Starting xisting + Selling & through

point Factory Produds + Promotion sale
Volumes

17. ‘A Comprehensive Term in terms of
Meaning.

ISTINCTION BETWEEN SELLING & MARKETING

A Narrow Term in terms of Meaning.

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Profits through Customer Satisfaction.

Profits through Sales Volume.

Focused on Customer needs.

Focused on Seller needs.

Begins before Production.

Begins after Production.

Long term Prospective.

Short-term Prospective.

Customer first then Product.

Product first then Customer.

Continues after Sale.

Comes to an end with a Sale.

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Business is considered a way to satisfy
consumers” needs

Business is considered a source of profit generation

Let the seller be aware.

Let the Buyer be aware.

10.

Integrated Approach.

Fragmented approach.

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Cost is determined by price and price is
determined by consumers

Price is determined by cost

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Anno ENVIRONMENT OQ

{27 Marketing environment refers to the external factors or forces that affect the company’s ability to develop
and maintain successful relationships with its target customers.

> Environment refers to the surroundings, conditions, and influences in which living organisms operate.
Similarly, organizational environment is a total of events circumstances, and objects that influence
the organization.

h Macro
> Consists of Three components: Environment

1. Internal Environment
2. Micro Environment Micro

3. Macro Environment Environment

Internal
Environment

19. Int ent ironment: /1
ctors within the organization and affects the Customers

~ overall business operations. General
à S 1 Public
These factors include labor, inventory, company y
policy, logistics, budget, capital assets, etc. These Sion E

factors can be controlled by the firm.

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2. Micro Environment: {Micro
— Environment:
1. Customer: Base of every Business is the

Customer's needs and wants.
Thus, each marketing strategy is customer-
oriented & understanding the needs of the
customers and offering the best product that
fulfills their needs Competitors
2. Employees: are the main component behind
the success of business. Training €
Development is crucial to impart marketing
skills in an individual.

20. Y. XL
e Environment:
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3” Suppliers: suppliers provide material to make a finished good and hence are very important for the
organization.
4. Retailers & Distributors: These are important partners who play a vital role in determining the success of
marketing operations.
Being in direct touch with customers they can give suggestions about customer's desires regarding a product and
its services.
5. Government: make several policies like. Pricing policy, credit policy, education policy, housing
policy, etc. do influence marketing strategies.
A company has to keep track of these policies and make the marketing programs accordingly.
6. Competitors: A close watch is required to design its marketing strategy according to the market trend.

7. General public: Social responsibility towards the society in which it is operating. =

Thus, all marketing activities should be designed that result in increased welfare of society as a whole/

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21. 3. Macro Environment

> It Includes all those factors that are related to outside the
organization and that can not be controlled.

> These Include PESTLE as Framed

1. Political & Legal Factors: Laws and policies with the
change in Political Parties, several changes are seen in the
market in terms of trade, taxes and Duties, codes and
Practices and Market regulation etc.

2. Economic Factors: Every business operates in the
economy and is affected by the different phases it is
undergoing. A

Different factors that form an economic environment h
like Interest Rates, Gross Domestic Products (GDP),

Gross National Product (GNP), Inflation. Subsidies, N
Income distribution, Government funding, Other \ C7
significant economic variables. = a m

22. _ Inpustey AND COMPETITIVE ANALYSIS a
: INDUSTRY ANALYSIS | i

©
> It is business research that focuses on the potential of an industry.
> Industry analysis is a part of any strategy development in firms and other organizations.

> An industry analysis is a significant business function that is performed by business proprietors and other
management experts to evaluate the present business environment. This is considered an effective market
assessment tool designed to provide a business with an idea of the intricacy of a particular industry.

> It reviews the economic, political, and market factors that influence the industry’s development. Major
factors can include the power manipulated by suppliers and buyers, the condition of competitors, and the

possibility of new market entrants.
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23. A : :
© Factors Analysed in Industry Analysis
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I. Basic Features and Conditions of the Industry
Il. Industry Environment

III. Industry Attractiveness

IV. Industry Practices

V. Emerging Trends

VI. Industry Structure

VII. Industry Performance

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24. Factors Analysed in Industry Analysis

I. Basic Features and Conditions of the Industry:
“Anvolves the size of industry, the products and services offered by the companies, variants of the products
and services, past performances of the industry, current industry position, future expectation, etc.

