Amity Business School

Marketing Theory and Practices

(MKTG 107)
Prerna Arora
 Amity Business School

Module 1: Introduction to Marketing

• Meaning of marketing Core concepts of marketing

• Marketing Management philosophies, viz., the production
concept, the product concept, selling concept and the
marketing concept
• Internal and External Marketing Environment Analysis
• Introduction to Marketing Information System and Marketing
Research
• Concept of Market Segmentation, Targeting, Positioning.
• Consumer buying decision process
• Introduction to Marketing Mix Elements
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Marketing
The American Marketing
Association offers the
Marketing is a social and following formal definition:
managerial process by Marketing is an
which individuals and organizational function and a
groups obtain what they set of processes for creating,
need and want through communicating and
creating and exchanging delivering value to customers
products and value with and for managing customer
relationships in ways that
others. benefit the organization and
its stake holders.

Philip Kotler defines Marketing may be narrowly

defined as a process by
marketing as ―a social which goods and services
process by which are exchanged and the
individuals and groups values determined in terms
obtain what they need of money prices. That
and want through means marketing includes
creating, offering and all those activities carried
freely exchanging on to transfer the goods
from the manufacturers or
products and services producers to the
of value with others consumers.

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Marketing Concepts
• It is the process of discovering and translating consumer wants into products and
services. It begins with the customer (by finding their needs) and ends with the
customer (by satisfying their needs). The components of marketing concept are as
under:
– a. Satisfaction of Customers: In the modern era, the customer is the focus of the
organization. The organization should aim at producing those goods and services, which
will lead to satisfaction of customers.
– b. Integrated marketing: The functions of production, finance and marketing should be
integrated to satisfy the needs and expectations of customers.
– c. Profitable sales volume: Marketing is successful only when it is capable of maximizing
profitable sales and achieves long-run customer satisfaction.

“Marketing is the performance of business activities that directs the flow of goods
and services from producer to consumer or user”

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Marketing Concept
• The marketing concept holds that the key to achieving organizational goals consists
in determining the needs and wants of target markets and delivering the desired
satisfactions more effectively and efficiently than competitors.
• The emphasis is on selling satisfaction and not merely on the selling a product.

Needs,
Wants and
Demands

Markets Products

Exchange,
Value
Transactions
Satisfaction
and
and Quality
Relationships

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Consumer and Customer

The customer is generally understood to be the person who makes the

decision to purchase a product, and/or who pays for it. In fact, products are
often bought by one person for consumption by another, therefore the
customer and consumer need not be the same person.

For example, colleges must market themselves not only to prospective

students, but also to their parents, careers counsellors, local employers, and
government funding agencies. In these circumstances it can be difficult to
identify on whom an organization‘s marketing effort should be focused.

For many public services, it is society as a whole, and not just the immediate
customer, that benefits from an individual‘s consumption. In the case of health
services, society can benefit from having a fit and healthy population in which
the risk of contracting a contagious disease is minimized.

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Marketing Concept
(A) Needs, Wants and Demands
Consumers are motivated by their desire to satisfy complex needs, and these should be
the starting point for all marketing activity.
Maslow (1943) recognized that, once individuals have satisfied basic physiological
needs, they may be motivated by higher-order social and self- fulfilment needs.

Self-actualisation Needs
(Self-development and Realization)

Esteem Needs
( Self-Esteem, Recognition, Status)

Social Needs
(Sense of Belongingness, Love)

Security Needs
(Security, Protection)

Physiological Needs
(Food, Water, Shelter)

Maslow’s Hierarchy of Needs

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Marketing Concept
Needs: Need refers to something that is deep-rooted in an individual‘s personality. How individuals go
about satisfying that need will be conditioned by the cultural values of the society to which they
belong. In some cultures, the need for self-fulfilment may be satisfied by a religious penance, while
other societies may seek it through a development of their creative talents.

Wants: Wants are culturally conditioned by the society in which an individual lives. Wants
subsequently become effective demand for a product where there is both willingness and an ability to
pay for the product.

Demands: People have almost unlimited wants, but limited resources. They choose products that
produce the most satisfaction for their money. When backed by buying power, wants become
demands. Consumers view products as bundles of benefits and choose those that give then the best
bundle for their money. People choose the product whose benefits add up to the most satisfaction,
given their wants and resources.

