RESEARCH REPORT On A STUDY OF AN EFFECTIVE PROMOTIONAL STRATEGY WHICH INFLUENCE CUSTOMER TO PURCHASE A PRODUCT OF GODREJ

Submitted for the partial fulfillment of the requirement for the award of degree of Master of Business Administration (MBA) 2011-13 Submitted by: Submitted to: MAHENDRA PRATAP TYAGI Roll no.-1153870023 MBA 4th Semester Ms. SURYA BATHAM (Lecturer)

AKS Management College Devrai Kala, Bakshi-ka-Talab, Lucknow.

Affiliated to Gautam Buddh Technical University Lucknow (College code-538)

To whomsoever it may Concern

This is to certify that Mr. Mahendra Pratap Tyagi Roll. No -1153870023 is a recognized student of MBA 4th semester, Batch 2011- 2013 in our institute. He has done research report on the topic, A STUDY OF AN EFFECTIVE PROMOTIONAL STRATEGY WHICH INFLUENCE CUSTOMER TO PURCHASE A PRODUCT OF GODREJ for the partial fulfillment of the requirement of Gautam Buddha Technical University (formerly known as Uttar Pradesh Technical University), Sitapur Road, Lucknow for the award of degree of Master of Business Administration (MBA).

Dr. S.S. Rathore Director AKS Management College

Ms. Surya Batham Interna l Guide (Faculty)

ACKNOWLEDGEMENT

Sincere gratitude to my internal guide Ms.Surya Batham for guiding me throughout the course of the project.

I am also thankful to the Director, and all the faculty members of A K S Management college for their valuable support throughout the project.

I extend my sincere thanks to all customers of Godrej Appliances who helped me for my project.

Last but not the least, I would like to thank my family members and friends whose unbounded support facilitated the successful completion of the project.

PREFACE

TABLE OF CONTENT

EXECUTIVE SUMMARY In this research the benchmark practices has been assessed. In this era of competition it is high time to realize for an organization regarding what is its strength, its core competencies, what is to be benchmarked, how it should be benchmarked and with whom. This project studies the consumer buying behavior of Godrej Home appliances through Direct sales with reference to existing customers. The project gives a detail description of consumer buying behavior process. It covers the application of designing and managing the sales force strategy of the company in order to manage, shape and motivate the customers as well as employees. Certain policies followed by the company are jotted as well as certain suggestions have been given. Today the biggest asset of an organization is its pool of human resource. The better is its human resource the more productive the company becomes. So it is highly essential for an organization to identify, train and recruits talented people. Only by selling products to people does not end. Another big deal for the organization is how to retain those customers. The company has to provide good after sales service. But above all it is not just these parameters which retain a customer but other factors like having regular contact, providing them the ambience, the sense of feeling that they are being needed by the organization. So the issues regarding customer retention is discussed. Apart from these, relation building is a matter of immense concern now days. Relation building is referred to as a corporate asset in this study. In this fast moving competitive era and growing population of service providers the major task rather than to create a customer is to retain him. Previously Indian market was weak in providing good after sales service but now a day there is huge competition. This report also includes the analysis of the psychological as well as Demographical analysis which will be very much helpful for a company. This report also says about various marketing and advertising strategies that can be followed by the company in order to grab the prevailing opportunities.

CHAPTER I INTRODUCTION

INTRODUCTION

The Godrej Group is one of the largest players of Home Appliances in India and has always delighted the consumer with relevant technology in a wide range of efficient products. In 1958, Godrej was the First Indian Company to manufacture Refrigerators and has become synonymous with the category. Godrej pioneered the launch of Polyurethane Foam (PUF) which became the new benchmark for the refrigerator industry. In the last 1 year, Godrej has introduced 104 new products across various categories- Refrigerators, Air conditioners, Microwave Ovens, Washing Machines and DVD Players. With new innovative technologies like Silver Shower technology in refrigerators, i-Sense and EM5 in Air conditioners, Steam Microwave Ovens, DAC+ in Washing Machines etc, Godrej is redefining the technology space in Indian Appliances context.

