General Characteristics of Consumer Behaviour

The reason for studying consumer behaviour lies in its general characteristics, as it may affect present day business operation. These characteristics can be described as below:

*  The Consumer is the King.
*  The Consumer Behaviour can be known.
*  The consumer's behaviour can be influenced.

Why Study Consumer Behaviour?
*  It will help to segment the market usefully
*  It will aid in development of an effective marketing mix
*  It will help to assess new market opportunities concept is unlikely to get discarded for a very long time to come, because there would always be products and populations of such a nature that some companies would feel.

What influences Consumers' Buying Decision Process?
Consumers' buying behaviour is influenced by cultural, social, personal and psychological factors. The cultural factors exert the broadest and deepest influence.

BUYER OR CONSUMER BEHAVIOUR

A product or service should have a consumer to buy it. Thus, it is very necessary to make a study on the behavioural aspect of the consumer i.e., there must be reasonable answer to the following questions:

*  What does a consumer buy?
*  Where from does he buy?
*  When does he buy?
*  How much does he buy?
    and
*  Why does he buy?
 

Though the first four questions can be answered by carrying out statistical data based market research known as 'retail audit', 'prescription audit', etc., the answer to the last question is indeed a very difficult one and can be answered by carrying out 'motivational research'. 

Nevertheless the answer to the 'Why' of consumer behaviour is the most important factor to any organisation while designing a successful product/service and its marketing strategy.

Planning Marketing and Other Functional Strategies

The relationship of marketing to the other business functions is often misunderstood.

*  Marketing alone cannot produce superior value for the consumer. All company departments must work together to accomplish this.

*  Each department is a link in the value chain (a major tool for identifying ways to create value for the customer).

*  A company's value chain is only as strong as the weakest link.

*  Marketers are challenged to find ways to get all departments to "think customer."

 

In its search for competitive advantage, the firm needs to look beyond its own value chain and into the value chains of its suppliers, distributors, and ultimately customers. This "partnering" will produce a value delivery network.

DEVELOPING GROWTH STRATEGIES

Companies should always be looking to the future. One useful device for identifying growth opportunities for the future is the product/market expansion grid. The product/ market growth matrix (proposed by Igor Ansoff) is a portfolio-planning tool for identifying company growth opportunities through:

*  Market Penetration-making more sales to present customers without changing products in any way. Supporting tactics might include greater spending on advertising or personal selling.

*  Market Development-a strategy for company growth by identifying and developing new markets for current company products.

*  Product Development-a strategy for company growth by offering modified or new products to current markets.

*  Diversification-a strategy for company growth by starting up or acquiring businesses outside the company's current products and markets. This strategy is risky because it does not rely on either the company's successful product or its position in established markets.

As market conditions change over time, a company may shift product-market growth strategies. For example, when its present market is fully saturated, a company may have no choice other than to pursue new markets.

ANALYSING THE CURRENT BUSINESS PORTFOLIO

In order to analyse the current business portfolio, the company must conduct portfolio analysis (a tool by which management identifies and evaluates the various businesses that make up the company). 

Two steps are important in this analysis:

1.  The First Step is to identify the key businesses (SBUs). The Strategic Business Unit (SBU) is a unit of the company that has a separate mission and objectives and which can be planned independently from other company businesses. The SBU can be a company division, a product line within a division, or even a single product or brand.
 

                Three characteristics of an SBU
             

                      *  Single business or collection of related businesses that can be planned for separately.
                      *  Has its own set of competitors.
                      *  Has a manager who is responsible for strategic planning and profit.
 

2.  The Second Step is to assess the attractiveness of its various SBUs and decide how much support each deserves.

 

The best-known portfolio planning method is the Boston Consulting Group (BCG) matrix:
 

*  Using the BCG approach, where a company classifies all its SBUs according to the growth-share matrix.
*  The vertical axis, market growth rate, provides a measure of market attractiveness.
*  The horizontal axis, relative market share, serves as a measure of company strength in the market.

