MARKETING MANAGEMENT

Q1(a) (a) What are the challenges and issues of marketing in the present millennium?

Introduction of a product, service or idea into the market is always followed by themarketing effort, the functions and forms of which have been changing over the decades. Tofollow these changes and overviewing the current position of art in marketing philosophy andmarketing challenges, the following structure of the papers is offered in Figure 1. This researchlogic implies that the main research goal is to review the marketing orientations (Dibb andSimkin, 2004; Lancaster and Reynolds, 2005; Blythe, 2005; Drummond and Ensor, 2005;Morgan, 1996; Kotler and Armstrong, 2008; Pranulis et al, 1999, 2000, 2008) as constituted inthe marketing philosophy and to determine the marketing challenges (Sutton and Klein, 2003;Blythe, 2005; Kashani, 2005; Brown, 2008; Kotler and Armstrong, 2008; Bishop, 2009) in thenew millennium, which could be consequently applied and tested in national (Lithuanian) andinternational markets.

Therefore, the paper also aims at applying the theoretical findings to the practical casestudies, namely comparing two coffee bars one on the international level Starbucks; andanother one from the Lithuanian market Coffee Inn.2. LITERATURE REVIEW ON MARKETING PHYLOSOPHY AND MODELLINGEfforts of reviewing and modelling marketing elements, concepts and philosophicalattitudes were numerous and effective. But with new challenges causing hurdles in makingmarketing function more effective on macro- and micro- level of the economy, a revision ofmarketing philosophy is always at place.

As indicated in Table 1, authors tend to use various terms for the elements of marketingphilosophy:a) orientation (Dibb and Simkin, 2004; Lancaster and Reynolds, 2005; Blythe,2005; Drummond and Ensor, 2005);b) philosophy (Morgan, 1996);c) concept (Kotler and Armstrong, 2008).Even the Lithuanian authors, who wrote the first university book on marketing, professorsPranulis, Pajuodis, Virvilaite and Urbonavicius (1999, 2000 and 2008) have used the Lithuaniancounterpart word orientation. Following this broad tendency of the term orientation usage,here, in this article, the choice of the orientation term will be applied.The renowned American professors Kotler and Armstrong (2008, pp.9-12) indicated thattheir choice of marketing management orientations were as follows:the production concept,the product concept,the selling concept,the marketing concept.the societal marketing concept.A similar opinion was expressed by a group of Lithuanian marketing professors, where theyclassified marketing orientations as follows (Pranulis et al., 1999, 2000): a) production

orientation, b) product orientation, c) selling orientation, d) marketing orientation; e) socialethicalmarketing orientation.Because of the difficulty of incorporating all the various facets of marketing into a singledefinition, Lancaster and Reynolds (2005) distinguished features of the subject in the followingstatements (Lancaster and Reynolds, 2005, p.16):Marketing is dynamic and operational, requiring action as well as planning.Marketing requires an improved form of business organisation, although this on its ownis not enough.Marketing is an important functional area of management, often based in a singlephysical location. More importantly, it is an overall business philosophy that should beadopted by everybody in the entire organisation.The marketing concept states that the identification, satisfaction and retention ofcustomers is the key to long-term survival and prosperity.Marketing involves planning and control.The principle of marketing states that all business decisions should be made with primaryconsideration of customer requirements.Marketing focuses attention from production towards the needs and wants of the marketplace.Marketing is concerned with obtaining value from the market by offering items of valueto the market. It does this by producing goods and services that satisfy the genuine needsand wants of specifically defined target markets.The distinguishing feature of a marketing orientated organisation is the way in which itstrives to provide customer satisfaction as a way of achieving its own businessobjectives.

The author of the article proposes the following perception on the classification ofmarketing orientations, which constitute the marketing philosophy essence (see Figure 2 andFigure 3):1) the production orientation,2) the product orientation,3) the financial orientation,4) the selling orientation,5) the marketing orientation,6) the market orientation (which extends to internal and external orientations),7) the social-ethical marketing orientation,8) the holistic marketing orientation (which extends to internal marketing orientation,integrated marketing orientation, social marketing orientation relationship marketingorientation).The holistic marketing concept was proposed by Kotler and Keller (2007) but it was notmentioned or wider discussed in the textbook of Principles of Marketing (Kotler and Armstrong,2008), but introduced in their co-operative book on Marketing Management (2007). For thisreason, it is viable to include this new orientation in the proposed model (Figure 3), as itintegrated at least four other sub-orientations: a) internal marketing orientation, b) integratedmarketing orientation, c) social marketing orientation and d) relationship marketing orientation.

Internal marketing orientation will be directly dealing with a Marketing Departmentwithin an organisation. It will directly subordinate to the senior management level and otherorganisational department, emphasising the organisational culture and micro-climate, suitable foreffective work and success factors in marketing performance.The Marketing Philosophy and Challenges for the New Millennium173Integrated marketing orientation would focus towards integrated marketingcommunications, the cost-effective selection of marketing channels and integrated developmentof products and services within the scope, demand and challenges of the national andinternational markets.Social marketing orientation would be focusing on the concept of societal marketingproposed by Kotler and Armstrong (2008), where the basic societal marketing triangle is basedon the well-being of the community, incorporating the corporate social responsibility ofcompanies and non-profit organisations, legal issues and environmental protection issues, whichaltogether streamline the sustainable development of the economy and consumption patterns.Relationship marketing orientation would be concerned with fostering the customercompanyrelationship with consumers, offering value added products and services. Thisorientation will also foster the company-partner company (B2B) relationship, seeking trust andreliability in partner selection process and its maintenance for coming years. Therefore,marketing channels should be effectively developed to reduce costs and enhance profitabilityratios for all three market participants: a) producers, b) distributors and sellers, c) consumers.The market orientation (No 6 in Figure 3) is proposed to be grouped as internal and externalorientations. Though Narver and Slater (1990) proposed a model that identified the componentsof market orientation as:Customer orientation, which incorporates customers perceptions and understanding bycustomers creating value, offering cost-effective solutions to satisfy their needs.Competitor orientation emphasises one of the marketings functions, i.e., to seekcompetitive advantage in the market. Competitor analysis, performed in varioustechniques (e.g. PESTED analysis, Porters forces analysis, Boston matrix analysis, etc.),gives a company tools to objectively evaluate competitors capabilities and results on themarket.Organizational culture if analysed on an individual basis could be either included intomarket orientation factor or in the holistic marketing orientation, depending howintegrative the marketing philosophy is on an organisational level. Organisational cultureshould support customer service and customer relationship development throughemployee performance prism.Interfunctional coordination should focus on the interaction between internal functionalareas of the organization which best serve customer need and satisfaction, which in othercases would correspond to the relationship marketing orientation (Kotler and Keller,2007).Long-term focus would incorporate the consideration of how the above can be sustained,and financially viable, over the long term.In this paper the proposition by Drummond et al (2000) is closer to the authors perception ofmarket orientation, therefore the constituent parts of the market orientation are considered to bethe balance between:a) External market orientation: customers, competitors and other external stakeholders.b) Internal market orientation: employees and other internal stakeholders3. LITERATURE REVIEW ON MARKETING CHALLENGES IN THE NEWMILLENIUMThe precondition, which fostered to review the challenges for the marketing in the newmillennium, was the statements in various forms and shapes, which appeared during the pastdecade in text books, social networks, media and social forums. The selection of disturbingstatements were selected and presented here for the discussion (see Table 2).The biased perception of marketing functions and orientations at the dawn of the newmillennium is not compelling. Traditional (conventional) marketing is visualised as a deadfunction, notwithstanding the critics of modern marketing practice. The critics bring up theissues of lost customers, mass marketing and viral marketing (Big Marketing Ideas, 2009; seeTable 2). Therefore, a more fundamental change for marketing is at stake towards a morepersonal touch in the field, as well emphasised by Spellings (2009).Boynett and Boynett (2003) in their book on The Guru Guide to Marketing: A ConciseGuide to the Best Ideas from Todays Top Marketers have also identified a number of citations,which question the future of marketing and its conventional functionality. It is apparent thatmarketing is becoming a multi-disciplinary theory, which inevitably incorporates postmodernaspects of the markets and consumption patterns and consumer behaviour.