II. Industry Environment:
The environment of industry can be classified according to Michel porter as - fragmented, emerging,

matured, declining, and global industries.

IH. Industry Structure:
The structure of that particular industry should be understood. Every industry has a specific market size and,
a certain number of companies and each company has its own market share.
The firms in an industry compete with each other to capture the market. These determine the severity of
competition in the industry, the extent of profitability, and the attractiveness of the industry. @

IV. Industry Attractiveness:
is determined by factors like industry potential, industry growth, profitability, future trends ite

nth d exit barriers in the industry, etc.

25. Factors Analysed in Industry Analysis

V4 Industry Performance:

The determinants of an industry's performance are its annual production, profitability per year,
technological advancements, etc.

VI. Industry Practices:

The products or services in which the companies deal in, the type of markets they share, the business
practices they carry-out, such as pricing, promotion, selling, research and development, etc.

VII. Emerging Trends:

The trends that are going to define the industry in the future also impact the business practices indirectly.

Some of the important factors like product life cycle, industry life cycle, changes in needs
and preferences of the consumers, changes in laws, possibilities of new entrants, innovation,
changes in technology, etc.

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A PORTER FIVE FORCE MODEL U

Threat of
new
entrants

This helps in the following ways:

Define Arena: It helps in defining the Ba

arena (or playing field) of the firm. Powering
suppliers

Focus on the Competitors: Setting

the industry boundaries helps the firm

to get an idea of its competitors and

the firms that are manufacturing

substitute products.

Identify Key Factors for Success:
This helps in allocating and deploying )
the key success factors in the industry. /

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wm | PORTER FIVE FORCE MODEL

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1) Rivalry inside the Industry 2) Bargaining power of supplier
i, Industry concentration i. Supplier concentration
ii Fixed costs/value-added ii. Importance of volume to supplier
iii. Industry growth iii. Differentiation of inputs
iv. Intermittent over-capacity iv. Impact of inputs on cost or differentiation
v. Product differences v. Switching costs of firms in the industry
vi. Switching costs vi. Presence of substitute inputs
vii. Brand identity vii. Threat of forward integration
viii. Diversity of rivals viii.Cost relative to total purchases in the e
ix. Corporate stakes industry
x High Exit barriers I

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e) "| PORTER FIVE FORCE MODEL

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3) Threat of new entrants

i. Absolute cost advantages ix. Access to distribution

ii. Proprietary learning curve x. Expected retaliation

iii. Access to inputs xi. Proprietary products

iv. Government policy 4) Threat of Substitutes

v. Economies of scale i. Low Switching costs

vi. Capital requirements ii. Buyer inclination to substitute
vii.Brand identity iii. The price-performance trade-
viii.Switching costs off of substitutes a

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.) ~ PORTER FIVE FORCE MODEL

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5) Bargaining power of buyer
i. Bargaining leverage
ii. Buyer volume
iii. Buyer information
iv. Brand identity
v. Price Sensitivity
vi. Threat of backward integration
vii. Product differentiation
viii. Buyer concentration versus industry ©

ix. Substitutes available
x. buyer’s incentives Y

30. 17 Ability to appeal new customers . Managing revenue growth and profit
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2. Ability to hold existing customers 9. Utilization of operating capacity
3. Ability to attract and retain good 10. Strong distribution channels

employees 11. Low-cost production structure

4. Successful advertising campaigns 1, Strong technology capability

(success is measured by the increase in
13. Location to customers
sales)

3, Minesingcastisoapndls 14. Sustainability of the business
6. Managing human resources

7. Managing cash flow LZ

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31. © “> After a firm has gained a considerate of the markets and industry in which it plan to complete the
competitor analysis.

> A competitive analysis is an instrument for organizing the information a firm collects about its
primary competitors.