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Marketing Concept
(B) Product
• A product is anything that can be offered to satisfy a need or want.
• Products include experiences, persons, places, organizations, information, and
ideas. Thus, the term product includes much more than just physical goods or
services.
• Consumers decide which events to experience, which tourist‘s destinations to visit,
which hotels to stay in, and which restaurants to patronize. To the consumer these
are all products.
• Examples of Products:
Events: Zomaland, Concerts, Food Fests
Tourists Destinations: Dubai (Skydiving), Australia (Nature), Singapore (Universal Studios),
India (Incredible India)
Hotels
Restaurants

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Marketing Concept
(C) Value, Satisfaction and Quality
• For customers, value is represented by the ratio of perceived benefits to price paid.
• Customer perceived value = Benefits deriving from a product/ Cost of acquiring the
product
• Value can be added by better specifying a product offer in accordance with
customers‘ expectations, for example by providing the reassurance of effective
after-sales service.
• Customer satisfaction depends on a product‘s perceived performance in delivering
value relative to a buyer‘s expectations. If the product‘s performance falls short of
the customer‘s expectations, the buyer is dissatisfied. If performance matches
expectations, the buyer is satisfied. If performance exceeds expectations, the buyer
is delighted.

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Marketing Concept
(D) Exchange
• Exchange implies that one party makes some sacrifice to another party in return for
receiving something it values; the other party similarly makes a sacrifice and
receives something that it values.
• In market-based economies there is a presumption that each party can decide
whether or not to enter into an exchange with the other. Each party is also free to
choose between a numbers of alternative potential partners. Exchange usually takes
the form of a product being exchanged for money, although the bartering of goods
and services is still common in some trading systems.
(E) Markets
• The term ‘market’ has traditionally been used to describe a place where buyers and
sellers gather to exchange goods and services

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Marketing vs Selling

Marketing Selling
• Focuses on Customer’s needs. • Focuses on seller’s needs
• Customer enjoys supreme • Product enjoys supreme
importance. importance.
• Converting customer’s needs into • Converting product into cash.
product. • Profits through sales volume.
• Profits through customer • Emphasis is placed on sale of
satisfaction. products already produced.
• Emphasis is given on product • Fragmented approach to selling is
planning and development to practiced.
match products with the market • The principle of caveat emptor (let
• Integrated approach to marketing the buyer beware) is followed.
is practiced.
• The principle of caveat vendor (let
the seller beware) is followed.

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Marketing Philosophies

Product
Concept

Production Marketing
Concept Concept

Societal Selling
Marketing Concept

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Marketing Philosophies
(A) Production Concept
• Production Concept is a concept where goods are produced without taking into
consideration the choices or tastes of the customers.
• It is one of the earliest marketing concepts where goods were just produced on the
belief that they will be sold because consumers need them.
• It is natural that the companies cannot deliver quality products and suffer from
problems arising out of impersonal behaviour with the customers.
• For example
 Coke is widely available throughout the world
 A company manufactures sugar because it knows that in the end consumers
will surely buy sugar.

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Marketing Philosophies
(B) Product Concept
• The product concept proposes that consumers will prefer products that have better
quality, performance and features as opposed to a normal product.
• One of the advantages of product concepts is that marketers do not need to carry
out extensive research into their target audience. Products that a marketer believe
will ̳sell themselves‘ do not need a lot of well planned and specifically driven
marketing campaigns that can save a company a lot of money.
• One problem which has been associated with the product concept is that it might
also lead to marketing myopia (a lack of insight into what a business is doing for
its customers. Organizations invest so much time, energy, and money in what they
currently do that they're often blind to the future.). For Example, Kodak assumed that
consumers wanted photographic film rather than a way to capture and share
memories and at first overlooked the challenge of digital cameras. Thus, companies
need to take innovations and features seriously and provide only those which the
customer needs. The customer needs should be given priority.

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Marketing Philosophies
(C) Selling Concept
• The Selling Concept proposes that customers, be individual or organizations will
not buy enough of the organization‘s products unless they are persuaded to do so
through selling effort.
• The aim is to sell what they make rather than make what the markets wants.
• Such marketing carries high risks. It focuses on creating sales transactions rather
than on building long term, profitable relationships with customers.
• The selling philosophy assumes that a well-trained and motivated sales force can
sell any product. However, soon companies began to realize that it is easier to sell a
product that the customer wants, than to sell a product the customer does not want.
When many companies began to realize this fact, the selling era gave way to the
marketing era of the marketing concept and philosophy.

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Marketing Philosophies
(D) Marketing Concept
• It holds that the key to achieving its organizational goals consists of the company
being more effective than competitors in creating, delivering, and communicating
customer value to its selected target customers.
• With the rise of economy, consumers have become more knowledgeable and
choosier as a result of which the organization cannot concentrate on what it sells
but rather it has to concentrate on what the customer wants to buy.
• The market concept thus relies on three key aspects:
i) What is the target market?
ii) What are the needs, wants and demands of the target market?
iii) How best can we deliver a value proposition?