It could be generalised that marketing in the 21st century presents many new postmodernchallenges (see Table 3):shrinking markets, which in effect implies fragmentation and decentralised subjects(Brown, 2008), followed by increasing market complexity (Sutton and Klein, 2003)and market globalisation (Kotler and Armstrong, 2008);green issues (Blythe, 2005), more marketing ethics (Blythe, 2005; Kotler andArmstrong, 2008) and social responsibility (Kotler and Armstrong, 2008);marketing strategy revisited (Blythe, 2005) through accelerating the demand formarketing efficiency and effectiveness (Sutton and Klein, 2003) and speed to market(Sutton and Klein, 2003), and aggressive innovations (Bishop, 2009);advancements in technologies in the digital age (Kotler and Armstrong, 2008),including Internet, commoditisation (Kashani, 2005), communications (Bishop,2009), internet marketing development (Blythe, 2005), increasing availability ofinnovative marketing technologies (Sutton and Klein, 2003);engagement and connection to the customer (Bishop, 2009), through service qualityenhancement (Blythe, 2005), delivering customer experiences at or aboveexpectations (Bishop, 2009), rapidly changing public attitudes towards consumption(Sutton and Klein, 2003);Dainora GRUNDEY176building a strong value proposition (Bishop, 2009) through growing need to capturemarketing knowledge (Sutton and Klein, 2003), power shift (Kashani, 2005) andreversed production and consumption (Brown, 2008).Therefore, marketers are facing the re-evaluation of marketing strategy, applying new toolsand sophisticated techniques in the new millennium, where changes are of a constant nature.Ultimately, the firms who take the greatest care of their customers interests are the ones mostlikely to maintain their competitive edge in a cut-throat world (Blythe, 2005 p.332).4. THE CASE OF COFFEE BARS: APPLYING MARKETING ORIENTATIONS ANDMARKETING CHALLENGES IN THE NEW MILLENIUMIn practice, each company selects business and marketing philosophy which suits it best.The decision depends on the companys type, size, products and services it produces, distributesand sells and etc. In order to apply marketing orientations and marketing challenges to a practicalsituation, two companies in coffee bars sector:a) an international company STARBUCKS (the USA) andb) a national company COFFEE INN (Lithuania).Their briefs and marketing philosophies will be discussed bellow.4.1 THE CASE OF STARBUCKS (THE USA)Probably one of the most famous brands in the United States and now in the whole world,reflecting the specific lifestyle of the few generations, is definitely Starbucks. Starbucks is thelargest coffee-house company in the world, offering a wide range of various coffees, hot andcold coffee and non-coffee drinks, sandwiches and sweet snacks.Founded in 1979, only as a coffee bean retailer Starbucks became a coffee-house sellingcoffee drinks as well as beans, when its present headmaster Howard Schultz came in and boughtthe company from its former owners in 1987. Since then, an extraordinary quick expansion in theUnites States, and from 1996 in the whole world, has begun. Now, Starbucks ownsapproximately 16 000 stores in the world and announces about opening 900 new stores outsideUnited States in 2009 (on the other hand, Starbucks is closing the same amount of stores in theUnited States) (www.strabucks.com).It is obvious, that such a big success would be impossible without well selected andformulated marketing philosophy. As one of the most innovative companies in the worldStarbucks has chosen social-ethical marketing orientation and declares care for the environmentand common wealth as well as for people. The main idea of their philosophy is defined in theStarbucks mission statement. Starbucks has two mission statements which are placed in theofficial companys website : To inspire and nurture human spirit one person, one cup, andone neighbourhood at a time and Starbucks is committed to a role of environmental leadershipin all facets of our business (www.strabucks.com).Social-ethical marketing orientation is getting a trendy buzz word, as environmental andecological problems are on the increase. Some years ago Starbucks was criticised for wastingresources by using paper and plastic cups, for wasting water and even funding Israel army(Vitkus, 2009). Now this company is shown as the best example of environmental friendlybusiness in the business schools around the world. Starbucks announces its corporate socialresponsibility Annual reports for the public; here the company describes their attention to theemployees, customers and the environment, manifesting marketing orientation, marketThe Marketing Philosophy and Challenges for the New Millennium177orientation and holistic marketing orientation. They started to use cups from recycled paper orbiodegradable plastic. Social responsibility is also emphasised in their coffee-bars design,posters and various promotional campaigns (the integrated marketing sub-orientation in theholistic marketing orientation).According to Pranulis et al (2008), the main idea of marketing orientation is to create thecircle of loyal clients rather than one-time buyers. Starbucks could be called a champion in thisfield too. The chairman of Starbucks Howard Schultz explains, that a person gets more than justcoffee when he/she visits Starbucks he gets great people, first-rate music and a comfortableand upbeat meeting place (www.strabucks.com). Thats why people all around the world arewilling to pay for coffee more than in other coffee-bars they buy and experience, not a drink(the selling orientation). According to Howard Schultz, Starbucks build personal relationshipswith each of their customers (this implies the relationship marketing sub-orientation in theholistic marketing orientation). Even the waiters at Starbucks are called baristas to make themfeel exceptional and proud about their workplace, not to feel just simple service workers(internal marketing sub-orientation in the holistic marketing orientation).Another core element of marketing concept (Pranulis et al., 2008, Kotler and Keller, 2007)is to appeal to customers needs. Starbucks does everything to achieve its costumerssatisfaction. They were the first who offered free internet at their coffee-bars and started to openthe stores 10 minutes before the actual opening time just to make customers always feel welcomeand happy. Viral marketing has also become one of the most important features of Starbucks.You can hardly find and advertisement in any newspaper or marketplace, but they buildextremely strong relationships by using social networks, internet and mouth-to-mouth marketing,which means Starbucks meets the marketing challenges of a) the digital age, b) valueproposition, c) connecting to customers, d) corporate social responsibility, e) green issues and f)overall revised marketing strategy, g) market shrinking factors (as Starbucks was forced to closedown 600 coffee-bars in the USA during the economic slowdown (Milasius, 2008)).4.2 THE CASE OF COFFEE INN (LITHUANIA)The other company selected for a comparative study is a national company, located only inLithuania. Coffee Inn is a coffee-bars chain opened a few years ago in Vilnius, the capital city ofthe country. Started from just one coffee-bar, Coffee Inn now owns 7 coffee-bars in Vilnius andone in Kaunas in 2007 (Vaitiekuniene, 2007). At first, Coffee Inn came into the market with thesame concept as Starbucks did. It sells coffee and various coffee drinks, served in paper cups,sandwiches and desserts in small, cosy coffee-bars, located in the city centre.The main difference between Starbucks and Coffee Inn is that Starbucks is a big globalcompany (the globalisation challenge) and can afford applying social-ethical marketingorientation, while Coffee Inn is still too small to afford huge investments for various socialprojects and campaigns and it has chosen the marketing orientation. However, Coffee Innexpands constantly, therefore, sooner or later this company will also apply social-ethicalmarketing oreintation (now Coffee Inn supports various cultural festivals, such as cultural nightTebunie naktis, or Street music day, not financially, but by helping to promote them, or byprolonging their opening hours during these festivals).The main idea, the co-owner of Coffee Inn Nidas Kiuberis explains, is that they sell afeeling of pleasure rather than just a cup of coffee (Obcarskaite, 2009). It seems extremelysimilar to Starbucks idea. The waiters are called baristas too, Coffee Inn also offers free internetaccess and their menu is quite similar to Starbucks one. Lithuanians sometimes even claim thatCoffee Inn tries to copy Starbucks. On the other hand, there are a lot of cafeterias offering similarDainora GRUNDEY178facilities (e.g., Vero Cafe, Double Coffee and etc.), and Coffee Inn is not an exception. However,Coffee Inn is a lot smaller as coffee-bars chain than Starbucks and for this reason it is mucheasier to control it. Being small enables Coffee Inn to be more flexible and to react to customersdemands and wants quicker and to create new demands and wants at the same time (marketingorientation). Coffee Inn constantly offers new drinks, snacks and other features (productorientation). They were one of the first who invited customers to come together with their pets,set free book collection and invited everyone to come to read or to donate a book (thecommunication challenge).While talking about customers loyalty, new technologies play an important part here too(the technological challenge): Coffee Inn keeps exceptionally close relationships with itscustomers using Facebook social network, writing the blog and honestly replying to all theletters and comments. The co-owner Nidas Kiuberis maintains the Coffee Inn blog himself thisis very important, as customers notice, that director of the company itself pays attention to theiropinion (Milasius, 2008). Nidas Kiuberis explains, they are following guerilla marketingideas, because it is the best solution for a small business without large budget, where creativityand energy are the most important things (Obcarskaite, 2009). Viral marketing and personalblog writing costs nothing and gives better results, than advertisement on TV your loyalty forcustomers loyalty, these are the things every company seeks, especially in a crisis time(Obcarskaite, 2009). As a result, Coffee Inn has created a steady circle of loyal customers, whoare indifferent to similar competitors, such as Vero Cafe, offers.5. CONCLUSIONSIn the changing market environment with changing customer behaviour and seekingbusiness opportunities, companies face marketing challenges on a daily basis. In the process oftheoretical research, a modified model of marketing orientations, which form the marketingphilosophy, was proposed, comprising eight major orientations, where market orientation and theholistic marketing orientation are split into further sub-orientations. The other task for the authorwas to review and structure marketing challenges in the new millennium and test these issues intwo cases of coffee-bars sector on international (Starbucks) and national (Coffee Inn inLithuania) markets.Starbucks and Coffee Inn both follow similar marketing orientations. Starbucks followssocial-ethical marketing orientation as a basis of business, while Coffee Inn is being still guidedby the marketing orientation. Both companies sell an experience, rather than just coffee andimage is very important for the customers of these companies as they are mainly young people(20-40 years of age, Miksys, 2008). Both companies use viral marketing techniques, thoughCoffee Inn can create closer relationships with its customers, because it is able to react tochanges quicker. Loyal customers could be called the biggest strength and competitive advantageof these companies as they do not compete on price, just by creating exceptional atmosphere