Using the matrix, four types of SBUs can be identified:

*  Stars are high-growth, high-share businesses or products (they need heavy investment to finance their rapid growth potential).
*  Cash Cows are low-growth, high-share businesses or products (they are established, successful, and need less investment to hold share).
*  Question Marks are low-share business units in high-growth markets (they require a lot of cash to hold their share).
*  Dogs are low-growth, low-share businesses and products (they may generate enough cash to maintain themselves, but do not have much future).
 

Generally, a SBU introduces a new product into a high-growth market, which will obviously have a low market share. The SBU has to do substantial marketing expenditure to increase the product's market share so that it becomes a "star" product. When the industry growth rate again declines, the SBU generally stops all marketing expenditure on this product which gives the SBU lot of cash as the expenditure is substantially reduced while the revenue is still very high. This surplus fund generated by "cash cows" are utilised for development of new products and establishing these new products in the market.

Once it has classified its SBUs, a company must determine what role each will play in the future. 

The four strategies that can be pursued for each SBU are: 

1. Build: Here the objective is to increase market share, if necessary, even foregoing short-term earnings to achieve this objective.

2. Hold: Here the objective is to preserve market share.
 

3. Harvest: Here the objective is to increase short-term cash flow regardless of longterm effect.

4. Divest: Here the objective is to sell or liquidate the business because resources can be better used elsewhere.
 

As time passes, SBUs change their positions in the growth-share matrix. Each has its own life-cycle.

The growth-share matrix has done much to help strategic planning study; however, there  are problems and limitations with the method.

*  They can be difficult, time-consuming, and costly to implement.
*  Management may find it difficult to define SBUs and measure market share and growth.
*  They focus on classifying current businesses but provide little advice for future planning.
*  They can lead the company to placing too much emphasis on market-share growth or growth through entry into attractive new markets. 

This can cause unwise expansion into hot, new, risky ventures or giving up on established units too quickly. In spite of the drawbacks, most firms are still committed to strategic planning.

Designing the Business Portfolio

The third step in the strategic planning process is designing the business portfolio.

*  The business portfolio is a collection of businesses and products that make up the company.

*  The best business portfolio is the one that best fits the company's strengths and weaknesses to opportunities in the environment.

 

In order to design the business portfolio, the business must:

*  Analyse its current business portfolio and decide which business should receive more, less, or no investment.

*  Develop growth strategies for adding new products or businesses to the portfolio.

Role and Characteristics of Objectives

Role of Objectives:

*  Objectives define the organisation's relationship with its environment.

*  Objectives help an organisation pursue its mission and purpose.

*  Objectives provide the basis for strategic decision making.

*  Objectives provide the standards for performance appraisal.




Characteristics of Objectives :

1. Objectives should be understandable

2. Objectives should be concrete and specific

3. Objectives should be related to a time frame

4. Objectives should be measurable and controllable

5. Objectives should be challenging

6. Different objectives should correlate with each other

7. Objectives should be set within constraints

SETTING COMPANY OBJECTIVES AND GOALS

The company's mission needs to be turned into detailed supporting objectives for each level of management. This second step in the strategic planning process requires the manager to set company goals and objectives and be responsible for achieving them. 

*  The mission leads to a hierarchy of objectives including business and marketing objectives.

*  Objectives should be as specific as possible.

Objectives are an organisation's performance targets - the results and outcomes it wants to achieve. They function as yardsticks for tracking an organisation's performance and progress. Strategic objectives relate to outcomes that strengthen an organisation's overall business position and competitive vitality; financial objectives relate to the financial performance targets management has established for the organisation to achieve. 

Objectives are open-ended attributes that denote the future state or outcomes, whereas goals are close-ended attributes, which are precise and expressed in specific terms.

Some Mission Statements

*  UNILEVER: "The mission of our company, as William Hasketh Lever saw it, is to make cleanliness commonplace, to lessen work for women, to foster health, and to contribute to personal attractiveness that life may be more enjoyable for the people who use our products."

*  MCKINSEY & CO.: "To help Business Corporations and governments to be more successful".

*  CADBURY INDIA: "To attain leadership position in the confectionery market and achieve a strong presence in the food drinks sector."