> The two main activities of competitor analysis are as follows:

1. Attaining information regarding the main competitors, and
2. Utilizing that information to forecast the behavior of competitors.

> Michael Porter introduced a framework for analyzing the competitors. Based on 4 key aspects of

competitors,
1. Competitor’s objectives
2. Competitor’s current Strategy

3. Competitor’s Assumptions

32. 1) Competitor’s objectives:
short-term and long-term. A competitor having a short-term objective would not waste its time and money

defending against competitive strategies and would rather focus on positioning its products strongly in the

market.

Whereas, a competitor having a long-term objective ignores short-term profit-making and only focuses on
price-based competition.

The objectives of competitors can also be financial or of other types like market share, growth rate,
technology leadership, etc. In addition, these objectives vary at every strategic level, viz., corporate, business
unit, and functional level.

Other factors, that indicate the competitors’ objectives, are management incentives, tolerance for risk,
composition of the Board of Directors, legal restrictions, the background of the executives and some
corporate-level objectives. (9)
The tendency of the competitor to modify its strategy is indicated by whether it is achieving the objectives or ©
not.

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.) © COMPETITIVE ANALYSIS

Cost-Based Pricing(Short Term Objective)

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Value-Based Pricing(Long Term Objective)

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34. L7 © COMPETITIVE ANALYSIS

2)~ Competitor's assumptions: A
= For example, if a new product launched by a firm fails to do well in the market, it is assumed that there is no
demand for such product. This type of assumption may be correct and may be wrong.
If it is wrong then this will block the future opportunities of the firm and create new opportunities for
other rival firms.
A product similar to the previous failed product may be launched by new companies creating a high demand
for the product.
For example, US manufacturers assumed their experiences that there was no demand for small bikes.
Then, Honda decided to enter the US market by launching a small motorbike.
The following are the bases for competitor's assumptions:
i) Belief about its competitive position, 10)
ii) Past experience with a product

iii) Regional factors Y

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35. L7 © COMPETITIVE ANALYSIS

3) ~Competitor's current strategy: What the competitor says’ and 'what it does’ are the two main caren
~ of competitor's strategy.

points highlight 'what the competitor says' about the strategy:

i) Managerial statements,

ii) Annual shareholder reports/Market shares

iii) Press releases/recent news

iv) Interviews with analysts.

There is sometimes a variation between ‘what the competitor says' and 'what it does’.

The activities indicating what the competitor actually does:

Hiring activity.
R&D projects, e
iii. Capital investments,
iv. Promotional campaigns, LZ

Strategic partnerships,

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36. Y COMPETITIVE ANALYSIS

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4) Competitor's Resources and Capabilities: The resources and capabilities of a competitor define its ability to
Üéespond against the competitive market environment.

> For this, a competitor needs to have adequate knowledge of its competitor's assumptions, objectives, and
current strategy.

>The strengths and weaknesses of a competitor determine its capabilities in different functional
areas, e.g., SWOT analysis. (Strengths, Weaknesses, Opportunities, and Threats)

> A competitor's capabilities are governed by its strengths. The rate at which the competitor is growing depicts its
capabilities.

> Since the competitive environment is dynamic in nature. A financial analysis can also be performed to identify
its sustainable growth rate.

> The ability of competitors to respond quickly to the changes must be evaluated.
> some firms adapt and mobilize things quickly whereas, some firms have a_slow
speed and take years to adapt to a particular change.

> The factors that affect the firm's capabilities to adapt swiftly can be large investments in fixed assets, low Cash

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37. oy, n Competitor's An
The firm must carefully examine the various elements of competitor analysis in order to transform its

competitive analysis activities into the firm's profitability.
> the firm must consider the following steps:

1. Defining Competitors
Some companies offer products and services which are less similar, while others may offer the
same type of products or services offered by one's own company. Therefore, the companies have to
choose whether the competition is an opportunity or a threat (either in the present or in the future)
to the company financially

2. Competitor Strengths and Weaknesses
Here, the main focus of the company is on its competitor's strengths and weaknesses and partially
on the products and services offered by them. In reality, all the elements of customer preferences
like product quality, price, distribution, service, etc., are considered as the first half portion’ of
competitive analysis.
While other half of the analysis is to examine the internal strengths and capabilities of its

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ey, =. Steps in Competitor's Analysis

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3. Internal Strengths and Weaknesses
Involvement of highly motivated, confident and creative employees.
Participation of talented marketing and advertising personnel.