(b) What is the relationship between customers and corporate profitability?(c) Customer profitability(CP) is the profit the firm makes from serving a customer or customer group over a specified period of time, specifically the difference between therevenuesearned from and thecostsassociated with the customer relationship in a specified period. According to Philip Kotler,"a profitable customer is a person, household or a company that overtime, yields a revenue stream that exceeds by an acceptable amount the company's cost stream of attracting, selling and servicing the customer."(d) Calculating customer profit is an important step in understanding which customer relationships are better than others. Often, the firm will find that some customer relationships are unprofitable. The firm may be better off (more profitable) without these customers. At the other end, the firm will identify its most profitable customers and be in a position to take steps to ensure the continuation of these most profitable relationships. However, abandoning customers is a sensitive practice, and a business should always consider the public relations consequences of such actions.[1]What is a Customer ?

Before spending a dime on customer profitability (or relationship based marketing in general for that matter) it makes a whole lot of sense to figure out who your customers are. And believe it or not, Customer likely means different things to different people within your company.

For example: within a Canadian retail bank a customer might mean an account holder; the originator of a transaction, an individual, a household or a family. Depending on who in the organization we ask, we may hear very different views about who or what a customer is.

There may also be complexities in the nature of the relationship between your company and your customers. Joint ownership and multiple beneficiaries of accounts (especially in business to business relationships) add complexity to the question. Intermediaries that play a bridging role between company and end customer, for example the relationship between Insurance provider and broker pose challenges to a simple notion of customer.

So it is evident that we had best figure out what we mean by Customer before we get started. To offer some guidance on this rather thorny issue we suggest this guideline: a customer should be a purchasing decision unit. What this means in the context of your business may require some careful thought.

Once you have defined who your customers are, the next issue that pops up is whether or not you can actually recognize them in your data. You need the ability to say which transactions and accounts relate to a given customer or you cannot achieve an actionable view of their behaviour and its implication for profitability of your company. This is usually achieved by establishing a customer hierarchy within your database.

Creating a customer hierarchy is a technical issue, usually resolved by building a Customer Information File (CIF) which cross references customers however defined - to accounts and transactions. Many companies use Householding algorithms to achieve a similar matching of customers to business activity. Both CIF development and Householding methods are substantial topics that we will leave to a separate discussion. Suffice it to say that it is very difficult to proceed without a reliable customer hierarchy if you want to measure customer profitability.

What is Profitability ?

Now that the foundation is established we get into the next big question: what is profit anyway ? Again there is an obvious answer - it is revenue minus expenses. But which revenues and which expenses to include and when to include them is not at all clear when we take a closer look at your customers behaviour and your business.

Should revenue be recognized when it is received (cash basis) or when it is earned (accrual basis) ? Should your existing customers bear the cost of money spent on soliciting new business from someone else ? Which customers should bear the cost of corporate functions like the Lear Jet ? Should insurance claim experience or loan losses, or warranty claims or coupons be attributed to individuals (and when) ?