*  RELIANCE INDUSTRIES: "To become a major player in the global chemicals business and simultaneously grow in other growth industries like infrastructure." 

*  RANBAXY: "To become a $1 billion research-based global pharmaceuticals company."

DEFINING THE COMPANY'S BUSINESS AND MISSION

An organisation exists to accomplish something. When management senses that the organisation is drifting, it is time to renew its search for purpose by asking:

*  What is our business?
*  Who is our customer?
*  What do customers value?
*  What should our business be?

According to Peter Drucker, every organisation must ask an important question "What business are we in?" and get the correct and meaningful answer. For example, Indian Railways will make a big mistake if they think they are in the business of moving trains and wagons; whereas they are actually in the business of transportation and material handling system.

The first step in the strategic planning process is defining the company mission.
 

*  Mission statement is a statement of the organisation's purpose - what it wants to accomplish in the larger environment.
 

*  A clear mission statement acts as an "invisible hand" that guides people in the organisation.

*  Market definitions of a business are better than product or technological definitions. Products and technologies can become outdated, but basic market needs may last forever.

*  A market-oriented mission statement defines the business in terms of satisfying basic customer needs.

The mission statement must avoid being too narrow or too broad. Mission statements must:

*  Be realistic
*  Be specific
*  Fit the market environment
*  Indicate distinctive competencies
*  Be motivating

A strategic vision is a road map of the company's future - providing specifics about technology and customer focus, the geographic and product markets to be pursued, the capabilities it plans to develop, and the kind of company that management is trying to create.

An organisation's Mission states what customers it serves, what needs it satisfies, and what type of product it offers.

A company's mission statement is typically focused on its present business scope – "who we are and what we do"; mission statements boldly describe an organisation's present capabilities, customer focus, activities and business makeup.

STRATEGIC PLANNING CONTROL AND IMPLEMENTATION PROCESS

The organisational planning takes place at several levels of the organisation - the corporate level, the business level and operational level. The corporate level consisting of the top management, deals with long term major decisions making such as allocation of resources, taking major risks for generating high profits. 

The operational level decisions are short term and less risky in nature and leads incremental change in organisational operation.

Steps in Strategic Planning :

Strategic planning can be defined as the process of developing and maintaining a strategic fit between the organisation's goals and capabilities and its changing marketing opportunities.

*  Strategic planning sets the stage for the rest of the planning in the firm.
 

*  There are four steps to the strategic planning process:

a. Defining a clear company mission.
b. Setting supporting company objectives.
c. Designing a sound business portfolio.
d. Planning and coordinating marketing and other functional strategies.

Dimensions of Strategic Decisions

*  Strategic issues require top management decision.

*  Strategic issues involve the allocation of large amount of company resources.

*  Strategic issues are likely to have a significant impact on the long term prosperity of the firm.

*  Strategic issues are future oriented

*  Strategic issues usually have major multifunctional or multibusiness consequences.

*  Strategic issues necessitate considering factors in the firm's external environment.

The Framework

The basic framework of strategic planning process can be described as shown in the picture below. Stage One is a situational analysis and is the starting point of strategic planning. Stage Two is a process of goal setting for the organisation after it has finalised its vision and mission. Stage Three deals with the various strategic alternatives an organisation has. Stage Four and Five are the final process of selection, implementation and control of a suitable strategy.

Some Basic Concepts
 

A company's strategy consists of the combination of competitive moves and business approaches that managers employ to please customers, compete successfully, and achieve organisational objectives.

A company's business model deals with whether the revenue - cost - profit economies of its strategy demonstrate the viability of the enterprise as a whole.

The term strategic management refers to the managerial process of forming a strategic vision, setting objectives, crafting a strategy, implementing and executing the strategy, and then over time initiating whatever corrective adjustments in the vision, objectives, strategy and execution are deemed appropriate.

Need for Strategic Planning

Many companies operate without formal plans. However, formal planning can provide many benefits:

*  It encourages management to think ahead systematically.
*  It forces managers to clarify objectives and policies.
*  It leads to better coordination of company efforts.
*  It provides clearer performance standards for control.