Identification of various companies' processes that provide benefits to the company in the market
environment.

Introduction of updated stock management system.
4. Customer Needs and Wants
Customer's priorities should be considered as the main priority of the company.

Apart from determining the customers' current needs and wants, business firms must also anticipate
the future demands of the customers. bait

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39. O Steps in Compet s Analy

5. Studying Impediments to Market for Competition Y
— The companies that are willing to enter into new markets have to face several challenges. There are
some challenges which can be dealt easily, while others may prevent launching of a campaign.

common barriers to enter a new market are

High Start-Up Costs: High costs for start-up is most challenging and formidable for companies,
especially small companies.

Patents: This protects the new products and processes from competitors.

Market Saturation: It is more challenging to create a niche in a crowded market than to establish
one's existence in the less competitive market.

Knowledge One of the major barriers to make a successful market entry is knowledge. This may
involve lack of expertise in manufacturing. marketing, technical and engineering areas.

©
6. Building Strategic Plans to Improve Marketplace Position

A well- defined strategic plan must cover all the aspects of business processes or operations like 7
i icing, distribution and marketing of various products or i

40. be

Zt is a systematic process of analysing the strengths and weaknesses of competitors in order to find
out opportunities and threats for their own organisation.

The benefits of competitor's analysis are as follows:

1) Identifies Competitive Information: It helps to identify the future plans and strategies of
competitors and forecasts possible actions towards various competitive plans. it also determines the
competitors’ reaction toward the activities and plans of the company.

2) Provides Motivation: Motivates the company to set- up a definite, hostile and proactive standpoint
towards several competitive strategies and the entire business environment.

3) Chooses Competitors: Competitor's analysis defines the competitor's capabilities and strategies and
ascertains the most appropriate competitor to compete with the company. Moreover, it states the
weaknesses and inabilities of competitors. oO

4) Reveals Hidden Opportunities: There are numerous opportunities which are present in the market )
but remain hidden. Through competitive analysis, companies come across its different functional

41. BENEFITS OF COMPETITOR’S ANALYSIS

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5 Develops Strategy: The information about the competitors helps the company to formulate their strategy
in accordance with the competitor's moves.
By using competitive analysis in an appropriate, brief and timely manner, an exceptional communication strategy can
be developed. This way, company can design an effective and competent strategy.
6) Strategy Implementation: Companies can apply its offensive strategy towards capitalising its strengths
and exploiting the opportunities available. Likewise, companies can manage its threats and overcome its
weaknesses by implementing the company's defensive strategies.

Hence, from the above benefits, it is clearly understood that the companies implementing systematic
competitor's analysis and profiling gain substantial advantage. For having a successful competitive
business environment, a comprehensive profiling capability is very essential. ©

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42. © a
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> Buyer behaviour is the study of buyers and the processes they use to select,
purchase and dispose of the goods and services. This process may consist of areas
like psychology, sociology, anthropology and economics. This study reveals the
decision-making process of individuals, groups and organisations.

> Broadly, it is the decision-making process of individuals to allocate their potential
resources, i.e., time, effort and money for consumption purpose.

> To understand the consumers' tastes and preferences, analysis of their buying

behaviour is the most preferable method. @

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43. ey nt
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Y BUYING ROLE OF CONSUMERS

1) Initiator: The initiator is the individual who uses the product.
He could be a foreman or labour or the end user to help define the product specifications

2) Influencer: May or may not be an end user but whose opinion would influence the end
user’s choice.
Eg- consultant, technical personnel, and professors Provide information for evaluation of

alternatives.

3) Decider: The decider is the individual who makes the ultimate decision to purchase the
product. These include the decisions of what to purchase, when to purchase, how to
purchase, from where to purchase, etc.