These are not trivial or easy questions to answer. The decisions you make concerning the treatment of individual revenue and expense items will have profound impact on the absolute profitability measurement results and the relative profit ranking of your customers. For example one Canadian bank learned that using average cost per account instead of individual transaction costs changed the ranking of many of its customers by three deciles or more. Their experience highlights how important it is to build a measurement that truly reflects your business.

Once your accounting methods are figured out are we done ? Not really. There are other questions you should think about as well to ensure that the measurement you are going to build will support the decisions you need to make in your business.

In some businesses it is imperative to measure the profitability of customers in relation to the capital resources they consume (e.g. Return on Capital for a lending business). In others it is important to measure profitability over the duration of a cycle that is inherent in the business (e.g. lifetime of a car lease, a growing season for a farmer, a project lifetime for a building contractor, a redemption cycle for a loyalty program customer). There are a wide variety of measurements that may be used to provide insight into the profitability of your customers business. Choosing what to measure and how will profoundly affect the usefulness of the information you produce.

Customer Profitability measurement is not the simplest thing to implement., yet many leading companies have surmounted the challenges that it presents. Why would you want to go through the effort of figuring all this out and building (or buying) a system to do it ?

what is the relationship betweencustomer's and corporate profitability.

We willingly admit to having a bias towards measuring customer profitability: at a basic level we believe that what gets measured gets managed. Managing value exchanges with your customers as a strategic process is just as relevant now as it was when CRM was first touted as the next great thing. What Customer Profitability adds to the mix is an understanding of what pays and what doesnt.

(a) What do you understand by marketing as a process? What are the needs, wants, and demands of a customer?

IntroductionTheactivitiesof marketers both reflect and shape the world we live in. Every year new products and services are launched and some of them succeeds on an unprecedented scale. As inthe caseof Apple's iPod, iPhone, and also iPad. They all are great inventions and highly successful in market.

According to marketing concept, the organisation must find ways to discover unfulfilled customer needs and wants and bring products that satisfy those needs and wants. This can be done in a sequence of steps that is called marketing process.

After reading this you will understand - what is marketing process, and the steps involved in marketing process.

Meaning of Marketing ProcessThe Marketing Process of a company typically involves identifying the viable and potential marketing opportunities in the environment, developing strategies to effective utilise the opportunities, evolving suitable marketing strategies, and supervising the implementation of these marketing efforts.

Marketing process involves ways that value can be created for the customers to satisfy their needs. Marketing process is a continual series of actions and reactions between the customers and the organisations which are making attempt to create value for and satisfy needs of customers. In marketing process the situation is analysed to identify opportunities, the strategy is formulated for a value proposition, tactical decisions are taken, plan is implemented, and results are monitored.

Steps in Marketing ProcessFollowing are the steps involved in the Marketing Process :- Situation Analysis Marketing Strategy Marketing Mix Decision Marketing Mix Decision Implementation and Control1. Situation AnalysisAnalysis of situation in which the organisation finds itself serves as the basis for identifying opportunities to satisfy unfulfilled customer needs. Situational and environmental analysis is done to identify the marketing opportunities, to understand firms own capabilities, and to understand the environment in which the firm is operating.

2. Marketing StrategyAfter identifying the marketing opportunities a strategic plan is developed to pursue the identified opportunities.

3. Marketing Mix DecisionsAt this step detailed tactical decisions are made for the controllable parameters of the marketing mix. It includes - productdevelopmentdecisions, product pricing decisions, product distribution decisions, and product promotional decisions.

4. Implementation and ControlFinally, the marketing plan is implemented and the results of marketing efforts are monitored to adjust the marketing mix according to the market changes.Needs wants and demands are a part of basic marketing principles. Though they are 3 simple worlds, they hold a very complex meaning behind them along with a huge differentiation factor. In fact, a product can be differentiated on the basis of whether it satisfies a customers needs, wants or demands.

Needs-Human needs are the basic requirements and include food clothing and shelter. An extended part of needs today has become education and healthcare. Generally, the products which fall under the needs category of products do not require a push. But in todays tough and competitive world, so many brands have come up with the same offering satisfying the needs of the customer that even the needs category product has to be pushed in the customers mind.Example Real Estate (land always appreciates), FMCG, etc.

Wants Wants are largely dependent on the needs of humans themselves. For example, you step into a restaurant. You may satisfy by eating basic plate meals rice. But you definitely want to try different recipes because it is your want. Example Hospitality industry, Electronics, Consumer Durables etc, FMCG, etc.

Demands. Demands are wants for specific products backed by ability to pay. When an individual wants something which is premium, but he also has the ability to buy it, then these wants are converted to demands. The basic difference between wants and demands is desire. A customer may desire something but he may not be able to fulfil his desire Many people want a luxury car or a weekend break in Dubai, but only a few people are willing and able to buy one. In business terms, companies must measure not only how many people want their product but also how many would actually be willing and able to buy it.Example: BMWs, 5 star hotels etc.

Need is a necessity without which a person cannot exist. E.g; Food,Water.Want is something that you decide to get but without which you can still survive and exist. E.g; car, mobile,Demand is a state of mind which drives your want towards fulfilment.

The needs wants and demands are a very important component of marketing because they help the marketer decide the products which he needs to offer in the market.

The Production Concept.This concept is the oldest of the concepts in business. It holds that consumers will prefer products that are widely available and inexpensive. Managers focusing on this concept concentrate on achieving high production efficiency, low costs, and mass distribution. They assume that consumers are primarily interested in product availability and low prices. This orientation makes sense in developing countries, where consumers are more interested in obtaining the product than in its features.

The Product Concept. This orientation holds that consumers will favour those products that offer the most quality, performance, or innovative features. Managers focusing on this concept concentrate on making superior products and improving them over time. They assume that buyers admire well-made products and can appraise quality and performance. However, these managers are sometimes so engrossed with their product and do not realize what the market needs.

The Sales Concept. This concept assumes that consumers typically show buying inertia or resistance and must be coax into buying. It also assumes that the company has a whole battery of effective selling and promotional tools to stimulate more buying. Most firms practice the selling concept when they have overcapacity. Their aim is to sell what they make rather than make what the market wants.

The Marketing Concept. This is a business philosophy that challenges the above three business orientations. It holds that the key to achieving its organizational goals (goals of the selling company) consists of the company being more effective than competitors in creating, delivering, and communicating customer value to its selected target customers. The marketing concept rests on four pillars: target market, customer needs, integrated marketing and profitability.

Distinctions between the Sales Concept and the Marketing Concept:

The Sales Concept focuses on the needs of the seller.The Marketing Concept focuses on the needs of the buyer.The Sales Concept is preoccupied with the sellers need to convert his/her product into cash.The Marketing Concept represents the major change in todays company orientation that provides the foundation to achieve competitive advantage. This philosophy is the foundation of consultative selling.

The Societal Marketing Concept.This concept is more theoretical and will surely influence future forms of marketing and selling approaches. This concept holds that the organizations task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors while preserving or enhancing the consumers and the societys well-being.