*  It is useful for a fast-changing environment since sound planning helps the company anticipate and respond quickly to environmental changes and sudden developments.

 

There are three different types of plans that companies might use:
 

*   Annual plans (deal with the company's current businesses and determine how to keep them going).
*  Long-range plans (also deal with company's current businesses and determine how to keep them prosperous).
*  Strategic plans involve adapting the firm to take advantage of opportunities in its constantly changing environment.

STRATEGIC MARKETING PLANNING

"Without a strategy, the organisation is like a ship without a rudder"
                                                                                      - Joel Ross and Michael Kami

In a hyper competitive marketplace, companies can operate successfully by creating and delivering superior value to target customers and also learning how to adapt to a continuously changing market place. So to meet changing conditions in their industries, companies need to be farsighted and visionary, and must develop long-term strategies. 

Strategic planning involves developing a strategy to meet competition and ensure longterm survival and growth. The marketing function plays an important role in this process and it provides information and other inputs to help in the preparation of the organisation's strategic plan.

The overall objective of strategic planning is two fold :

* To guide the company successfully through all changes in the environment.

* To create competitive advantage, so that the company can outperform the competitors in order to have dominance over the market.

 

Strategic planning consists of developing a company mission (to give it direction), objectives and goals (to give it means and methods for accomplishing its mission), business portfolio (to allow management to utilise all facets of the organisation), and functional plans (plans to carry out daily operations from the different functional disciplines). 

No matter how well the strategic planning process has been designed and implemented, success depends on how well each department performs its customer-value-adding activities and how well the departments work together to serve the customer. Value chains and value delivery networks have become popular with organizations that are sensitive to the wants and needs of consumers. 

The marketing department (because of its ability to stress the customer's view) has become central in the implementation of most strategic plans. Ultimately, the aim of strategic planning is to serve the company's business products, services and communications so that they achieve targeted profits and growth.

MARKETING RESEARCH PROCESS

While the Marketing Information System has its focus on managing the flow of relevant information to decision-makers in the marketing department, marketing research is concerned with the function of generating information for marketing decision-makers.

There are occasions when there are no easy answers for a variety of marketing situations that marketing managers face. Such situations may call for conducting formal marketing studies of specific problems and opportunities. Marketing research is intended to address carefully defined marketing problems or opportunities. It helps in identifying consumer needs and market segments, furnishes information necessary for developing new products and formulating marketing strategies, enables managers to measure the effectiveness of marketing programmes and promotional activities, develops economic forecasting, helps in financial planning, and quality control. Research undertaken without precisely defining the problem and objectives usually results in wasting time and money. 

For conducting marketing research, companies develop systematic procedures for collecting, recording, and analysing data from secondary and primary sources to help managers in making decisions. Marketing research is different from market research, which is information collected about a particular market or market segment. In the process of marketing research, companies collect a lot of different types of information. David G. Bakken is of the opinion that it is easy to think of all these in terms of three Rs of marketing:

1.  Recruiting New Customers.
2.  Retaining Current Customers.
3.  Regaining Lost Customers.
 

To recruit new customers, the researchers study different market segments to develop the right products and services consumers need and want. To retain customers, the marketer may conduct customer satisfaction studies. Marketers realise that good relationship with customers is important for long-term positive sales results. Regaining lost customers can be a formidable problem. It needs innovative marketing and outstanding communications. The information collected with respect to the first and the second Rs helps regaining the lost customers.

MARKETING INTELLIGENCE SYSTEMS

In the current fast-paced business climate, keeping up with macro-environmental changes, and competition is becoming increasingly difficult. Marketing intelligence system refers to systematic and ethical approach, procedures, and sources that marketing managers use to gather and analyse everyday information about various developments with regard to competitors and other business trends in the marketing environment. This intelligence is collected from various sources such as newspapers, trade publications, business magazines, talking with suppliers, channel members, customers, other managers, and sales force people.

