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Marketing as defined by Philip's Kotler is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others (Principles of Marketing, pg. 10). According to Kotler marketing is all about understating the needs, wants and demands of the customers.
In 1957 Alderson defined the concept of marketing as an exchange process between consumer and company (Principles of Marketing, 3rd edition, pg.5). But as far as this definition is concerned it is at very basic level and it does not give any idea related to those aspects of marketing that occur before products or services. In short it does not give a reference to the behavior of consumer and company before exchange of goods or services.
Successful marketing is not a simple process rather it is a complex process that contains critical and in depth analysis of both the market forces and consumer behavior. In Principles of Marketing 3rd edition pg. 3 writers states that, marketing in fact, covers a very wide range of absolutely essential business activities that bring you the products you do want, when you want them, but at prices you can afford, and with all the information you need to make informed and satisfying consumer choices.
Following are some of the critical marketing concepts that are necessary to understand before evaluating and analyzing the marketing activities of firm within an industry.
· Needs, Wants and Demands
· Simple Marketing System
· Marketing Mix (4 P's)
Needs, Wants and Demands
Kotler describes human need as a state of felt deprivation (Principles of Marketing 2nd edition, pg. 10). Humans have many different needs. These includes basic physical needs like food, clothes etc. Kotler defines that these needs are not invented by the marketers. The product/services should be designed keeping in the needs of the market in mind. That service/product should be able to fulfill the need of the consumer.
Want is the form that a human need takes as shaped by culture and individual personality (Principles of Marketing 2nd edition, pg. 10). A need can be fulfilled by different means. For instance the basic need is food. To fulfill that need a person may eat burger, salad, fires etc. So these are related to the cultural exposure and personalities of the individuals.
When the human wants are backed by the buying power then they become demands. Consumers view products as bundles of benefits and choose products that give them the best bundle for their money. (Principles of Marketing 2nd edition, pg. 10)
Simple Marketing System
Kotler's model gives a clear view of exchange between consumers and companies. This model shows the delivery of goods and services in return of money (Principles of Marketing 2nd edition, pg. 10).
Information and communication exchange between the buyers and sellers is the key part of successful marketing. If a Brand or a product is communicated to the consumers then it is the result of successful marketing and in return if the consumers respond, then it gives seller insight into the success or failure of that product or service.
Marketing Mix (4 P's)
The Marketing mix was first introduced by McCarthy in 1960. It is an acronym that is very easy to remember and now this acronym has become very popular as 4 P's of Marketing. According to this the demand of the product can be categorized into 4 groups. The marketing mix is the set of controllable tactical marketing tools that the firm blends to produce the response it wants in the target market. The marketing mix consists of everything the firm can do to influence the demand for its product (Principles of Marketing 2nd edition, pg. 109).
Ø Product - Anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need (Principles of Marketing 2nd edition, pg. 110). This area covers everything to do with the creation, development and management of products (Principles of Marketing, 3rd edition, pg. 25). This group also covers the non tangible aspect of the product like after sales service, guarantees etc.
Ø Price - The amount of money charged for a product or service, or the sum of the values that consumers exchange for the benefits of having or using the product or service (Principles of Marketing 2nd edition, pg. 110). Pricing is very important and essential part of marketing mix. The price of the product or service may portray it being a quality item or a desirable one (Principles of Marketing, 3rd edition, p.26). Pricing of the product is used to get competitive advantage in the competitive market.
Ø Place - Place includes company activities that make the product available to target consumers. (Principles of Marketing 2nd edition, pg. 110).Place in the marketing mix is concerned with distribution channels, market intermediaries and consumer service levels. It gives the insight to the approach and availability of product and service to the consumers.
Ø Promotion - Promotion means activities that communicate the merits of the product and persuade target customers to buy it (Principles of Marketing 2nd edition, pg. 110).
Consumer behavior is referred to as the study of when, why, how, where and what people do or do not buy products. It blends elements from psychology, sociology, social, anthropology and economics. It attempts to understand the buyer decision making process, both individually and in groups. It studies characteristics of individual consumers such as demographics and behavioral variables in an attempt to understand people's wants. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general. (www.wikipedia.com)
Another definition of consumer behavior is given by Blackwell, Miniard and Engel. Consumer behavior involves the activities people undertake when obtaining, consuming, and disposing of products and services (Consumer Behavior, 9th Edition, pg. 6). So in this section the behavior and the influencing forces can be analyzed.
The basic purpose of this analysis is to find out that how the potential customer behave or respond to the different marketing and advertising activities. In order to achieve the marketing and advertising goals successfully company need to promote a Unique Selling Point to its potential customers. So understanding the consumer behavior is very necessary in order to achieve these goals.
A successful marketing campaign will contain all those factor that ultimately influence the consumer behavior. There was a time when the marketers were able to understand the behavior of their customers due to the daily selling. But the scenario is very much different and complex now. The markets have grown and the consumers have also grown. Moreover, competition in the markets has become intense. So now the companies spend a lot of money to understand the behavior of their consumers.
Kotler describes a model of Consumer Buyer Behavior. First, the buyer's characteristics influence how he or she perceives and reacts to the stimuli. Second, the buyer's decision process itself affects the buyer's behavior (Principles of Marketing 2nd edition, pg. 230). So, the marketer has to look into the behavior of the consumer very deeply. According to the Kotler's model the consumer buyer behavior have two parts. First, the characteristics of the consumer or the ability of the consumer to perceive the message that has been conveyed by the company for its certain product or service. Secondly, the decision making process of the buyer also effects the consumer behavior.