In 1958, Godrej Appliances makes the very first refrigerator in India. Fast forward to today. Eon is bringing you cool new features to meet todays needs. Our addiction to innovation is an old story. We launched PUF (polyurethane foam) technology way back in the 80s. Created 100% CFC free fridges much before green got fashionable. And added colorful doors to these cooling machines. And so on. We continue moving forward. Not just with Refrigerators, also washing Machines, Air Conditioners, Microwave Ovens, DVD Players and Televisions and more. Not to be cheeky here, but we were voted the Most Trusted Brand, Gold award (Readers Digest consumer survey) 4 years in a row by our consumers. And earned the CNBC Consumer Awaaz Award, 3 years in a row. Eon, in the Consumer World Awards, was chosen as Mera Brand of the year, 2008. Next. Godrej Appliances becomes a Super brand. Godrej and Boyce Mfg. Co. Ltd. deals in both the consumer products as well as industrial products. Both have wide ranges of products in it. From appliances to personal care in consumer products while the storage solution, machine tool service, agro products,

chemicals etc comes in the industrial products category. Recently it has announced to increase the number of retail stores from 49 to 100 by 2010. Investment of Rs 20 crore will be made to make it a success. Godrej Appliances Ltd. brings out refrigerators, washing machines, air-conditioners, microwave ovens, and DVD players in India with the latest technology. Every consumer good comes with price range and variety to serve absolutely all the strata of the society. Fully sensing the need and demand of the market of IT in India Godrej InfoTech Limited provides IT solutions like the development of software, e solutions development, customization & ERP. It also provides database outsourcing and consultancy services Godrej Industries ltd. manufactures Oleo chemicals. Over two dozens of industries in India use the chemicals made by Godrej industries. They all in all make more than hundred of such chemicals. Besides this it also produces edible oil, vanaspati and bakery fats, and deals in medical diagnostic and real estate. Product has quality that of international standard and yet at competitive price. Company's' profile shows that Godrej Properties ltd a real estate arm of Godrej Group is doing wonders in residential sector in India. it is coming up with property project in Bangalore. Our Divisions:

Appliances Construction Furniture (Interio) Locks Engineering Process Equipment Storage Solutions Vending (Prima) Security Solutions

AV Solutions (Prima) Electricals & Electronics Lawkim Motors Material Handling Precision Precision Systems

Tooling

Godrej India has seen both the post and pre independence days as it got established in 1897. It started its business with locks manufacturing and at present it a provider of wide variety of services in India, like doors, furniture, locks, software development, beverages, chocolates, chemicals for industries, home appliances etc. The website on different associates gives full details on the dealers, their locations and maintenance tips on each product manufactured by Godrej India. Godrej has captured a consumer market in India at large scale with its brands like Soaps, Toiletries, Hair Care, Household Care, Fabric Care, Baby Care and Keyline Brands. Godrej Appliances - The largest engineering and consumer products company in the country having varied interests from engineering to personal care products. We are also one of the most respected corporate houses known for our philanthropy and initiation of labour reforms besides being recognized for our values of fair, transparent and ethical dealings. Godrej's appliance division aims to achieve a growth of 40 per cent in turnover this year. The division posted 30 per cent growth in turnover at Rs 1,700 crore in 2009-10, Mr Menezes said, the C.O.O of the Appliances division.. Appliance division accounts for almost one-third of Godrej and Boyce's total turnover. Godrej Appliances, one of the largest manufacturers of Home Appliances in India, has won the National Energy Conservation Awards 2009 a prestigious award from the Ministry of Power, Government of India for its Eco-friendly Refrigerators. The Government of India has recognized the eco-friendly technology and manufacturing processes as well as the ecofriendly innovation in design adopted by Godrej Appliances making it a clear winner for this award.

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Bags The National Energy Conservation Award 2009, The Super Brand Award 2010 for Eco-Friendly Refrigerators & The NSCI Safety Awards for its Mohali Plant. Godrej Refrigerators has been repeatedly awarded Consumer Superbrand in its category the first time being in 2004, followed by 2009. This also makes Godrej Appliances the only Indian brand in the consumer durables space to have won this award. 25% of the shares of the Godrej Groups holding company are held in a trust that invests back in the environment, healthcare and education. Which means business is not just about big bucks but keeping our land green, our folks happy and healthy and our kids smart. In 1920, our founder Ardeshir Godrej gave a donation of Rs. 3 lakhs to the Tilak Swaraj Fund then considered a princely sum - for liquor prohibition and upliftment of the downtrodden. His gesture of philanthropy grew into the Godrej corporate policy. Giving back turned into our way of saying thank you to the 400 million Indians who are Godrej loyalists.