About competitive intelligence, the general idea is that more than 80 per cent information is public knowledge. The most important sources from which to obtain competitive intelligence include competitors’ annual and financial reports, speeches by company executives, government documents, trade organisations, online databases, and other popular and business press. The company can take certain steps to obtain quality marketing intelligence. The company should take steps to train and motivate field sales personnel about the types of information to report regularly on any relevant developments in the marketplace. Besides sales force, the company can take steps to motivate channel members to pass along important intelligence. The company can also purchase competitors’ products, and attend trade fairs. 

Some important questions that managers should ask about competitive intelligence are:

* How fast does the competitive climate in our industry change? How important is it to keep our knowledge about these changes current?

* What are the objectives of our company about competitive intelligence?

* Who are the important clients for competitive intelligence? To whom should the intelligence effort be reported?

With rapid developments in the area of software applications that run on PCs, it is becoming increasingly possible to keep track of client lists and the various kinds of contacts that are made with each client. Many such programmes keep track of clients’ names, addresses, phone and fax numbers, e-mail addresses, personal details such as birthdays, likes and dislikes, product/brand usage, hobbies, club memberships, etc.
 

Most of today’s information systems are computer applications in a sophisticated datadriven age. These enable marketers to be better informed about their customers, potential customers, and competitors. This helps marketers to be more productive and establish and sustain competitive advantage. New applications are being developed at a faster pace. The ultimate focus of most such systems is to enable marketers to know enough about any given customer and the competitive context, to fine-tune their marketing efforts to better serve the target market so that customer’s needs are met perfectly. This is the ultimate dream for every marketer.

DATA MINING AND DATA WAREHOUSING

The term ‘data mining’ refers to automated data analysis of large amount of data stored in a data warehouse. This is similar to extracting valuable metals from mountains of mined ore. The purpose is to unearth – with the help of modern computing power – meaningful patterns of information that might be missed or remain undiscovered. 

Data mining creates customer database, which is extremely important for all narrowly defined target-marketing efforts. Data mining also leads to build database on resellers, distribution channels, media, etc. Data warehousing refers to storing subject-based, integrated, nonvolatile, time variant data in support of managerial decisions. 

It can be viewed as a central collection of clean, consistent, and summarised information gathered from several operational systems. With increasing computing capabilities, organisations are collecting large amounts of a variety of information or data possibly faster than they can use, and for this reason all the collected data or information needs to be sorted, classified and warehoused, so that it can be retrieved when needed in a meaningful manner.

COMPUTER NETWORKS AND INTERNET

Present day computer networks enable marketers to access data sources and customers with immediate information about products and performance. Through such networks, marketers can exchange e-mails with employees, customers, and suppliers. 

Online information services such as Compu Serve and America Online typically offer their subscribers access to e-mail, discussion groups, files for downloading, chat rooms, and databases and other related research materials. Marketers can subscribe to “mailing lists” that periodically deliver electronic newsletters to their computer screens. 

This helps increased communication with a marketer’s customers, suppliers, and employees and boosts the capabilities of a company’s marketing information system. Online information services are available only to subscribers. 

However, the Internet allows global exchange of e-mails, discussion through newsgroups on almost any subject, downloading of files, chat rooms, etc. A well-maintained database enables a company to analyse customer needs, preferences, and behaviour. 

It also helps in identifying right target customers for its direct marketing efforts.

External Sources

Census Bureau is one key source of information regarding various demographic variables. Besides Census Bureau of India, other sources include Newspapers, Trade Publications, Technical Journals, Magazines, Directories, Balance Sheets of companies, Syndicated and published research reports. Various third party information suppliers offer a variety of information about customers as per marketer’s requirements, for a price. 

For example, Reader’s Digest markets a database covering 100 million households. It is one of the best databases to assess potential markets for consumer products. It lets Reader’s Digest management know the likes and dislikes of many of its readers. Behaviour Scan is a single source information service that monitors consumer household televisions and records the programmes and commercials watched. This source is an example that screens about 60,000 households in 26 US markets. Many companies develop their own databases. 