Critics question if Marketing Concept is an appropriate philosophy in an age of environmental deterioration, resource shortages, explosive population growth, world hunger and poverty, and neglected social services. Are companies that do an excellent job of satisfying consumer wants necessarily acting in the best long-run interests of consumers and society?

The marketing concept possibly sidesteps the potential conflicts among consumer wants, consumer interests, and long-run societal welfare. Just consider:The fast-food industry offers tasty but unhealthy food. The burgers/pizza has a high fat content, and the restaurants promote fries and pies, two products high in starch and fat. The products are wrapped in convenient packaging, which leads to much waste. In satisfying consumer wants, these restaurants may be hurting consumer health and causing environmental problems in a long run.

Exchange and Transactions:Exchange, which is the core concept of marketing, is the process of obtaining a desired product from someone by offering something in return. For exchange potential to exist, five conditions must be satisfied:

1. There are at least two parties.2. Each party has something that might be of value to the other party.3. Each party is capable of communication and delivery.4. Each party is free to accept or reject the exchange offer.5. Each party believes it is appropriate or desirable to deal with the other party.Whether exchange actually takes place depends on whether the two parties can agree on terms that will leave them both better off (or at least not worse off) than before. Exchange is a value-creating process because it normally leaves both parties better off.

Two parties are engaged in exchange if they are negotiating-trying to arrive at mutuallyagreeable e terms. When an agreement is reached, we say that a transaction takes place. A transaction is a trade of values between two or more parties: A gives X to B and receives Y in return. Smith sells Jones a television set and Jones pays $400 to Smith. This is a classic monetary transaction but transactions do not require money as one of the traded values. A barter transaction involves trading goods or services for other goods or services, as when lawyer Jones writes a will for physician Smith in return for a medical examination.

A transaction involves several dimensions: at least two things of value, agreed-upon conditions, a time of agreement, and a place of agreement.

Marketing deals with identifying and meeting human and social needs. One of the shortest definitions of marketing is "meeting needs profitably."The American Marketing Association offers the following formal definition: Marketing is an organizational function and a set of processes of recreating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stake holders. Coping with exchange processes calls for a considerable amount of work and skill.

Marketing management takes place when at least one party to a potential exchange thinks about the means of achieving desired responses from other parties.Product:In marketing, a product is anything that can be offered to a market that might satisfy a want or need.PRODUCT' can be classified as tangible or intangible. A tangible product is a physical object that can be perceived by touch such as a house, automobile, computer, pencil. An intangible product is a product that can only be perceived indirectly such as an insurance policy.MarketTraditionally 'a"market"was a physical place where buyers and sellers gathered to buy and sell goods. Economists describe a market as a collection of buyers and sellers who transact over a particular product or product class (e.g., the housing market or grain market).

Manufacturers go to resource markets (raw material markets, labour markets, money markets), buy resources and turn them into goods and services, and then sell finished products to intermediaries, who sell them to consumers. Consumers sell their labour and receive money with which they pay for goods and services. The government collects tax revenues to buy goods from resource, manufacturer, and intermediary markets and uses these goods and services to provide public services. Each nation's economy and the global economy consist of complex interacting sets of markets linked through exchange processes.Key Customer MarketsConsider the following key customer markets: consumer, business, global, and nonprofit.

Consumer MarketsCompanies selling mass consumer goods and service such as soft drinks, cosmetics, and athletic shoes and equipment spend a great deal of time trying to establish a superior brand image.Business MarketsBusiness buyers buy goods in order to make or resell a product to others at a profit. Business marketers must demonstrate how their products will help these buyers achieve higher revenue or lower costs.

Global MarketsCompanies selling goods and services in the global marketplace face additional decisions and challenges. They must decide which countries to enter; how to enter each country (as an exporter, licenser, joint venture partner, contract manufacturer, or solo manufacturer); how to adapt their product and service features to each country; how to price their products in different countries; and how to adapt their communications to fit different cultures. These decisions must be made in the face of different requirements for buying, negotiating, owning, and disposing of property; different culture, language, and legal and political systems; and a currency that might fluctuate in value.

Non profit and Government Markets:Companies selling their goods to non-profit organizations such as churches, universities, charitable organizations, or government agencies need to price carefully because these organizations have limited purchasing power.

(b) Explain meta-markets. Discuss marketing as a managerial function.

The combination of an intangible market such as the internet, promotingclosely related tangible or intangible products is known as a Meta market. For understanding meta markets lets first outline two definitions.Market Places Markets of physical goods and products is known as Market places. The market places has presence of companies which manufacture their own products.Market space The online market space with websites such as Ebay, Amazon and others is known as Market spaces. These sites do not have offline products. They only sell others products online.Meta Markets An online website such as the Maruti suzuki website for second hand cars which promotes the purchase of physical goods (Maruti suzuki cars) is known as a meta market. Lets take a look at the automobile industry. Whatever company it may be, an automobile company would involve suppliers, channels, service providers so and so forth. Thus the meta market will bring all these buyers and sellers online in one place for one purpose only. Rather than giving multiple products to one customer, the meta market brings together different customers of the same product.It can also be said that the combination of various entities within the same industry can be known as a meta market. The meta markets are on the rise because of the increase in accessibility of internet on both computers as well as smart phones. Almost every individual in urban areas have access to the computer and the internet. There are plans being made by the Indian government to have an internet outlet in every 2 Km of India thus making internet available to even the ruralpopulation.The meta market helps facilitate the movement of physical goods through online medium. Take an example of 99acres.com a real estate portal. It brings together buyers and sellers or real estate. Yatra.com brings together the travelers and the travel providers. Shaadi.com brings the marriage service providers andthe groom/bridesfamily together.So on and so forth. Thus both Yatra.com and 99acres.com are meta markets for real estate and travelers respectively.The factor contributing most to meta markets is the convenience of users. Nowadays you can make purchases in one click. However, what if instead of going on ebay or amazon which offer tons of different options, you want to go for the website which is specific to your niche itself? Thats a meta market.

MARKETING AS A MANAGERIAL FUNCTIONMarketing as a managerial activity involves analyzing the market opportunities, planning the marketing activities ,implementing marketing plans and setting control mechanism, in such a way that organizational objectives are accomplished at the minimum cost. In other words, marketing is:1. Understanding consumer needs.2. Environmental scanning and market opportunity analysis.3. Developmental of competitive marketing plan and strategy such that an organization is able to satisfy not only the consumer needs but also achieve its objectives.4. Implementation of marketing plan and development of tactical plans to overcome problems at the market place ; and5. Development of control mechanisms.Marketing is therefore, an important organizational function.Interestingly, an important aspect of buyers is ignored, i.e that they too use the marketing ,sales and production concept. Buyer and marketer are roles played by individuals and their behavior in exchange relationship determines whether they are adopting the marketing, sales or production concept .For example, the buyers side in a marketing exchange gathers information about current and potential exchange partner. Then the buyers side tailors offerings like product, price or even point of purchase, mentioned above, but aggressively purchase exchange through other elements of the marketing mix, like word of mouth of publicity ,sales talk, etc. This has been termed as the buying concept, as it is the buyers form of the sales concept. Likewise ,when the buyer is passive in his buying behavior, accepting or rejecting whatever that has been offered to him and not actively seeking an exchange ,it has been termed as the offering concept as it corresponds to the production concept.These types of exchanges demystifying the marketing concept are shown below

Q 3(a) What is the role of marketing in the modern organizations?