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Marketing Philosophies
(D) Marketing Concept

Pepsi and Coke – Both of these companies have similar products. However, the value
proposition presented by both is different. These companies thrive on the marketing
concept. Where Pepsi focuses on youngsters, Coke delivers on a holistic approach.
Also, the value proposition by Coke has been better over ages as compared to Pepsi
which shows that coke especially thrives on the marketing concept, i.e. it delivers a
better value proposition as compared to its competitor.
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Marketing Philosophies
(E) Societal Marketing Concept
• This concept holds that the organization‘s task is to determine the needs, wants, and
interests of target markets and to deliver the desired satisfactions more effectively
and efficiently than competitors (this is the original Marketing Concept).
Additionally, it holds that this all must be done in a way that preserves or enhances
the consumer‘s and the society‘s well-being.
• The organization believes in giving back to the society by producing better
products targeted towards society welfare. They see it as affording an opportunity
for companies to enhance their corporate reputation, raise brand awareness,
increase customer loyalty, build sales, and increase press coverage.
• The concept is also referred as :
i) The human concept,
ii) The intelligent consumption concept,
iii) The ecological imperative concept,
iv) Cause- related marketing.

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Marketing Philosophies
• (E) Societal Marketing Concept

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Comparison of Marketing Philosophies

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Marketing Environment
• Marketing environment is the combination of external and internal factors
and forces that affect the company’s ability to establish a relationship and
serve its customers.
• The marketing environment is made up of the internal and external
environment of the business. While the internal environment can be
controlled, the business has less or no control over the external
environment.
(A) Internal Environment
• The internal environment of the business includes all the forces and factors inside the
organisation which affect its marketing operations. These components can be
grouped under the Five Ms of the business, which are:
• Men: The people of the organisation including both skilled and unskilled workers.
• Minutes: Time taken for the processes of the business to complete.
• Machinery: Equipment required by the business to facilitate or complete the
processes. 
• Materials: The factors of production or supplies required by the business to complete
the processes or production.
• Money: Money is the financial resource used to purchase machinery, materials, , and
pay the employees.
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Marketing Environment
• The internal environment is under the control of the marketer and can be
changed with the changing external environment.
• This environment includes the sales department, the marketing department,
the manufacturing unit, the human resource department, etc.
(B) External Environment
• The external environment constitutes factors and forces which are external
to the business and on which the marketer has little or no control. The
external environment is of two types:
• Micro marketing environment
• Macro marketing environment

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Marketing Environment
Micro Environment: It comprises external forces and factors that are directly
related to the business.
•  Suppliers include all the parties which provide resources needed by the
organisation.
• Market intermediaries include parties involved in distributing the product or
service of the organisation.
• Partners are all the separate entities like advertising agencies, market
research organisations, banking and insurance companies, transportation
companies, brokers, etc. which conduct business with the organisation.
• Customers comprise of the target group of the organisation.
• Competitors are the players in the same market who targets similar
customers as that of the organisation.
• Public is made up of any other group that has an actual or potential interest
or affects the company’s ability to serve its customers.

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Marketing Environment

Macro Environment:
Also known as broad environment.
• It constitutes the external factors and forces which affect the industry as a whole but don’t have a
direct effect on the business.
– Demographic Environment
The demographic environment is made up of the people who constitute the market. It is
characterised as the factual investigation and segregation of the population according to
their size, density, location, age, gender, race, and occupation.
– Economic Environment
The economic environment constitutes factors that influence customers’ purchasing
power and spending patterns. These factors include the GDP, GNP, interest rates, inflation,
income distribution, government funding and subsidies, and other major economic
variables.
– Physical Environment
The physical environment includes the natural environment in which the business operates.
This includes the climatic conditions, environmental change, accessibility to water and raw
materials, natural disasters, pollution etc.

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– Technological Environment
The technological environment constitutes innovation, research and development in
technology, technological alternatives, innovation inducements also technological barriers
to smooth operation. Technology is one of the biggest sources of threats and
opportunities for the organisation and it is very dynamic.
– Political-Legal Environment
The political & Legal environment includes laws and government’s policies prevailing in the
country. It also includes other pressure groups and agencies which influence or limit the
working of the industry and/or the business in the society.
– Social-Cultural Environment
The social-cultural aspect of the macro-environment is made up of the lifestyle, values,
culture, prejudice and beliefs of the people. This differs in different regions.