According to Laurence N. Goal, a single source providing information about household demographics, purchases, television viewership behaviour, and responses to promotions is called a single-source data. When consumers from these households go shopping in stores equipped with scanner-installed computers, they present their credit cards to billing clerks for payment. This permits each customer’s identification to be electronically coded so that the marketer can track his or her purchases.

 

Some Important Data Sources

1. The Thomas Register: It is the world’s most important industrial buying guide for industrial products. Thomas Register of Indian Manufacturers is available in print, CD, and through Internet. It has 120,000 listings of 40,000 industrial manufacturers and service providers covering 10,000 different product and service categories.

2. The Source Directory: Source Publishers, Mumbai publish this directory. Currently Mumbai and Delhi editions are available. It provides contact information on ad agencies and related services, marketing and sales promotion consultants, market research firms, music companies, telemarketing, and different media.

3. Yellow Pages: Tata Press and GETIT yellow pages are leaders. Currently, yellow pages publications are available for all cities and major towns of India. New Horizons is a joint venture between Living Media and Singapore Telecom and have been publishing directories for specific businesses.

4. Internet: It is a source of extensive data on almost any subject. Different types of published data, research findings, statistics, and figures are available either free or on payment.

Database and Internal Records

 Database:

A database refers to the collection of comprehensive information about customers and prospects such as demographic and psychographic profiles, products and services they buy, and purchase volumes, etc., arranged in a manner that is available for easy access and retrieval. Databases allow marketers access to an abundance of information, – often through a computer system – such as sales reports, news articles, company news releases, and economic reports from government and private agencies, etc., that can be useful in making various marketing decisions.

Internal Records :

Modern technology is making information required for marketing decisions ever more accessible. It is possible to track customer buying behaviour and better analyse and understand what customers want. The integration of various modern technologies is allowing companies to access valuable information. Ever increasing numbers of market researchers and managers are having access to e-mail, voice mail, teleconferencing, video conferences, and faxes.

Internal database is the most basic starting point in developing a strong MIS. Marketers, not just the growing numbers of large retailers in our country, need information about what is demanded more by customers and what is not. Internal record systems help in tracking what is selling, how fast, in which locations, to which customers, etc. Availability of all such information relies on reports available on orders received from sales people, resellers, and customers, copies of sales invoices, prices, costs, inventories, receivables, payables, etc. Getting inputs and designing systems to provide right data to the right people at the right time is critical for marketing decisions.

Accumulated data about customers in various internal records is an important source to build database such as customer inquiries, existing customers and past purchasing histories of these customers. The key information in this regard consists of RFM (Recency, Frequency, and Money) variables. Recency refers to the time of purchase, frequency reflects the number of times the customer made a product purchase from the firm, and money denotes the quantity and monetary value of the purchase. RFM helps analyse and develop a customer index that reflects which customers are more profitable for the business. USP Age, in its September 2004 issue has reported that BPCL has been compiling its database for the past four years and has a formidable collection of more than 1.4 million customers. Shopper’s Stop has been compiling data of its regular customers through its loyalty programme, First Citizen. Further, a company in India can obtain a database for as little as 50 paise to Rs. 5 per contact. Companies involved in Direct Marketing such as Catalogue Selling and Mail Order Marketing are heavy users of databases.

MARKETING INFORMATION SYSTEM (MIS)

Marketing Information System (MIS) assesses the information needs of different managers and develops the required information from supplied data in time regarding competition, prices, advertising, sales, distribution and market intelligence etc. Most of today’s information systems are computer applications in a sophisticated data-driven age. These enable marketers to be more better informed about their customers, potential customers and competitors. New applications are being developed at a faster pace.

The term ‘Marketing Information Systems’ refers to a programme for managing and organising information gathered by an organisation from various internal and external sources. MIS assesses the information needs of different managers and develops the required information from supplied data in time regarding competition, prices, advertising expenditures, sales, distribution and market intelligence, etc. Information sources for MIS include a company’s internal records regarding marketing performance in terms of sales, and effectiveness and efficiency of marketing actions, marketing databases, marketing intelligence systems, marketing research, and information supplied by independent information suppliers.