One observes that the role of marketing in modern organization is that of integrating the needs and wants of the customers to the other organizational functions like production, R&D, finance, personnel, etc. One look at the companies today would be sufficient to conclude that neither marketing nor any other function alone holds the key to success. All functions are equally important. However it is marketing, which performs the role of integration.Integrative Function of MarketingAn interesting feature of successful companies is the integration of objectives of all corporate functions in a way that synergy is obtained. This is crucial in todays competitive environment because the responsibility to market the product and also to expand/maintain the market share is on the shoulders of every individual of the organization. Lets take examples of companies where such integration does not or does exist. A well-known large-sized public limited company, producing and marketing agricultural inputs like urea, recently found itself in the midst of stiff competition from other local and foreign brands. The company had been operating in a sheltered market and hence no one bothered about packaging, quality, price, etc. Now, in a changed situation, all these were as critical as selling skills and other marketing strategies and tactics. But, marketing and other departments continued to work at cross-purposes, leading to further deterioration in the companys performance.Another company, manufacturer of consumer durables, had an excellent integration between all its functions. The R&D department ,while working on a new model of cooking range, worked in coordination with production, finance and marketing .The resultan excellent cooking range, just the kind required by Indian middle class consumers at an affordable price.The above examples illustrate that the problems are not department specific, pertaining solely to the marketing or the production departments. Rather, each is a total business problem requiring an integrative solution. Marketing forms the lead and core of any business set up for profits. All other functions including Production, Purchase or Administration must be complimentary to Marketing.(b) Discuss about the integrative function of marketing.Companies that regard integrated marketing communications as a management function can organize the various marketing and communication activities under one leadership. The marketing communications manager controls all communications either directly or through reporting relationships. In addition to marketing material that the company generates to inform the public about its products, public relations and other information that the company produces go through the integrated management function. The marketing communications manager makes sure that the image the company projects in the marketplace is consistent and positive.

SalesThe traditional role of marketing communications has been to develop marketing material that supports the company's sales activities. The integrated marketing communications manager continues to provide this service, but the other activities under his integrated management function influence the production of marketing material. If he sees a lot of complaints from customers, positive or negative publicity in the media or becomes aware of an event that can link to his marketing, he can orient the marketing material to address these factors, which are normally outside of his area of responsibility.Special EventsCompanies often organize, attend or support special events in their fields of activity. Such events could be the responsibility of engineering, sales or production. With marketing communications integrated under one management function, all events go through the integrated communications function. It means that the company's profile and the image it projects at such events is consistent and in keeping with overall company goals.Public RelationsUnder integrated marketing communications management, companies no longer maintain a separate public relations operation whose activities may not support the efforts of marketing. The public relations function becomes part of the integrated strategy and supports the marketing function. Published information, even if not directly relevant to the marketing of the company's products, helps create an image of the company that supports the ability to market them. Companies and their products become more tightly identified in the minds of the public.MediaInstead of separate media relations, the integrated marketing communications concept groups this responsibility with all the other company communications. The integrated marketing communication operations review and manage the image of the company in the media. Marketing personnel release targeted information to support the image they want to see. When the company is in the news, they shape the information coming out of the company to support the company's overall goals and a positive media image.PublicityA company often has various people authorized to create press releases. Under the integrated concept, integrated marketing communications management handles all such publicity. Others may want to publicize some newsworthy items, but the press release itself goes through the integrated management function. The manager can decide how to structure the release of the news so that it has the desired effect, or he can decide that the release of a particular news item is not in the interests of the company.CustomersCompanies often place communications with customers in customer service. Under integrated communications, the marketing function handles direct customer contact. This arrangement has a two-fold advantage. Marketing management can shape the responses to complaints to maximize customer satisfaction while protecting the company. Marketing management also becomes aware first hand of issues with the company's products. When marketing is placed on the front lines, the function becomes more responsive to customer concerns, and the influence of customers increases.Integrated marketing communications is an approach to planning communications that gives your small business the potential to get better results from your campaigns and reduce marketing costs. By integrating tools such as advertising, direct mail, social media, telemarketing and sales promotion, you provide clarity, consistency and maximum communications impact, according to the American Association of Advertising Agencies definition.ResultsIn the traditional approach to marketing communications, businesses and their agencies plan separate campaigns for advertising, press relations, direct marketing and sales promotions. Integrated campaigns use the same communication tools to reinforce each other and improve marketing effectiveness. In an integrated campaign, you can use advertising to raise awareness of a product and generate leads for the sales force. By communicating the same information in press releases and feature articles, you reinforce the messages in the advertising. You can then use direct mail or email to follow up inquiries from the advertising or press campaigns and provide prospects with more information. To help convert those prospects to customers, you can use telemarketing to sell directly or make appointments for the sales team.Cost SavingsCreative consistency in your integrated campaigns can also save you money. By using the same images and adapting the same copy for different media, you reduce copy-writing, design and photography costs. If you work with external communications suppliers, you may be able to reduce agency fees by working with a single firm that offers integrated communications services, rather than separate specialist agencies.Customer PreferenceAn integrated campaign helps you provide customers with information in the format they prefer. Consumers and business customers can specify if they want to receive product information via email, direct mail, text message or telephone. Integration ensures they receive the same information in all communications. You can also meet the needs of customers who search the Internet for product information by integrating your website design and content with other communications.

Discuss about the strategies for customer loyalty creation.