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Marketing Information System

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Components of Marketing Information System

Marketing
Information
System

Internal Marketing Marketing Analytical

Reporting Research Intelligence Marketing
Systems System System System

Internal Reporting Systems: An organization which is working has tremendous amount of information.
The internal records that are of immediate value to marketing decisions are: orders received, stockholdings and
sales invoices. These are but a few of the internal records that can be used by marketing managers, but even this
small set of records is capable of generating a great deal of information.
Marketing Research System: Marketing research is a proactive search for information. In many cases, data is
collected in a purposeful way to address a well-defined problem (or a problem which can be defined and solved
within the course of the study). The other form
of marketing research centres not around a specific marketing problem but is an attempt to continuously monitor
the marketing environment.

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• Marketing Intelligence Systems:

A marketing intelligence system is a set of procedures and data sources used by marketing
managers to shift information from the environment that they can use in their decision
making.
The internal sources to marketing intelligence include company executives, front
desk staff, service staff, purchasing agents, and sales force. The external sources of
marketing intelligence includes suppliers, convention and tourist bureaus , travel
agencies, trade publications, associations, consultants, banks and financial
institutions.

• Analytical Marketing System

Within the MIS there has to be the means of interpreting information in order to give
direction to decision. These models may be computerized or may not. These mathematical,
statistical, econometric and financial models are the analytical subsystem of the MIS.

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Market Research
• Market Research is a process that identifies and defines marketing opportunities
and problems, monitors and evaluates marketing actions and performance, and
communicates the findings and implications to management.
Research helps the marketing manager to:
1. Identify and define marketing problems and opportunities accurately;
2. Understand markets and customers and offer reliable prediction about them;
3. Develop marketing strategies and actions to provide a competitive edge; and refine
and evaluate them;
4. Facilitate efficient expenditure of funds;
5. Monitor marketing performance; and Improve the understanding of marketing as a
process.

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Market Research
The various stages in research process are:
 Stage 1 : Define Problem
The very first and the most important step in research:
–  A problem well-defined is half solved‖
–  Nature of the problem determines the type of study to conduct.
–  Symptoms, for example, declining sales, profit, market share, or customer loyalty are not
problems.
A research problem must be accurately and precisely defined, otherwise the task of designing
a good research difficult. Marketing problems may be difficulty- related or opportunity-
related. For both, the prerequisite of defining the problem is to identify and diagnose it.
Conduct situation analysis. It provides the basic motivation and momentum for further
research.
Stage 2 : Establish Research Objective
If you do not know what you are looking for, you won‘t find it‖. Research objectives are related to
and determined by the problem definition. In establishing research objectives, the researcher must
answer the following questions:
  What specific information should the project provide?
  If more than one type of information will be developed from the study,
which is the most important?
 What are the priorities?
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Market Research
• When specifying research objectives, development of hypotheses, might be very
helpful. When achieved, objectives provide the necessary information to solve the
problem.

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Market Research
• Stage 3 : Develop Research Design
Research Design step involves the development of a research plan for carrying out
the study. There are a number of alternative research designs. The choice will
largely depend on the research purpose.

• Stage 4 : Implement Research Program

Once the research design is finalized it needs to be implemented so that best results
can be derived out of it.

• Stage 5 : Collect and Tabulate Data

Data can be collected through two sources – Primary as well as secondary. Sources
of primary data include – Observation, survey, experiments, and questionnaires.
Sources of secondary data include – various internal reports, government publications,
periodicals and books, commercial data and electronic database.

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Market Research
• Stage 6 : Interpret and Analyse Findings
At this stage the findings of the research are interpreted, and conclusions are drawn
and reported to the management. The management must review the findings and
give their inputs as well. Interpretation is very essential because a research holds no
meaning if the manager accepts the findings and interpretations of the researcher
blindly.
• Stage 7 : Distributing Information
Once the conclusion has been drawn from the findings it is necessary that the
information passes to the relevant departments. This analysis helps the managers to
answer various questions like:
What are the major variables affecting sales and how important is each? If the price is raised,
then what effect will it have on sales?
What should be the target market?
On what basis should the market segmentation be done? Etc.

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Marketing Mix

• Marketing mix refers to the primary elements that must be attended to in order to
properly market a product or service.
• Marketing mix is the combination of seven elements: Product, Place, Price,
Promotion, People, Physical Evidence and Process. They are called the ― “Seven
Ps of the marketing mix”

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Marketing Mix
(A) Product
– Before making a product, the company should focus on what customers want and need
and then accordingly, they should develop a product to meet the need of the potential
customers.
– Let‘s consider, the competitor‘s products offer the same benefits, same quality, and same
price. In such a scenario you should differentiate your product with the following:
• Design
• Technology
• Usefulness
• Convenience
• Quality
• Packaging
• Accessories
• Warranty

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Marketing Mix
(B) Price
– A product is only worth if a customer is prepared to pay for it. Therefore, the companies focus on
various pricing strategies while pricing their products:
 Premium Pricing
This strategy involves using high pricing where there is uniqueness about the product or
service. This approach is used where a substantial competitive advantage exists. Such high
prices are charge for luxuries such as Cruises, Luxury Hotel rooms, Designer products.