For example, children are the deciders for some products, such as toys. /

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“BUYING ROLE OF CONSUMERS

4) Gatekeeper: The gatekeeper is something or someone who helps the consumer in deciding to
purchase a certain product out of all the alternatives available.
A gatekeeper can either be a person, or an organization, or just a pamphlet, etc.

5) Buyer: Buyer who makes actual purchase on behalf of the organization.
They have the formal authority to select the suppliers and finalize terms of purchase. Selection of
vendors and negotiating transactions.

6) User: The person who actually uses the product or avails the service is known as user.
For example, an infant may not be the buyer of a toy but he certainly is the user of it.

A marketer has to analyse the buying process, various stakeholders involved in it, and different roles that

they play during the process. He should decide suitable strategies for influencing each of them to buy his /
product.

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45. > The buying habits are very important in the decision-making process of customers and it is 2
U also known as buying situations.
> For example, the purchase of a new house is one such situation that makes it necessary for each
consumer to follow all steps systematically with complete precautions.
> The levels at which consumer decision-making can be made, are as follows:

1. Complex Buying Behaviour/Extensive Problem Solving/New Task: The first level of buying
behaviour involves an extensive problem-solving process. More time is involved in collecting
information and evaluating the alternatives. Under this process, consumer can go through
cognitive dissonance.

The perceived risk is also high and the products in this category are generally expensive, e.g.,
buying a house, a car or an insurance policy. Hence, marketer should opt for low-key
approach with minimum perceived risk. ©

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46. a

ey, 4 pes of Buying Behaviour

2. Dissonance-Reducing Buying Behaviour/Limited Problem Solving/ Modified Buy: follows

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all the steps involved in decision-making process. Here, consumers are more experienced and
knowledgeable than the complex buyers. The products purchased by consumers are used by them,
but not regularly. Therefore, the risk involved is less.

For example, clothes, vacations, gifts, etc. To improve this type of buying behaviour, a marketer needs to
enhance its communication process by providing more information about the product.

3. Habitual Buying Behaviour/Routinised Response Behaviour/ Straight Rebuy/Brand
Loyalty:. Here, same product of a specific brand is purchased regularly or repeatedly by the
consumer, e.g., groceries, haircut, magazines, etc.

The marketer must understand the buying behaviour of potential consumers and inform existing consumers

about the arrival of superior brands in the market. This will help in improving the buying patterns of the
consumers.

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47. nt
u) 4 pes of Buy

© 4. Variety-Seeking Buying Behaviour/Brand Switching: =
In present scenario, there are several new brands of similar products which are available in the
market.
This has brought a change in the behaviour of consumers who seek variety and do not stick to a
particular brand.
The brands which are already leading the market try to ensure that their products are in
abundance in the market to captivate their existing customers and also attract new customers.
The new brands try to attract the customer by lower price, offering discounts on certain
conditions such as bulk purchase, free coupons or free samples for trial and putting
advertisements on social media.

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48. FACTORS AFFECTING CONSUMER BUYING BEHAVIOUR

>There are various factors and determinants which directly influence the buying behaviour of customers.
1. Cultural Factors:

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1. Culture: Culture is the key element for determining an individual's buying behaviour. The cultural
factors influencing the features of a society consist of earned values, norms, rituals, and symbols.

2. Sub-culture: A culture has several sub-cultures which assist the marketers to easily recognise and
socialize with its customers.
It includes nationalities, religions, racial groups, and geographic regions. Many times, these sub-
cultures are defined as a market segment and marketers offer products based on their needs and wants.