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Corporate Profile Company Profile The Company celebrated its centenary in 1997. In 1897 a young man named Ardeshir Godrej gave up law and turned to lock-making. Ardeshir went on to make safes and security equipment of the highest order, and then stunned the world by creating toilet soap from vegetable oil. His brother Pirojsha Godrej carried Ardeshir's dream forward, leading Godrej towards becoming a vibrant, multi-business enterprise. Pirojsha laid the foundation for the sprawling industrial garden township (ISO 14001- certified) now called Pirojshanagar in the suburbs of Mumbai. Godrej touches the lives of millions of Indians every day. To them, it is a symbol of enduring ideals in a changing world. The Godrej Group touches the lives of 400 million Indians who use at least one of our products every single day. Our commitment to quality, attention to detail and customer centricity has helped us earn the trust of generations of Indians.

Mission, vision & Motto Vision Of godrej: Godrej in Every Home and Work place. Mission sTATEMENT: Godrej Mission is to operate in existing and new businesses which capitalize on the Godrej brand and corporate image of reliability and integrity. Godrej objective is to delight its customer both in India and abroad.

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Godrej shall strive for excellence by nurturing, developing and empowering its employees and suppliers. Godrej entourages an open atmosphere, conducive to learning and team work

Accelerate the growth of Indian household insecticides market.

To globalize the business rapidly.

Enriching Quality of Life Everyday Everywhere.

Motto of godrej: We care the quality of your life.

Values of Godrej:Commitment to Quality Customer Orientation Dedication & Commitment Discipline Honesty & Integrity Learning Organization Openness & Transparency

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Respect/Care & Concern for People Teamwork and Trust The Evolution Of Godrej 1897 Establishment Of The Company 1918 Launched the first soap in the world to be made without animal fat. 1923 We maid our first Almirah. 1932 Incorporated with limited liability. 1951 It made ballot boxes for free Indias first election. 1958 We made our first refrigerator. 1978 Our employee count stood at 12000. Today its 20,000 and growing. 1986 Godrej launched its Hair Dye. 1995 We discovered that Godrej Washing machine had hatke use to whip up lassi. 1997 We turned to 100. 2008 We helped develop the launch vehicle and lunar orbiter for Chandrayaan-1, indias f first unmanned mission to the moon. Its our pride.

2008 Godrej logo colour changed.

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Incorporation Established in 1897, the Company was incorporated with limited liability on March 3, 1932, under the Indian Companies Act, 1913. Sales-Subsidiaries and Affiliates The Company is one of the largest privately-held diversified industrial corporations in India. The combined Sales (including Excise Duty) of the Company, its subsidiaries and affiliates, during the Fiscal Year ended March 31, 2008, were about Rs. 90,000 million (US$ 1,900 million).

Jamshyd Godrej: Jamshyd Godrej is the Chairman of the Board of Godrej & Boyce Mfg. Co. Ltd. He graduated in Mechanical Engineering from Illinois Institute of Technology, USA. He is the Chairman of Aspen Institute India. Adi Godrej: Adi Godrej is the Chairman of the Godrej Group and several entities that are part of one of Indias leading conglomerates. These include Indian companies like Godrej Industries, Godrej Consumer Products, Godrej Properties as well as international companies such as Keyline Brands U.K and Rapidol South Africa. Nadir Godrej: Nadir Godrej is the Managing Director of Godrej Industries and

Chairman, Godrej Agrovet. He is also a Director of numerous firms including Godrej & Boyce, Godrej Foods, Godrej Consumer Products and Godrej Sara Lee. Other Executive Directors: P. D. Lam, K. A. Palia, V. M. Crishna, A. G. Verma Non-executive Directors: Hathikhanavala,F. P. Sarkari, A. B. Godrej, N. B. Godrej, K. N. Petigara, B. A. P. P. Shah, A. Ramachandran

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Shareholders Since its inception, the Company is controlled by the GODREJ family based in Mumbai, India. Its shares are not listed on any Stock Exchange. About one-fourth of the Company's share capital is held by Pirojsha Godrej Foundation, a public charitable trust.