· Penetration Pricing
It is the strategy of entering the market with a low initial price to capture greater market share.

· Price Skimming
The practice of ̳price skimming‘ involves charging a relatively high price for a short time where
a new, innovative, or much-improved product is launched into a market. The prices are set high
in order to attract least price sensitive customers to generate high profits.

· Competitive pricing
If your product is sold at the lowest price regarding all your competitors, you are practicing
competitive pricing. Sometimes, competitive pricing is essential. For instance, when the products
are basically the same, this strategy will usually succeed.

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Marketing Mix
(C) Promotion
This is the way in which you communicate to your potential customers about your product. It
includes the various ways of communicating to the customers of what the company has to
offer. It is about communicating the features/ benefits of using a particular product or service.

·  Advertisement: It takes many forms like TV, radio, internet, newspapers, yellow pages,
Leaflets, Posters etc.

•  Sales Promotion: Buy One Get One Free. Others include couponing, money-off
promotions, free accessories (such as free blades with a new razor), and introductory
offers (such as buy digital TV and get free installation) and so on.

  Personal Selling: It is an effective way to manage personal customer relationships. The

salesperson acts on behalf of the organization.

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(D) Place
It refers to the place where the customers can buy the product and how the product reaches
out to that place. This is done through different channels like:
o Retails
o Wholesale
o Internet
o Mail orders
o Direct Sales
(E) People
An essential ingredient to any service provision is the use of appropriate staff and people.
Recruiting the right staff and training them appropriately in the delivery of their service is
essential if the organization wants to obtain a form of competitive advantage. Staff should
have the appropriate interpersonal skills, attitude, and service knowledge to provide the
service that consumers are paying for.
(F) Process
It refers to the methods and processes of providing service which helps the customers get
what they want. Always keep customers informed. This can be done at the store or through
faxes and emails.

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Marketing Mix
(G) Physical Evidence
• This is particularly important in services marketing as it is the only physical item
that a customer will see and so it must reflect the image that the service is trying
to project. It includes some of the following:
  Internet/web pages.
  Brochures.
  Furnishings.
  Signage (such as those on aircraft and vehicles).
  Uniforms.
  Business cards.
  The building itself (such as prestigious offices or scenic headquarters). Example: If you
walk into a restaurant your expectations are of a clean, friendly, hygienic environment which
will want you to visit again.

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Concept of Market Segmentation, Targeting, Positioning

• STP marketing is an acronym for Segmentation, Targeting, and Positioning – a
three-step model that examines your products or services as well as the way you
communicate their benefits to specific customer segments.
• In a nutshell, the STP marketing model means you segment your market, target
select customer segments with marketing campaigns tailored to their preferences
and adjust your positioning according to their desires and expectations.

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Concept of Market Segmentation, Targeting, Positioning

• STP marketing is effective because it focuses on breaking your customer base into
smaller groups, allowing you to develop very specific marketing strategies to 
reach and engage each target audience. 
• In fact, 59% of customers say that personalization influences their shopping
decision and another 44% said that a personalized shopping experience would
influence them to become repeat customers of a brand.
• STP marketing represents a shift from product-focused marketing to customer-
focused marketing. This shift gives businesses a chance to gain a better
understanding of who their ideal customers are and how to reach them. In short, the
more personalized and targeted your marketing efforts, the more successful you
will be.
• Segmentation + Targeting Equals Positioning
This formula clearly illustrates that each segment requires tailored positioning and
marketing mix to ensure its success.

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Market Segmentation
• Market segmentation is a technique you can use to divide your customer base into
subgroups based on shared characteristics, such as age, income, hobbies and
location. The aim of segmentation is to tailor marketing efforts to your ideal
customer profile (ICP), i.e. the customers most likely to buy your product or
service. 
• Market segmentation also helps you to: 
• Enter new markets
• Build products that solve customer pain points
• Streamline sales processes
• Drive more revenue from email marketing
• Drive more revenue from social media marketing
• Increase customer retention
• 4 Key Market Segmentation types:
– Demographic Segmentation
– Psychographic segmentation
– Geographic segmentation
– Behavioural segmentation