3. Social Class: Mostly, every individual in society is a part of some social class.
These social classes are defined based on the caste system which indicates specific roles, which
cannot be changed. Often, the caste system is transformed into a social class... LZ
These classes share similar interests, behaviour, and values. Jin

49. FACTORS AFFECTING CONSUMER BUYING BEHAVIOUR

2. Social Factors:

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i Reference Group: A person or a group who is identified as a reference to an individual, defining the
fundamental or fixed attitudes, behaviours or. yalues, is known as a ‘reference group’. Being a
social class member, an individual always compares his abilities and opinions with the defined abilities
of a reference.

ii. Family: Buyer's behaviour is largely influenced by his family members. There are 2 types of families,

i Family of Orientation: Usually observed that grown-up children who are living with their
parents signify them as their ideal reference group.

ii Family of Procreation: The buying behavior is affected by every family member such as
spouse, children, parents, ete, They purchase products considering the requirements of every
individual in a family. ©

iii. Roles and Status: A person performs different roles and has different statuses in various groups such as )
family, organization, clubs, etc.

50. FACTORS AFFECTING CONSUMER BUYING BEHAVIOUR

Personal Factor:

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% Age and Stage in the Life Cycle: For example, in childhood, baby food is consumed and in youth healthy
food is consumed. Things like taste of clothes, home decor and recreational activities are also related to age.
Therefore, consumption pattern is created on the basis of family lifecycle.

ii, Occupation and Economic Cireumstances: For example, a blue-collar employee will buy necessary items
like formal clothes, office shoes, or a lunchbox.
While, a company head will buy luxury items like air travel tickets, a country club membership, or a large
sailboat.
Here, marketers target those who have a high interest in their products. Product selection also varies with the
economic circumstances such as monthly income, savings, purchasing power, assets, debts, etc.

iii. Lifestyle: individuals' activities, interests, opinions, etc. A marketer needs to find out the product which is most
suitable for customers’ lifestyles. For example, a person belonging to upper class will buy only zuge cars
because it suits his lifestyle.

iv. Personality: can be helpful in defining the consumers' behaviour but the type of personality should be identified/

precisely and there should be a strong relation between the personali 7 and the products.

51. BUYER DECISION PROCESS

Steps involved in Buying Decisión=é

52. YS
© 1) Attitude: Attitude defines the consumers' philosophy towards a specific product.
This helps the marketer to renovate and improvise the specific product and
again approach the consumer to buy it. This enables the marketer to strengthen
its marketing ability.

2) Culture: The marketing operations are widely influenced by the changing
demographics. Therefore, understanding of cultural differences and
sensitivities may prove advantageous to marketers for recognizing their target
market and customers.

3) Lifestyle: Lifestyle-based products are in trend. By analyzing the consumer,
lifestyle, marketers can sell those products that are most appealing to the

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53. IMPORTANCE OF CONSUMER BUYING BEHAVIOUR

4)“ Experience: After consumption of a product, experience also influences further buying
~ decisions of a customer. The marketer must be vigilant enough to observe and understand

the consumers' experience with a product and accordingly promote the product.

5) Decision-making: The marketer must try and find a way through which consumers can
decide while evaluating a certain product. If a marketer can identify the key points that
the consumer looks up in a product then this act leads the marketer to run the business
successfully.

6) Product Use/Complements: Marketing is not just about selling of a particular product,
rather recognizing the use of a product and its supporting items that add more value to
product.

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This helps the marketer to design a perfect product, keeping in mind the requirements

of customers. This is a vital tool to attract more customers.

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54. INDUSTR BUYING BEHAVIOUR

> In marketing process, there is a need to understand why customer or buyers purchases
goods and services. Buyer behaviour is associated with the operations and decision processes
involved to select between alternatives, procuring and using products or services.

> Industrial /Business/Organizational buyers are the entities (individuals manufacturers,
producers or other organizations), involved in buying goods and services to produce new
goods and services. These buyers sell, rent or supply the produced goods and services to
others.

>The process of determining needs for buying products and services and selecting the most
suitable supplier or brand from available alternatives through identifying and evaluating them,
is called Industrial buying or Business buying or Organisational buying. ©

>This helps to understand consumer desire and must be taken in concern for successful /

suppliers x ( Jin

55. ul) NATURE OF INDUSTRIAL BUYING BEHAVIOUR

1) Multiperson Buying Activity: It is a very complex process as it involves interactions among ae
people, e.g. the buying process of industries or of the organizations such as, hospitals, government
organizations, educational institutions, etc.