Godrej & Boyce Mfg.Co.Ltd Branches (Sales and Service) and Retail Showrooms The Company has a network of: 38 Company-owned Showrooms more than 2,200 Wholesale Dealers, and more than 18,000 Retail Outlets. The

Company has Representative Offices in Sharjah (UAE), Nairobi (Kenya), Colombo (Sri Lanka) and Riyadh (Saudi Arabia). Hierarchy: Personnel department comprises of four employees- one deputy and 3 seniors under him. Over all there are 19 plants make all different products like security systems, locks, doors, etc. Each of this plant is considered as a separate profit making center. Profits made by each of the plants are accounted for separately in its Annual report also.

Management: Different levels of management are as follows: A - Base level - In this level, new-entrants are trained about the various levels of the department. O - Operation P - Promotion of product T - Technical
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- Sales

E - This level consists of owners and M.D. Each of this level consists of three sub-sections, through which each employee has to pass to reach a higher level. An employee, before moving into the next level, he has to be in each sub section for at least two years. GODREJ DIRECT It is a division of GODREJ appliance, where companys representatives go directly to the customer and fulfill the requirement. It is a initiative towards CRM. It has started its operation in 2002 by selling contracts and AMCs. But looking at the need of the customer and after understanding the customer in a better way we have started selling appliances from 2005.Presently it has its operation in 15 branches. NCR,Mumbai,Chennei,Kolkata,Lucknow,Jaipur,Hyderabad,Pune,Bangalore,Ahemedaba d,Bhopal,Chandigarh,Cochin,Coimbatore and Bhubaneswar. National head is Mr.Rajinder Kool Zonal manager (ME)-Mr.Bharat Bhusan Agarwal Zonal Manager (SW)-Mr.Sumit Malik

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GODREJ DIRECT, BHUBANESWAR Started operation in May 2008 It has 2 division telecalling and D2D.in D2D 10 executives are there who put up camps in different location and visit to the homes in that locality. The average knocks per executive is 35 to 40.in telecalling 4 executives are there who call to the existing customer and generate the leads and the sales executive follow up the leads.

Refrigerator

A.C

Washing Machine Microwave Oven

Inverter

Frost Free Direct Cool Combination

Split A.c Window A.c

Fully automatic

Convection Grill &

Semi automatic

Solo Steam From locks to aerospace, furniture to construction, appliances to custom-built critical equipment, and several more, Godrej & Boyce has a diverse range of products and services.

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Major Competitors of Godrej Appliances

1) LG

2) Samsung

3) Whirlpool

4) Videocon Godrej believe in Brighter Living Brighter Living = Progression + Expression + Empathy + Experience

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CHAPTER II LITERATURE REVIEW

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LITERATURE REVIEW

MARKETING Marketing is the process by which companies determine what products or services may be of interest to customers, and the strategy to use in sales, communications and business development. It is an integrated process through which companies create value for customers and build strong customer relationships in order to capture value from customers in return. Marketing is used to identify the customer, to keep the customer, and to satisfy the customer. With the customer as the focus of its activities, it can be concluded that marketing management is one of the major components of business management. The evolution of marketing was caused due to mature markets and overcapacities in the last 2-3 centuries. Companies then shifted the focus from production to the customer in order to stay profitable. The term marketing concept holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions. It proposes that in order to satisfy its organizational objectives, an organization should anticipate the needs and wants of consumers and satisfy these more effectively than competitors. DifferentType Print Advertising Print campaigns include newspaper and magazine advertising. This type of marketing can carry a variety of messages (either brand oriented or direct response) and can be focused on a particular audience based on who reads the publication in question. So for example, if you want to reach people who live in San Diego, put your marketing efforts into the San Diego daily newspapers. If you are selling a new line of cat collars, look into Cat Fancy or other feline-related periodicals. Print advertising must be prepared well in of Marketing.

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advance to meet the deadlines of the publications especially with monthly magazines, since they are printed months before their release date. Direct Mail Although many believe Direct Mail marketing has seen its best days already passed; there is still some life in this powerful, traditional form of advertising. Direct Mail refers to postcards, brochures and flyers that are sent through the mail and generally contain a direct response call-to-action. Using direct mail means having to purchase some necessities for the campaign, including printing materials, postage and the address lists of the demographic you wish to target. TV and Radio

Among the most high profile campaigns in the industry, television and radio advertising offer the opportunity to reach the largest number of people in the shortest time frame. Among the disadvantages of these marketing efforts are the potentially high cost and the inability to truly target your demographic with precise accuracy. However, the prestige associated with television advertising can elevate a business in a way no other marketing format can.