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Demographic segmentation
• You can use demographic segmentation to split your audience and create customer
personas based on objective information, such as:
• Age, Gender, Income, Level of education, Religion, Profession/role in a company, Family
structure
Gender : A lot of organizations that sell deodorants for men will often use marketing campaigns that
depict a man using their deodorant and instantaneously becoming irresistible to the women around him.
They do so because most men get a strong sense of gratification when women are attracted to them. These
campaigns want to show men that this deodorant can bring them this gratification, instantly
Family Structure: A lot of jewellery brands target newly engaged couples and will depict serious
relationships within their ad campaigns. This is because jewellery is often purchased by couples who are
about to get married. 
Level of Education: Tech companies that sell laptops have identified that a significant segment of their
target market is college-going students. 
They try to attract this segment by offering promotional offers to college-going students by giving them a
discount on their laptops if they can provide proof of being a student (such as university identification
cards).

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Psychographic Segmentation
• Psychographic segmentation is the process of grouping people together based on similar
personal values, political opinions, aspirations and psychological characteristics. 
For example, you can group customers according to their:
Personality, Hobbies, Social status, Opinions, Life goals, Values and beliefs, Lifestyle
• Because these characteristics are subjective, psychographic is a harder segment to identify –
but it’s also the most valuable.
• Through psychographic segmentation, you can get a deep insight into your customers’ likes,
dislikes, needs, wants and loves. You can then create marketing campaigns that resonate with
their psychographic profile. 
• Examples: A makeup brand has recently learned that there are significant segments of its
customers who believe in sustainable and cruelty-free practices. 
• The brand then adjusts its marketing to directly address that the products are never tested on
animals and that the materials are locally sourced.
A luxury car brand would target only the elitists and not the middle-class of people. This
segmentation type can be helpful for brands that have a niche product/service to offer which
will not be helpful to all social classes. 

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Geographic Segmentation
• Geographic segmentation involves segmenting your audience based on the region they live or
work in. This can be done in any number of ways: grouping customers by the country they
live in, or smaller geographical divisions, from region to city, and right down to postal code.
• There are six factors that pertain to geographic segmentation and can be used to create
customer segments:
Location (country, state, city, ZIP code), Time zone, Climate and season, Cultural preferences,
Language, Population type and density (urban, suburban, exurban or rural)
• Examples:  
– Area: Nike in the US is likely to focus on American football and baseball , while you’re unlikely to
see American football or baseball commercials in Europe – you’ll see product ads for Soccer
(Football in Europe) instead.
– Climate and Season: If you’re planning a trip to Antarctica, warm clothes and boots will be crucial to
keep you comfortable and safe. Therefore, if you’re a winter boots manufacturer like Cool Antarctica,
your product marketing strategy revolves around targeting people who are searching for holidays in
that region.
– Cultural preferences: McDonald’s, the company takes into consideration cultural differences. In
India, McDonald’s doesn’t serve any beef or pork in any form, in any of their outlets. Instead of
ground beef and pork patties, the McDonald’s menu in India features Indian burgers that are 100%
vegetarian.
– Language: Not everyone can, or wants to, read marketing in English, Spanish, or Mandarin. It’s
essential to use languages of targeted areas for labelling, 

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Behavioral Segmentation
• Behavioral segmentation refers to a process in marketing which divides customers into
segments depending on their behavior patterns when interacting with a particular business or
website.
• These segments could include grouping customers by:
• Their attitude toward your product, brand or service; 
• Their use of your product or service, 
• Their overall knowledge of your brand and your brand’s products, 
• Their purchasing tendencies, such as buying on special occasions like birthdays or
holidays only, etc.
• Four Behavioral segments:
– Purchase behavior
– Occasion/ Timing
– Benefits sought
– Customer loyalty

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Behavioral Segmentation
Purchase Behaviour
• Segmenting by purchase behaviour disentangles the varying trends and behaviour patterns
that customers have when making a purchase decision. This form of behavioural segmentation
provides insight into the buying stage that your customer might be in, their role in the
purchasing process, the obstacles they are facing, the incentives they’re most likely to respond
to and much more.
• This is where segmenting by purchase behavior comes in. You can break these behaviours
down into categories depending on:
• How many interactions with your business does a customer need before proceeding to
conversion;
• What search queries a customer used to locate your brand, product or service;
• What questions a customer asks when using a live chat or virtual assistant; etc.
– Knowing this information allows you to respond to your customer’s needs in a relevant
manner. 
• For example, customers who are in the research phase and are likely to leave to compare
prices could be retargeted with a “best price” or “price match” guarantee. Alternatively, a
shopper that is keen on social proof and buys in accordance with popularity trends could be
targeted with a message suggesting that the item is in high demand, and moving fast.