The people involved in the buying situation may also adopt different roles in the buying process. This

concept of varied roles in buying process is known as "Buying Centre”.
2) Formal Activity: Technical complexities of industrial buying have high monetary value, but still it has to
follow all the formal procedures of the organization.
The organisation adheres to certain policies even at the times of emergency and it is very important that suppliers
have the knowledge of these policies.
3) Longer Time Lag between Efforts and Results: It involves the interaction of many people, they take
comparatively longer time than individual buying. u
Thus, there is a great time lag between the initiation of the marketing effort and the actual buying taking place.
It is very important for the marketer to have a good idea of the time lag in getting the response from

56. e7 NATURE OF INDUSTRIAL BUYING BEHAVIOUR

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y Rational yet Emotional Activity: Industrial buying is a formalized process with very clear rules and
procedures, yet it cannot be said that it is an unemotional or a rational process.
The reason behind this is the entities that carry out industrial buying, i.e., human beings.
Human characteristics can also impact the activities of industrial buying, such as, buying of raw
materials, commodities, standard products, components, etc.

5) Uniqueness of Organisations: Several commonalities exist in industrial buying processes, but no two

organizations have the same behavior or decision-making process.
This is due to a wide divergence with respect to the buying situations, resources, capabilities of the
organisations, the suppliers and their relationships, etc

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Hence, it is very important to consider every organisational buyer as_a/

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57. ul) OBJECTIVES OF INDUSTRIAL BUYING BEHAVIOUR

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The industrial buying process is handled by the procurement cell.
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This department is governed by the overall strategy of the organisation and also by the specific rules which the
department has laid down for itself. Has the following key objectives:
1. Non-Task Objectives: should be used by the procurement department of a company to achieve the task-related
objectives.
y Transparent and non-discriminatory policies, answerability of management, and proficiency in
the process of procurement, are some of the examples of non-task objectives.
Y The procurement process should not favour any particular supplier or a group of suppliers.
y It should also not be biased towards any supplier and should conduct the entire process fairly and equitably.
y The efficiency of the procurement department affects the efficiency of the entire organization. 6)
This also helps in building the brand image of the company; for example, successful brands like TATA
differentiate themselves in the marketplace through their efficient and transparent procurement policies.

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58. L7 OBJECTIVES OF INDUSTRIAL BUYING BEHAVIOUR

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2. Task-Oriented Objectives: are determined in order to achieve following specific
“objectives of the organisation:
v Cost: Controlling acquisition costs is crucial in the procurement process, ensuring the right product,
quality, quantity, time, and source are procured.
Y The procurement department selects suppliers who meet their standards and negotiates the rate for
the supply of raw materials.
y In this manner, the procurement team delivers the maximum value to the company.
y Quality: Supervising the use of high-quality raw materials in product manufacturing is crucial for
ensuring quality.

Y The end-user or production department sets quality specifications, while the procurement

department ensures these standards are met. 6)

The procurement department conducts a thorough value analysis of all alternatives
to select the most suitable option without compromising the quality of the fin;

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59. es OBJECTIVES OF INDUSTRIAL BUYING BEHAVIOUR

Task-Oriented Objectives:

y Service: The procurement department should clearly define the services bundled
with a product before purchasing it from the vendor

The procurement department should negotiate service parameters with vendors,

including additional technical information, machinery demonstrations, and after-

sales service, before finalizing deals.

60. FACTORS INFLUENCING INDUSTRIAL BUYING
BEHAVIOUR
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The factors which influence industrial buying behaviour are broadly divided into following four categories:

A. Environmental Factors
B. Individual Factors
C. Organisational Factors

D. Interpersonal Factors

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61. FACTORS INFLUENCING INDUSTRIAL BUYING
BEHAVIOUR

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A? Environmental Factors

i. Political: Political factors significantly influence organizational buyer behavior, as the political system
can alter the work environment, ultimately impacting the buying behavior of organizations.

Certain organisations/products get concessions or exemptions under political considerations. The trade

agreements involving foreign suppliers require government approval.