Online

Marketing

The rising star in the world of marketing is online. The web continues to explode and along with it so do the advertising opportunities. Billions and billions more advertising dollars are spent every year online, as business try to find ways to tap into the Internet user. The most common types of Online Marketing include:

Pay Per Click bidding on search terms and having the business ads appear when the relevant keywords are searched for in Google and Yahoo!

Banner Advertising creating a graphic advertisement and placing it on relevant

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websites. The ad then takes customers directly to the advertisers website. Email Marketing Using lists of email addresses to deliver content and promotional offers to potential customers.

Organic Search Using search engine optimization (SEO) to rank high on Google and Yahoo! in your given area of business. This is achieved by manipulating the copy on a website and in the HTML code that forms the backbone of the web pages.

It is worth nothing that many businesses are abandoning the more traditional, print forms of marketing in favor of reaching out to the online world. As print and direct mail see their numbers decline, more and more businesses are choosing the cost effective, highly targeted marketing options found online.

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Consumer Behavior and Segmentation, Targeting & Positioning Segmentation, targeting, and positioning together comprise a three stage process. We first (1) determine which kinds of customers exist, then (2) select which ones we are best off trying to serve and, finally, (3) implement our segmentation by optimizing our products/services for that segment and communicating that we have made the choice to distinguish ourselves that way.

Segmentation involves finding out what kinds of consumers with different needs exist. In the auto market, for example, some consumers demand speed and performance, while others are much more concerned about roominess and safety. In general, it holds true that You cant be all things to all people, and experience has demonstrated that firms that specialize in meeting the needs of one group of consumers over another tend to be more profitable. Generically, there are three approaches to marketing. In the undifferentiated strategy, all consumers are treated as the same, with firms not making any specific efforts to satisfy particular groups. This may work when the product is a standard one where one competitor really cant offer much that another one cant. Usually, this is the case only
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for commodities. In the concentratedstrategy, one firm chooses to focus on one of several segments that exist while leaving other segments to competitors. For example, Southwest Airlines focuses on price sensitive consumers who will forego meals and assigned seating for low prices. In contrast, most airlines follow

the differentiated strategy: They offer high priced tickets to those who are inflexible in that they cannot tell in advance when they need to fly and find it impractical to stay over a Saturday. These travelersusually business travelerspay high fares but can only fill the planes up partially. The same airlines then sell some of the remaining seats to more price sensitive customers who can buy two weeks in advance and stay over. Note that segmentation calls for some tough choices. There may be a large number of variables that can be used to differentiate consumers of a given product category; yet, in practice, it becomes impossibly cumbersome to work with more than a few at a time. Thus, we need to determine which variables will be most useful in distinguishing different groups of consumers. We might thus decide, for example, that the variables that are most relevant in separating different kinds of soft drink consumers are (1) preference for taste vs. low calories, (2) preference for Cola vs. non-cola taste, (3) price sensitivity willingness to pay for brand names; and (4) heavy vs. light consumers. We now put these variables together to arrive at various combinations. Several different kinds of variables can be used for segmentation. Demographic variables essentially refer to personal statistics such as income, gender, education, location (rural vs. urban, East vs. West), ethnicity, and family size. Campbells soup, for instance, has found that Western U.S. consumers on the average prefer spicier soupsthus, you get a different product in the same cans at the East and West coasts. Facing flat sales of guns in the traditional male dominated market, a manufacturer came out with the Lady Remmington, a more compact, handier gun more attractive to women. Taking this a step farther, it is also possible to segment on lifestyle and values. Some consumers want to be seen as similar to others, while a different segment wants to stand apart from the crowd.

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Another basis for segmentation is behavior. Some consumers are brand loyali.e., they tend to stick with their preferred brands even when a competing one is on sale. Some consumers are heavy users while others are light users. For example, research conducted by the wine industry shows that some 80% of the product is consumed by 20% of the consumerspresumably a rather intoxicated group. One can also segment on benefits sought, essentially bypassing demographic explanatory variables. Some consumers, for example, like scented soap (a segment likely to be attracted to brands such as Irish Spring), while others prefer the clean feeling of unscented soap (the Ivory segment). Some consumers use toothpaste primarily to promote oral health, while another segment is more interested in breath freshening. In the next step, we decide to target one or more segments. Our choice should generally depend on several factors. First, how well are existing segments served