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Behavioral Segmentation
Occasion or timing-based segmentation
• Occasion-based segmentation categorizes customers who are most likely to
interact with your brand or purchase from your website on either specific occasions
or set times.
• Occasion-based purchasing can also occur in a customer’s daily routine. Purchases
like a happy hour round of drinks after work and a caffeinated morning drink are all
types of occasion-based purchases as they are only bought at precise times.
• Grouping customers using this form of segmentation involves monitoring a
customer’s purchasing behavior to establish a pattern so that you preempt the
targeting process.  
• For example, if your store has customers that participate yearly in your
Thanksgiving promotions, but do not buy anything else from you throughout the
year, you can use this information to market to the customer in weeks in advance.

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Behavioral Segmentation
 Benefits sought segmentation
Segmenting by benefits sought refers to dividing your audience based on the unique value
proposition your customer is looking to gain from your product or service.
• Even when purchasing something as mundane as toothpaste, we lean towards different value
propositions: Some may be looking for whitening benefits while others seek comfort to their
sensitive gums. Dividing consumers based on these factors embodies the benefits sought
segmentation.
• Grouping your data by benefits sought helps you narrow down the specifics of what drives
customer purchases, revealing which product feature or service aspect they feel most attuned
to. Divide data by these benefit categories when using this form of behavioural segmentation:
• Quality: What makes your product better than your competitors?
• Usage: How will it benefit your customer when they use it?
• Customer Feedback: Are your customers happy with the product or service, or are there areas for
improvement?  
• USPs: What makes your product unique from other already existing products?
• Additional Benefits: Are there other advantages a customer could receive from purchasing your
products or services?

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Behavioral Segmentation
Segmentation based on customer loyalty
Loyalty-based segmentation measures the level of loyalty a customer has with your
brand, either through a rewards program, number of purchases, or general engagement
with your marketing efforts.

• Using loyalty-based behavioral segmentation helps you to zero in on existing repeat

customers, their needs, behavior patterns, and more. Besides generating repeat
revenue from your business, loyal customers are incredibly useful in terms of
referrals, word of mouth, and feedback.
• Extracting valuable information from this segment can help you optimize future
campaigns, improve your value proposition, strengthen positioning, and more.
• The most common examples of customer loyalty segmentation can be reflected in
the travel industry which regularly promotes frequent flier programs and the 
finance industry who offer rewards for big-spending platinum credit card members.

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Market Segmentation
• Segmentation based on customer journey stage
• A customer’s buying journey develops in four main stages, which make up the
widely known AIDA model. The AIDA model recognizes this process of
deliberation as a sequence of 4 steps: 
1. Attention: The consumer becomes aware of the brand, product, or service. 
2. Interest: The consumer’s curiosity develops into a deeper interest. 
3. Desire: The consumer starts imagining the product in their everyday lives.
4. Action: The consumer is ready to purchase.
• It’s important to note the eCommerce buyer’s journey doesn’t end with the
purchase. After the initial conversion follow Adoption (your customer makes
repeated, regular purchases) and Advocacy (your customer becomes a loyal
supporter of your brand, product, or service, frequently purchasing and actively
promoting you by word of mouth, social proof, etc.).

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Market Segmentation
Segmentation based on engagement
• Customer engagement can be categorized by three levels:
• Occasional: Customers sometimes have contact with your brand, product, or
service but not regularly. 
• Regular: Customers regularly interact with your products or services but fail to use
them to the full extent. 
• Intensive: Your products or services are embedded in your customer’s life, and
they buy from you at any opportunity. 
• Behavioral segmentation based on satisfaction
is the most straightforward of them all. Utilizing customer feedback can help you to
enhance your product or service by understanding which features your customers most
desire, or which could help you edge ahead of competitors.

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Targeting Market
• Your main goal here is to look at the segments you have created before and determine which
of those segments are most likely to generate desired conversions (depending on your
marketing campaign, those can range from product sales to micro conversions like email
signups).
• Your ideal segment is one that is actively growing, has high profitability, and has a low cost of
acquisition:
1. Size: Consider how large your segment is as well as its future growth potential.
2. Profitability: Consider which of your segments are willing to spend the most money on
your product or service. Determine the lifetime value of customers in each segment and
compare.
3. Reachability: Consider how easy or difficult it will be for you to reach each segment
with your marketing efforts. Consider customer acquisition costs (CACs) for each
segment. Higher CAC means lower profitability. 
• There are limitless factors to consider when selecting an audience to target – we’ll get into a
few more later on – so be sure that everything you consider fits with your target customer and
their needs.