The easiest way to grow your customers is not to lose themThe average business loses around 20 percent of its customers annually simply by failing to attend to customer relationships. In some industries this leakage is as high as 80 percent. The cost, in either case, is staggering, but few businesses truly understand the implications.Imagine two businesses, one that retains 90 percent of its customers, the other retaining 80 percent. If both add new customers at the rate of 20 percent per year, the first will have a 10 percent net growth in customers per year, while the other will have none. Over seven years, the first firm will virtually double, while the second will have no real growth. Everything else being equal, that 10-percent advantage in customer retention will result in a doubling of customers every seven years without doing anything else.The consequences of customer retention also compound over time, and in sometimes unexpected ways. Even a tiny change in customer retention can cascade through a business system and multiply over time. The resulting effect on long-term profit and growth shouldnt be underestimated.Marketing Wizdom can introduce you to a number of simple customer retention strstegies that will cost you little or nothing to implement. Behind each technique listed here there is an in-depth step-by-step process that will increase your customer retention significantly once implemented, and will have a massive impact on your business.1. Reducing AttritionVirtually every business loses some customers, but few ever measure or recognise how many of their customers become inactive. Most businesses, ironically, invest an enormous amount of time, effort and expense building that initial customer relationship. Then they let that relationship go unattended, in some cases even losing interest as soon as the sale been made, or even worse, they abandon the customer as soon as an easily remedied problem occurs, only to have to spend another small fortune to replace that customer. The easiest way to grow your business is not to lose your customers. Once you stop the leakage, its often possible to double or triple your growth rate because youre no longer forced to make up lost ground just to stand still.2. Sell and then sell againSo many people do an excellent job of making the initial sale, then drop the ball and get complacent, ignoring the customer, while they chase more business. Your selling has actually only just begun when someone makes that initial purchase decision because virtually everyone is susceptible to buyers remorse. To lock in that sale, and all of the referrals and repeat business that will flow from it, you need to strike while the iron is hot to allay your customers fears and demonstrate by your actions that you really care. You should thank them and remind them again why theyve made the right decision to deal with you and put a system in place to sell to them again, and again, constantly proving that they made the right decision.3. Bring back the lost sheepTheres little point in dedicating massive resources to generating new customers when 25-60% of your dormant customers will be receptive to your attempts to regenerate their business if you approach them the right way, with the right offer. Reactivating customers who already know you and your product is one of the easiest, quickest ways to increase your revenues. Re-contacting and reminding them of your existence, finding out why theyre no longer buying, overcoming their objections and demonstrating that you still value and respect them will usually result in a tremendous bounty of sales and drastically increased revenues in a matter of days and will lead to some of your best and most loyal customers.4. Frequent Communications CalendarAvoid losing your customers by building relationships and keeping in touch using a rolling calendar of communications. This is a programmed sequence of letters, events, phone calls, thank yous, special offers, follow-ups, magic moments, and cards or notes with a personal touch etc. that occur constantly and automatically at defined points in the pre-sales, sales and post-sales process. People not only respond to this positively, they really appreciate it because they feel valued and important. It acknowledges them, keeps them informed, offsets post-purchase doubts, reinforces the reason theyre doing business with you and makes them feel part of your business so that they want to come back again and again.5. Extraordinary Customer ServiceThe never-ending pursuit of excellence to keep customers so satisfied that they tell others how well they were treated when doing business with you. Moving the product or service you deliver into the realm of the extraordinary by delivering higher than expected levels of service to each and every customer. Key facets include: dedication to customer satisfaction by every employee; providing immediate response; no buck passing; going above and beyond the call of duty; consistent on-time delivery; delivering what you promise before AND after the sale; a zero-defects and error-free-delivery process and recruiting outstanding people to deliver your customer service. Extraordinary service builds fortunes in repeat customers, whereas poor service will drive your customers to your competition.6. Courtesy systemA powerful system that improves the interpersonal skills of your team and changes the spirit of your organisation. It involves speaking to colleagues politely and pleasantly, without sarcasm or parody, and treating them at least as well as you would want them to treat your customers. This will help your team to feel worthwhile and important, which makes for pleasant social contacts at work. It also motivates them to provide extraordinary service, encourages them to be consistently pleasant in all of their dealings and to relate to customers in a warm, human and natural manner. This results in better, warmer, stronger, more trusting relationships and longer term bonds with your customers.7. Product or service integrityLong-term success and customer retention belongs to those who do not take ethical shortcuts. There must always be total consistency between what you say and do and what your customers experience. The design, build quality, reliability and serviceability of your product or service must be of the standard your customers want, need and expect. Service integrity is also demonstrated by the way you handle the small things, as well as the large. Customers will be attracted to you if you are open and honest with them, care for them, take a genuine interest in them, dont let them down and practice what you preach and they will avoid you if you dont.8. Measure lifetime valueTheres a vast difference between the one-off profit you might make on an average sale, which ignores the bigger picture, and the total aggregate profit your average customer represents over the lifetime of their business relationship with you. Once you recognise how much combined profit a customer represents to your business when they purchase from you again and again, over the months, years or decades, youll realise the critical importance of taking good care of your customers. And because youll understand just how much time, effort and expense you can afford to invest in retaining that customer, youll be in control of your marketing expenditure.9. A complaint is a gift96 percent of dissatisfied customers dont complain. They just walk away, and youll never know why. Thats because they often dont know how to complain, or cant be bothered, or are too frightened, or dont believe itll make any difference. Whilst they may not tell you whats wrong, they will certainly tell plenty of others. A system for unearthing complaints can therefore be the lifeblood of your business, because customers who complain are giving you a gift, theyre still talking to you, theyre giving you another opportunity to return them to a state of satisfaction and delight them and the manner in which you respond gives you another chance to show what youre made of and create even greater customer loyalty.

(b) What are the basis of consumer classification. Discuss about the behaviour pattern of the rich.

Consumer BehaviorA market is designed for buying and selling of products and services. It is a human activity to satisfy the human needs and wants through the exchange process. This means the aim of marketing is to satisfy the potential needs and wants of products and services of the consumer. To do marketing effectively, first we need to understand the likes, dislikes, preferences, taste, process of purchase, consumption patterns, buying power, buying place, quantity etc. of the buyers of that product. Here comes the importance for us to learn the consumer behavior. Let us look at the meaning, importance, types and factors affecting the consumer behavior.Meaning of consumer behavior.

We all are consumers. In fact, everybody in this world is a consumer. We buy and consume a variety of services and goods in our daily life. But we all have different taste. We adopt different behavior patterns while making purchase decisions. We have different likes and dislikes. You may prefer to use Nokia Mobile phone with Airtel connection while your spouse may prefer Samsung Mobile phone with Vodaphone connection. Your colleague may be using Sony Ericsson Mobile phone with MTNL connection. Your neighbor may be carrying a Motorala Mobile with Reliance connection. You may prefer Close-up toothpaste, Lux toilet soap and Sunslik shampoo while your spouse may prefer Colgate toothpaste, Dove toilet soap and Suave Shampoo.

Similarly, you may have certain preference in selecting your magazines, books, brands, clothing, food, recreational activities, mode of investing, brand of vehicle you use, forms of savings, stores from where you prefer to shop, the people you associate with etc. While you'll find that your spouse, your colleagues and your neighbors are holding different preference in selecting their food, vehicle, books, magazines, cloths, investments, mode of savings etc. While buying vehicles people hold different choices like brand, size and capacity etc.

Economically weaker section buy a car which would help them to commute with less cost. So the preference of such people is entirely different from the preference of rich people. Rich people who can shell out a lot of money look for safety, comfort and look of the vehicle. Price or running cost is least concern for such people.

Again within each category also different people prefer different brands. Thus, each consumer is unique. This uniqueness is reflected in the consumption behavior and pattern as well as process of purchase. The knowledge of consumer behavior provides us reasons as to why consumers differ from one another in buying and using products and services.

What products and services do we buy, how often do we buy, why do we buy, From where do we buy etc. are the issues which are comes under the subject of consumer behavior. It blends the elements from economics, psychology, sociology and social anthropology. It tries to understand both individual and group decision making process of consumers.