Internet marketers

To accomplish their objectives, Internet marketers use many approaches, some of which include:

* Banners: A banner ad is a boxed-in promotional message that often appears at Changing Marketing Practices the top of the web page. If a visitor clicks on the banner ad, she/he is transported to the advertiser’s  home page. This is the most used form of Internet promotion. Banners can be used to create brand recall or recognition. Other names given to banners include side panels, skyscrapers, or verticals. Experienced web visitors ignore banners and many experts believe that their usefulness is very limited and their use seems to be declining.

* Sponsorships: This is another common advertising approach on websites. The advertiser is given a permanent place on host’s website and pays a sponsorship fee to the host. Some sites are targeted at specific segments, such as village is targeted at women. This site has many sponsors who offer special deals and offer advice to target visitors. The use of sponsorship sites is increasing and is more popular than banners.
 

* Pop-Up and Pop-Under: When a visitor accesses a web page, sometimes a window appears either in front or underneath the web page, the visitor is viewing. Pop-ups become visible as sooner the web site is accessed and pop-under becomes visible only when the visitor closes the browser. Pop-ups are usually larger than a banner but smaller than full screen. Website visitors often get irritated with popups and consider them as intrusion.

* Portal Use: Some portals give a prominent place to a company’s offer for a fee. When a visitor follows directed search, the marketer’s name appears prominently at or near the top of the list. For example, when anyone uses Yahoo’s search engine to locate a toy marketer, the name of K-B Toys is displayed prominently.
 

* E-mail: Companies send e-mails to Internet users to visit the company web site. It can be effective only when the target customer is appropriate otherwise it becomes “junk mail.”

* Interstitials: These ads appear on the computer screen while a visitor is waiting for a site’s contents to download. The opinion about the effectiveness of interstitials is divided. Some believe they are irritating and a nuisance than a benefit, but some others believe that the recall rate of interstitials is better than pop-ups.
 

* Push Technologies: Some companies provide screen savers to its website visitors, that allow the firms to directly “hook” the visitor to their websites. This is an approach to “push” a message to the consumers rather than wait for consumers to locate it. These new technologies are known as push technologies or web-casting technologies and open web pages or news updates and may also have video and audio content.

* Sales Promotions: Many companies effectively use sales promotions such as contests and sweepstakes to generate consumer interest. For example, Pepsi Co. used a contest for its Mountain Dew named “Play Street Dash”

E-BUSINESS-SETTING UP WEBSITES

Websites have become much more creative than being simply online catalogues. Now they promote products and try to create brand images, use sales promotions, and even sell products and services.

The number of websites keeps on increasing everyday. What if a company creates a website that nobody visits. It is like opening a show room that no prospective customer comes to. Another situation can be, those who enter the showroom are not the target customers. 

They are not the ones who would buy the available merchandise. The number of websites is numerous and unless a company’s website is visited by the right customers, it amounts to having wasted the money in creating the website. Search engines cannot keep track of all the available websites. 

Visits to websites are deliberate and initiated by the visitors who can be customers, suppliers, or competitors, looking for particular products or information of their interest. In case of mass media marketing communications, such as advertisements, there is no passive exposure. 

What happens in case of traditional mass media marketing communications such as TV, or radio commercials, or outdoor media, people get exposed to them without really looking for such ads. In case of the Internet, the visitor initiative is very important.

The Internet marketers have to make their websites attractive to the right target audience so that, they are motivated to visit their specific websites. Developing and maintaining a website requires considerable effort to attract visitors to the site and encourage them to return again and again requires creativity, effective marketing and regularly updating the site. 

Depending on the product category and the company’s marketing objectives for the Internet, a website can be just a simple source of information about the company and its products or a powerful tool to build brand image, a means to offer samples, or generating sales leads.

In general, the communication objectives may relate to creating awareness, generating customer interest, provide information, help in building a strong brand, a powerful image or stimulate product trial by consumers.

Company Responses and Adjustment

Highly respected companies are adapting to the fresh challenges by:

* Reengineering the business process.