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Market Positioning
The process indicates how you differentiate your product/ service from that of your
competitors and then determine which market niche to fill. A company’s marketing
positioning strategy is affected by plenty of variables related to customers’
requirements and motivations, as well as by its competitors’ actions.
There are three positioning factors that can help you gain a competitive edge:
1. Symbolic positioning: Enhance the self-image, belongingness, or even ego of your
customers. The luxury car industry is a great example of this – they serve the same
purpose as any other car but they also boost their customer’s self-esteem and
image.
2. Functional positioning: Solve your customer’s problem and provide them with
genuine benefits.
3. Experiential positioning: Focus on the emotional connection that your customers
have with your product, service, or brand.  

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Market Positioning
• There are three positioning factors that can help you gain a competitive edge:
1. Symbolic positioning: Enhance the self-image, belongingness, or even ego of your
customers. The luxury car industry is a great example of this – they serve the same
purpose as any other car but they also boost their customer’s self-esteem and image.
2. Functional positioning: Solve your customer’s problem and provide them with genuine
benefits.
3. Experiential positioning: Focus on the emotional connection that your customers have
with your product, service, or brand.  

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Consumer buying decision process
• The consumer decision-making process involves five basic steps. This is the process by which
consumers evaluate making a purchasing decision. The 5 steps are problem recognition,
information search, alternatives evaluation, purchase decision and post-purchase evaluation.
1. Problem recognition
• The first step of the consumer decision-making process is recognizing the need for a service or
product. Need recognition, whether prompted internally or externally, results in the same
response: a want. Once consumers recognize a want, they need to gather information to
understand how they can fulfill that want, which leads to step two.
• Since internal stimulus comes from within and includes basic impulses like hunger or a
change in lifestyle, focus your sales and marketing efforts on external stimulus. 
• Develop a comprehensive brand campaign to build brand awareness and recognition––you
want consumers to know you and trust you. Most importantly, you want them to feel like they
have a problem only you can solve.
• Example: Winter is coming. This particular customer has several light jackets, but she’ll need
a heavy-duty winter coat if she’s going to survive the snow and lower temperatures.

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Consumer buying decision process

2. Information search
• When researching their options, consumers again rely on internal and external
factors, as well as past interactions with a product or brand, both positive and
negative. In the information stage, they may browse through options at a physical
location or consult online resources, such as Google or customer reviews.
• Your job as a brand is to give the potential customer access to the information they
want, with the hopes that they decide to purchase your product or service. Create a
funnel and plan out the types of content that people will need. Present yourself as a
trustworthy source of knowledge and information. 
• Another important strategy is word of mouth—since consumers trust each other
more than they do businesses, make sure to include consumer-generated content,
like customer reviews or video testimonials, on your website.
• Example: The customer searches “women’s winter coats” on Google to see what
options are out there. When she sees someone with a cute coat, she asks them where
they bought it and what they think of that brand.

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Consumer buying decision process

3. Alternatives evaluation
• At this point in the consumer decision-making process, prospective buyers have
developed criteria for what they want in a product. Now they weigh their
prospective choices against comparable alternatives.
• Alternatives may present themselves in the form of lower prices, additional product
benefits, product availability, or something as personal as color or style options.
Your marketing material should be geared towards convincing consumers that your
product is superior to other alternatives. Be ready to overcome objections—e.g., in
sales calls, know your competitors so you can answer questions and compare
benefits.
• Example: The customer compares a few brands that she likes. She knows that she
wants a brightly colored coat that will complement the rest of her wardrobe, and
though she would rather spend less money, she also wants to find a coat made from
sustainable materials.

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Consumer buying decision process
Purchase decision
• This is the moment the consumer has been waiting for: the purchase. Once they have gathered
all the facts, including feedback from previous customers, consumers should arrive at a logical
conclusion on the product or service to purchase.
• If you’ve done your job correctly, the consumer will recognize that your product is the best
option and decide to purchase it.
• Example: The customer finds a pink winter coat that’s on sale for 20% off. After confirming
that the brand uses sustainable materials and asking friends for their feedback, she orders the
coat online.
Post-purchase evaluation
• This part of the consumer decision-making process involves reflection from both the consumer and
the seller. As a seller, you should try to gauge the following:
• Did the purchase meet the need the consumer identified?
• Is the customer happy with the purchase?
• How can you continue to engage with this customer?
• Remember, it’s your job to ensure your customer continues to have a positive experience with your
product. Post-purchase engagement could include follow-up emails, discount coupons, and
newsletters to entice the customer to make an additional purchase. You want to gain life-long
customers, and in an age where anyone can leave an online review, it’s more important than ever to
keep customers happy.

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