by other manufacturers? It will be more difficult to appeal to a segment that is already well served than to one whose needs are not currently being served well. Secondly, how large is the segment, and how can we expect it to grow? (Note that a downside to a large, rapidly growing segment is that it tends to attract competition). Thirdly, do we have strengths as a company that will help us appeal particularly to one group of consumers? Firms may already have an established reputation. While McDonalds has a great reputation for fast, consistent quality, family friendly food, it would be difficult to convince consumers that McDonalds now offers gourmet food. Thus, McDs would probably be better off targeting families in search of consistent quality food in nice, clean restaurants. Positioning involves implementing our targeting. For example, Apple Computer has chosen to position itself as a maker of user-friendly computers. Thus, Apple has done a lot through its advertising to promote itself, through its unintimidating icons, as a computer for non-geeks. The Visual C software programming language, in contrast, is aimed a techies.

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Michael Treacy and Fred Wiersema suggested in their 1993 book The Discipline of Market Leaders that most successful firms fall into one of three categories: Operationally excellent firms, which maintain a strong competitive advantage by maintaining exceptional efficiency, thus enabling the firm to provide reliable service to the customer at a significantly lower cost than those of less well organized and well run competitors. The emphasis here is mostly on low cost, subject to reliable performance, and less value is put on customizing the offering for the specific customer. Wal-Mart is an example of this discipline. Elaborate logistical designs allow goods to be moved at the lowest cost, with extensive systems predicting when specific quantities of supplies will be needed. Customer intimate firms, which excel in serving the specific needs of the individual customer well. There is less emphasis on efficiency, which is sacrificed for providing more precisely what is wanted by the customer. Reliability is also stressed. Nordstroms and IBM are examples of this discipline.

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Technologically excellent firms, which produce the most advanced products currently available with the latest technology, constantly maintaining leadership in innovation. These firms, because they work with costly technology that need constant refinement, cannot be as efficient as the operationally excellent firms and often cannot adapt their products as well to the needs of the individual customer. Intel is an example of this discipline. Treacy and Wiersema suggest that in addition to excelling on one of the three value dimensions, firms must meet acceptable levels on the other two. Wal-Mart, for example, does maintain some level of customer service. Nordstroms and Intel both must meet some standards of cost effectiveness. The emphasis, beyond meeting the minimum required level in the two other dimensions, is on the dimension of strength. Repositioning involves an attempt to change consumer perceptions of a brand, usually because the existing position that the brand holds has become less attractive. Sears, for example, attempted to reposition itself from a place that offered great sales but unattractive prices the rest of the time to a store that consistently offered everyday low prices. Repositioning in practice is very difficult to accomplish. A great deal of money is often needed for advertising and other promotional efforts, and in many cases, the repositioning fails. To effectively attempt repositioning, it is important to understand how ones brand and those of competitors are perceived. One approach to identifying consumer product perceptions is multidimensional scaling. Here, we identify how products are perceived on two or more dimensions, allowing us to plot brands against each other. It may then be possible to attempt to move ones brand in a more desirable direction by selectively promoting certain points. There are two main approaches to multi-dimensional scaling. In the prior approach, market researchers identify dimensions of interest and then ask consumers about their perceptions on each dimension for each brand. This is useful when (1) the market researcher knows which dimensions are of interest and (2) the customers perception on each dimension is relatively clear (as opposed to being made up on the spot to be able to give the researcher a desired answer). In the similarity

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rating approach, respondents are not asked about their perceptions of brands on any specific dimensions. Instead, subjects are asked to rate the extent of similarity of different pairs of products (e.g., How similar, on a scale of 1-7, is Snickers to Kitkat, and how similar is Toblerone to Three Musketeers?) Using a computer algorithms, the computer then identifies positions of each brand on a map of a given number of dimensions. The computer does not reveal what each dimension means that must be left to human interpretation based on what the variations in each dimension appears to reveal. This second method is more useful when no specific product dimensions have been identified as being of particular interest or when it is not clear what the variables of difference are for the product category. Diffusion of Innovation Products tend to go through a life cycle. Initially, a product is introduced. Since the product is not well known and is usually expensive (e.g., as microwave ovens were in the late 1970s), sales are usually limited. Eventually, however, many products reach a growth phasesales increase dramatically. More firms enter with their models of the product. Frequently, unfortunately, the product will reach a maturity stage where little growth will be seen. For example, in the United States, almost every household has at least one color TV set. Some products may also reach a decline stage, usually because the product category is being replaced by something better. For example, typewriters experienced declining sales as more consumers switched to computers or other word processing equipment. The product life cycle is tied to the phenomenon of diffusion of innovation. When a new product comes out, it is likely to first be adopted by consumers who are more innovative than othersthey are willing to pay a premium price for the new product and take a risk on unproven technology. It is important to be on the good side of innovators since many other later adopters will tend to rely for advice on the innovators who are thought to be more knowledgeable about new products for advice.