According to the model described by Kotler there are several factors that affects the consumer buyer behavior. These factors include cultural, social, psychological and personal factors.
The set of basic values, perceptions, wants and behaviors learned by a member of society from family and other important institutions (Principles of Marketing 2nd edition, pg. 230). Culture is the most basic cause of a person's wants and behavior. Human behavior is largely learned. Growing up in a society, a child learns basic values, perceptions, wants and behaviors from the family and other important institutions.
These factors are relatively permanent and ordered divisions in a society whose members share similar values, interests and behaviors (Principles of Marketing 2nd edition, pg. 233). Almost every society has some form of social class structure. Social classes are society's relatively permanent and ordered divisions whose members share similar values, interests and behaviors. So the consumers behave according to their social class.
A buyer's decisions are also influenced by personal characteristics such as the buyer's age and life-cycle stage, occupation, economic situation, lifestyle, and personality and self-concept (Principles of Marketing 2nd edition, pg. 238).
People change the goods and services they buy over their lifetimes. Tastes in food, clothes, furniture and recreation are often age related. Buying is also shaped by the family life cycle - the stages through which families might pass as they mature over time. Also the economic situation prevailing around the consumer, occupation, also most importantly the personality of the consumer also affects the buying behavior of the consumer.
A person's buying choices are further influenced by four important psychological factors: motivation, perception, learning, and beliefs and attitudes (Principles of Marketing, 2nd edition, pg. 244).
Ø Motivation - Need becomes a motive when it reaches to a sufficient level of intensity. A person may have many needs at a time, but it is not necessary that all the need becomes a motive. So this motivation factor affects the consumer buying behavior. Abraham Maslow devised one of the most popular theories about motivation. His theory bases human motivation upon a hierarchy of needs a person faces. Ranging from basic needs such hunger, thirst and sex all the way through to self-actualization. Maslow sought to explain why people are driven by particular needs at particular times (Marketing: An Introduction, 5th Edition, pg. 101).
Ø Perception - The process by which people select, organize and interpret information to form a meaningful picture of the world (Principles of Marketing 2nd edition, pg. 247). In marketing, perceptions are more important than reality, as it is perceptions that will affect the consumer's actual behavior (Marketing Management, 12th Edition, pg. 186). It is not necessary that two person having same motivation factors also perceives alike. People may act differently because they perceive the situation differently.
Ø Learning - The change in the behavior also arises with the passage of time. As the person learns and gets more experience its behavior becomes different. In other words, if a person has good experience with a certain brand/product then there are more chances that he or she will purchase the same product in the future. Bad experiences lead to negative feelings towards the product or service involved.
Ø Beliefs and Attitudes - Through doing and learning, people acquire their beliefs and attitudes. These, in turn, influence their buying behavior. A belief is a descriptive thought that a person lies about something.
Market Segmentation and Targeting
Buyers make markets and buyers are different from one another. Differences may occur due to the wants, resources, places, cultures, locations, attitudes, beliefs etc. So companies divide the large and heterogeneous markets in to different and smaller segments. By this, it is easier to reach the consumer with different buying behavior more affectively. Moreover the products and services can be designed according to the needs and wants of the consumers of different market segments.
Levels of Market Segmentation
As each buyer has different and identical behavior so the ideal case scenario would be that the marketing strategy should be designed for individual customer. However, some company tries to serve the customer individually, but many other find large number of buyers and do not find the segmentation. Deepening on the nature of product or service, the companies choose to adapt the level of segmentation of the market.
Ø Mass Marketing - Kotler describes mass marketing as using almost the same product, promotion and distribution for all consumers (Principles of Marketing 2nd edition, pg. 380).
Marketing Process Models
There are many models to explain the stages a potential customer will go through from the initial awareness of the product to desire for the product (Principles of Marketing, 3rd edition, pg. 580). Many of these models amount to more or less the same sequence. Each potential consumer must pass through three simple stages.
Ø The Cognitive stage - this is where the consumer will become aware of the existence of a certain product or service.
Ø The Affective stage - involves the changing of the attitude towards a product or service.
Ø Behavior stage - involves the action that results from the change in attitude towards the product (Brassington and Pettitt, 2003, p. 580).
The AIDA model developed by Edward Strong (1925) breaks down the sequence of events to:
Ø A - Attention
Ø I - Interest
Ø D - Desire
Ø A - Action
In the model there are four stages that are described and show that how an advertising campaign can be successful in reaching out to its audience. Successful Marketing campaign helps firstly grabbing their attention. Secondly, it creates interest in them with the idea of the product or service. After that it makes the product / service desirable to the potential customer. The final stage is to get the consumer to take action as a result of their desire for the product.
Ø D - Defining
Ø A - Advertising
Ø G - Goals
Ø M - Measuring
Ø A - Advertising
Ø R - Results
Russell Colley devised this model in 1961 and it gives a very useful approach to understand that how advertising works. This model is used to measure the result of a specific communication task in terms of the cognitive-affective-behavioral hierarchy impact on a defined audience (Copley, 2004, p. 83). Basically, it is an approach to adapt a precise method for selecting and quantifying goals and use those goals for performance measurement.
However, these models have their drawbacks. Sandra Moriarty (1983) noted that the drawbacks lay in their reliance on the concept of a linear process (Moriarty taken from Huey, 1999). Moriarty (1983) and Kristian Palda (1966) both agree that these models were oversimplifying the process. They state that the stages of AIDA do not necessarily repeat in the same sequence. Sometimes an advert will result in the product being desired, other times it will result in interest etc (Huey, 1999).