* Outsourcing from more competitive and cost effective sources.

* Attracting customers more effectively through e-commerce

* Benchmarking their activities, performances and cost structure.

* Building global network

* Becoming more market-driven




Marketers are also switching to new concepts such as:

* Customer relationship marketing

* Customer lifetime value

* Customer share

* Target marketing

* Integrated marketing communications

How the Business Environment is Changing?

We are operating in a most dynamic business environment today, one that is changing radically as a result of major radical societal forces, such as technological advances, globalization and deregulation, which have created new behaviours and challenges:

* Customers increasingly expect higher quality and service along with some customisation. They are also showing greater awareness and price-sensitivity in their search for value.

* Brand manufacturers are facing intense competition from domestic and foreign brands and rising promotion costs coupled with shrinking profit margins.

* Giant retailers are growing powerful and killing store-based retailers. They are marketing an ‘experience’ rather than a product assortment.

SOCIETAL MARKETING CONCEPT

As the marketing concept was gaining wide acceptance in business organizations, it was noticed that firms were ignoring their social responsibility while satisfying consumers and achieving their organizational goals. Their activities are often in direct conflict with society’s best interests. 

Thus, a firm may totally satisfy its customers, achieving handsome profits but in the process of doing so, they might also be polluting the air and water in the environment or damaging the cultural environment. As companies came to realize their social responsibility, this factor became one of its primary objectives. 

It was seen that for a company to prosper in the long-run, it needed to satisfy social needs as well as the economic needs of customers. The marketing concept and a company’s social responsibility is compatible if the management strives over the long-run to:

* Satisfy the wants of its product-buying customers, even if that introduced an element of customisation.

* Meet the societal needs of others affected by the firm’s activities.

* Achieve the company’s performance objectives.

The societal marketing concept holds that organization’s task is to determine the needs, wants and interests of target markets and to deliver the desired satisfaction more effectively and efficiently than competitors in a way that preserves or enhances the consumer’s and society’s well-being.

Event Management Firms

Like any other organisation, event management firms are coming up in India. They offer their clients services for organising corporate events. A marketing manager must be aware of event management as a tool of corporate publicity. 

Event management is not like advertising. Cathexis Pivotal, a Bhuvaneshwar based event management firm, differentiates between advertising and event management. In advertising, we do not know what the customers feel about the publicity package and the product at large. But, in event management there is a greater scope for immediate feedback. 

Generally, a marketing firm organises corporate events to build up a corporate image and public goodwill. When a marketing manager does not have expertise in organising a corporate event, he may appoint a free-lancer, temporarily, to organise corporate events.

We now understand that marketing is essentially concerned with exchange and trade. Exchange has existed ever since mankind came into existence. The early process of exchange resulted in the setting up of village markets. 

Later, markets emerged in cities and towns to facilitate trading as a result of industrialisation. The advancement in science and technology, in later days, has manipulated the whole process of exchange and made it a complex system to manage.

Public Relations Consultancy Firms

Independent public relations consultancy firms have come up in recent times. They offer packages for corporate communications. There is an ‘International Public Relations Association’ headquartered in London. 

In India, for example, Ritam Communication, (Kolkata), a private PR consulting agency, offers a total package of solutions for corporate communications. 

Ritam’s clients are beverage giant Pepsi, Air India and many other consumer goods manufacturers.

Direct Marketing

The development of direct marketing is another important feature of modern marketing. Many companies, particularly MNCs, use mail, telephone, fax, e-mail (Internet) to communicate with their target market directly. 

Tele shopping, on-line shopping and digital ATM services are all part of the direct marketing system. Marketers solicit a direct response from target customers through telephone or Internet (on-line shopping). 

Thus, telecommunication tools are used for direct marketing.

Freight Transportation

Moving the products to the consumption point has made marketing a complex system. The marketing manger has to cope with several issues. 

Generally, freight transportation in India is dependent on roads and railways. 

In designing the distribution network of a firm, a marketing manager has to understand the commercial transport environment to minimise the cost of transporting the cargo.