Other political factors influencing the organisational buying behaviour are lobbying. tariff barriers, defence

expenditure, ete

ii. Economic: Economic factors within an organization, such as price and wage policies, inventory levels,
cash-flow availability, and consumer demand, significantly influence buying behavior.

The organization utilizes various factors to determine its stock level, financing for purchasing, and final

price for goods and services. 10)

ii, Technological: Technological factors significantly influence organisational buyer behavior, influencing
product quality, compatibility, and market type, ultimately affecting the type and category of prod:

62. FACTORS INFLUENCING INDUSTRIAL BUYING

BEHAVIOUR

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A. Environmental Factors

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iv. Legal: Legal and regulatory conditions by local, state, and central governments can influence
organizational buying capacity, influencing product standards, sales, marketing policies, and
market terms.

y. Physical: Physical factors like geographical location and climate influence organisational buying,
influencing individual behavior and transportation limitations.

Supplier selection is influenced by the location of both the organisational buyer and supplier, with local,
cost-effective suppliers preferred by buyers and domestic suppliers preferred by global organisations.

vi. Ethical: Ethical conduct is crucial in organizational negotiations and financial transactions, as a lack of
it can lead to long-term repercussions for both buyers and vendors.

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vii. Cultural: Culture refers to established values within an organization, shared by all members. Different
organizations have unique norms, customs, and traditions, which significantly influence /

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63. FACTORS INFLUENCING INDUSTRIAL BUYING
BEHAVIOUR
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B. Organisational Factors: Organisational buying is influenced by various factors such as
award system, product selection, authority level, communication system, objectives, policies,
and structure, which individually or collectively influence buyer behavior.

i. Structure: The structure of an organization significantly influences its style of
organisational buying, as it reflects the official hierarchical structure within the
organization.

Organizational structure, whether formal or informal, influences buying decisions by

determining the quality and quantity of goods and services, with formal structures maintaining

hierarchy and informal structures based on personal relationships

ii. People: People in organisational buying are interrelated, defined roles, and members who
participate and decide on the purchasing process, reflecting the organization's buying

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64. FACTORS INFLUENCING INDU
BEHAVIOUR

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B. Ofganisational Factors:

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iii. Task: Organizational buying is prioritized based on factors like purpose, expenditure, material
variety, routine or one-time purchase, centralized or decentralized purchase, and tasks or activities
involved.

iv. Technology: Technological innovations influence organizational buyer behavior, affecting
product type and buying methods. While manual buying remains popular, some
organizations are transitioning to online buying.

65. e) Jj Wii |
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C. Interpersonal Power
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The factors responsible for influencing through interpersonal influence are called interpersonal
factors. The relationship amongst the people counts high in organisational buying behaviour. This

relationship develops with personal experiences and matures with passage of time, bringing

confidence, dependence and integrity which add to further strengthening in relationships.
i. Power Relationship: All members possess buying power.
Purchasing intermediaries perceive their involvement in decision-making.
Relationship influences organizational buying behavior.

ii. Buying Centre and its Role: Buying centre is a group of people who negotiates for

Members have accountability, professional standing, and reasoning abilities. Ss

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purchase on behalf of the organization.

66. FACTORS INFLUENCING INDUSTRIAL BUYING
BEHAVIOUR

D. Individual Factors Individual factors refer to the psychological aspects of individuals
“involved in organizational buying, as they possess their own feelings and thoughts.

These are very important and are as follows:

i. Learning: Experience-based decision-making strongly influences organizational
buying behavior, as individuals learn from successful transactions and stick to the same
pattern over time, making it an automatic choice.

ii. Motivation: Understanding the motivation level of individuals involved in organisational

buying is challenging, their motives are categorized into two groups.

i. Task related: The buying center seeks to ensure the supplier offers the right material,
price, quality, and reliability for perfect buying at the desired schedule. (9)

ii. No-task Related: Buyers in this category are motivated by personal recognition, growth,
and risk reduction, often driven by promotions, increments, and personal favors from

67. INDUSTRIAL INDUSTRIAL BUYING PROCESS

y Problem Recognition
General Need Description

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