Consumer behavior can be defined as those acts of consumers (individuals) directly involved in using, obtaining and disposing of economic goods and services, including decision process that precede and determine the these acts.Importance of understanding the consumer behavior

The importance of understanding the consumer behavior is that to know and understand the preferences of different consumers which will enable the marketers to form the marketing strategies accordingly. Human being differ in terms of social status, nationality, age, sex, income, occupation, religion, family set-up, education and the culture of the society. We have different needs because of these differences. We buy only those products which we think will satisfy our needs. We can find out or classify the different market segment by analyzing the consumer behavior of same product or variation of same basic product. Better understanding of market segment is necessary for a marketing manager to design strategies for different segments. Knowledge of consumer behavior and taste is important factor which plays a vital role in the creation of marketing strategies.

Consumer taste are also changing as fast as the technology changes. In today's world technology changes are taking place rapidly. The changes in technology changes the taste of consumers. To cater to the need of a rapidly changing consumer trends, a firm has to constantly understand the latest consumer trends and tastes. Consumer behavior provides invaluable clues and guidelines to marketers on new technological frontiers which they should explore. For example, let us consider the 3G enabled mobile phones in India. When the 3G technology introduced and the service providers started 3G services in the end of 2010, the consumers exhibited a desire to purchase 3G enabled mobile phones than the ordinary mobile phones. In the early eighties when the color transmission started, consumers exhibited a desire to purchase color Television for closer-to-life color picture viewing.

To identify and understand the prospective customers and their buying behavior a management which believes in the philosophy of marketing concept will take necessary steps to constantly in touch with the customers to know their likes and dislikes or requirement and expectation of the product. Customer relationship department is a two way communicating agency between the management and the customers. To understand the customer means to understand the goals of customers, which may be long-term or short-term in nature. Once the goals are identified, the firm can decide and design the products accordingly to match the goal of the consumer. The next step is to make the customer aware about the product or services. An advertisement message explaining how the product or services can help the customer to reach his goal will fulfill that part of the work.

There are many difficulties in finding out the goal of the prospective customers. People rarely ever give their goals any conscious thought nor express them in a way that can be understand easily. Many times the consumers fail to express the goals in the order of importance. Sometimes expressed goals are of short term in nature and seeks immediate satisfaction which lacks the long term significance. These difficulties can fail you to understand the true picture of consumer behavior.

To select the appropriate message and medium of advertisement, it is necessary for the firm to understand the specific goals with a fair level of accuracy of the targeted groups.Some of the areas that provide useful insight into consumer behavior are psychology, Sociology, social psychology, economics and cultural anthropology. Special markets which are consists of government agencies and other non profit organizations needs to be studied carefully to understand the unique consumer behavior. To capitalize the potentials of the market we need to analyze the market in depth.Types of consumers:Types of consumers can be classified in to two. They are:

1. Personal Consumers and2. Organizational consumers.

Personal Consumers:When you buy a Watch for your own use, you are buying in your capacity as a personal consumer. Whenever you buy goods and services for your own or for your family use, you are treated as a personal consumer. All individuals therefore, fall in the category of personal consumers. Buying decisions of a personal consumer mostly depend on his taste, availability and afford-ability of the goods and services.

Organizational Consumer:When you buy a printer for your use in office, you are making the the purchase in your capacity as an organizational consumer. All business firms, government agencies and bodies, non-business organizations such as temples, truest, hospitals etc. are organizational consumers who purchase goods and services for running the organizations. Even in the organization, buying decisions are taken by individuals only. Therefore, the behavior pattern of organizational consumer is marginally different from personal consumers.Factors influencing consumer behaviorConsumer behavior is affected by a host of different factors ranging from personality characteristics, needs, attitudes, values, economic and cultural background like age, sex, professional status to social influences of various kinds like forces from family, friends, colleagues and society as a whole. The combined effect of these various factors influence the purchasing decision and behavior of the consumer.

Consumer behavior results from environmental and individual influences. To achieve ideal self-image and to project the self-image they want others to accept, consumers often adjust their purchases of goods and services. Influence of others and the psychological makeup of individuals control the consumer behavior.All the factors that influence the consumer behavior can be classified in to four broad groups:

1. Psychological Factors2. Personal Factors3. Social Factors4. Cultural Factors

Psychological Factors: A felt need of something useful is the starting point of a purchase decision process. We all have needs. We hope fulfilling those needs will improve and satisfy our life. Sufficiently pressing needs will direct the person to seek its satisfaction. We call this urgency of the need motive. Therefore, motives are inner states that direct people towards the goal of satisfying a felt need. People take steps or action to reduce the tension created by the want or need.

Mr. Abraham Maslow (1908 - 1970) has developed a useful theory of the hierarchy of needs based on tow important assumptions.1. People are wanting animals whose needs depend on what they already possess. Only these needs that have not been fulfilled can influence human behaviour. A satisfied need is not a motivator.

2. In the order of importance all needs can be ranked from the low biological needs to the higher level psychological needs. Unfulfilled level of need is the motivator behind the individuals behaviour. As soon as one level of need is fulfilled, he moves on to the next higher level of needs.Maslow has classified the needs into five categories. They are:1. Physiological needs2. Safety Needs3. Social Needs4. Esteem Needs5. Self Actualization NeesSince no need is ever totally satisfied, there is always overlap amongst the different levels of needs. Also there is always scope for further fulfillment.

Physiological Needs:The basic needs or primary needs are food, shelter and clothing. It is the common and the basic need of a human being. He sees to fulfill this need before he goes for higher needs. Once hungry, a person ignores all other needs until he gets food to satisfy his hunger. Once his Physiological needs are met, he looks for other higher levels of needs and try to fulfill such needs. He tries to fulfill his basic needs of Food, water, air, shelter and sex at this stage.

Safety Needs:The second important need is the safety, security and protection from physical unexpected harm which may come in the way as the life progress. To protect oneself from such unexpected harm, he take the necessary steps to face such situations. Saving account, medical insurance, life insurance, health club membership are some of the tools he use to protect himself. Security of: body, employment, resources, morality, health, family health are some of the desires he tries to fulfill at this stage.

Social needs:The desire to be accepted by family, individuals and the society (group) comes after fulfilling the physiological and safety needs. To be accepted in the society, he starts to behave in such a way that acceptable to the society in which he live. He change his dress code. Use gadgets to match the status of the group he belongs. He would be interested in obtaining status among the group in which he belong. Friendship, belongingness, family, sexual intimacy are the some of the needs that one desire at this stage.

Esteem needs: A sense of accomplishment, achievement and to receive respect from others is the next higher level of need a person desire to fulfill. Status, Prestige, Success, Self Respect, confidence, respect by others and respect of others are some of the desires one look for at this stage. Esteem needs are present in all human beings. But very few work towards to achieve the same in a big way. In this level he not only desire to get acceptance but also have a desire for respect and recognition. He wanted to be an outstanding individual in the crowed.

Self-actualization Needs:Maslow defines self-actualization as"The healthy man is primarily motivated by his needs to develop and actualize his fullest potentialities and capacities. What man can be, he must be."He tries to achieve his fullest potential of his capabilities and talents at this stage. Morality, creativity, spontaneity, problem solving, lack of prejudice, acceptance of facts are some of the needs of this stage one seeks for.Q 5(a) What do you mean by suppliers? What are the techniques for environmental scanning?