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At later phases of the PLC, the firm may need to modify its market strategy. For example, facing a saturated market for baking soda in its traditional use, Arm Hammer launched a major campaign to get consumers to use the product to deodorize refrigerators. Deodorizing powders to be used before vacuuming were also created.

It is sometimes useful to think of products as being either new or existing. Many firms today rely increasingly on new products for a large part of their sales. New products can be new in several ways. They can be new to the marketnoone else ever made a product like this before. For example, Chrysler invented the minivan. Products can also be new to the firmanother firm invented the product, but the firm is now making its own version. For example, IBM did not invent the personal computer, but entered after other firms showed the market to have a high potential. Products can be new to the segmente.g., cellular phones and pagers were first aimed at physicians and other price-insensitive segments. Later, firms decided to target the more price-sensitive mass market. A product can be new for legal purposes. Because consumers tend to be attracted to new and improved products, the Federal Trade Commission (FTC) only allows firms to put that label on reformulated products for six months after a significant change has been made. The diffusion of innovation refers to the tendency of new products, practices, or ideas to spread among people. Usually, when new products or ideas come about, they are only adopted by a small group of people initially; later, many innovations spread to other people.

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The bell shaped curve frequently illustrates the rate of adoption of a new product. Cumulative adoptions are reflected by the S-shaped curve. Thesaturation point is the maximum proportion of consumers likely to adopt a product.

In the case of refrigerators in the U.S., the saturation level is nearly one hundred percent of households; it well below that for video games that, even when spread out to a large part of the population, will be of interest to far from everyone. Several specific product categories have case histories that illustrate important issues in adoption. Until some time in the 1800s, few physicians bothered to scrub prior to surgery, even though new scientific theories predicted that small microbes not visible to the naked eye could cause infection. Younger and more progressive physicians began scrubbing early on, but they lacked the stature to make their older colleagues follow. ATM cards spread relatively quickly. Since the cards were used in public, others who did not yet hold the cards could see how convenient they were. Although some people

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were concerned about security, the convenience factors seemed to be a decisive factor in the tug-of-war for and against adoption. The case of credit cards was a bit more complicated and involved a chicken-and-egg paradox. Accepting credit cards was not a particularly attractive option for retailers until they were carried by a large enough number of consumers. Consumers, in contrast, were not particularly interested in cards that were not accepted by a large number of retailers. Thus, it was necessary to jump start the process, signing up large corporate accounts, under favorable terms, early in the cycle, after which the cards became worthwhile for retailers to accept. Rap music initially spread quickly among urban youths in large part because of the low costs of recording. Later, rap music became popular among a very different segment, suburban youths, because of its apparently authentic depiction of an exotic urban lifestyle. Hybrid corn was adopted only slowly among many farmers. Although hybrid corn provided yields of about 20% more than traditional corn, many farmers had difficulty believing that this smaller seed could provide a superior harvest. They were usually reluctant to try it because a failed harvest could have serious economic consequences, including a possible loss of the farm. Agricultural extension agents then sought out the most progressive farmers to try hybrid corn, also aiming for farmers who were most respected and most likely to be imitated by others. Few farmers switched to hybrid corn outright from year to year. Instead, many started out with a fraction of their land, and gradually switched to 100% hybrid corn when this innovation had proven itself useful. Several forces often work against innovation. One is risk, which can be either social or financial. For example, early buyers of the CD player risked that few CDs would be recorded before the CD player went the way of the 8 track player. Another risk is being perceived by others as being weird for trying a fringe product or idea. For example, Barbara Mandrell sings the song I Was Country When Country Wasnt Cool. Other sources of resistance include the initial effort needed to learn to use new products (e.g., it

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takes time to learn to meditate or to learn how to use a computer) and concerns about compatibility with the existing culture or technology. For example, birth control is incompatible with strong religious influences in countries heavily influenced by Islam or Catholicism, and a computer database is incompatible with a large, established card file. Innovations come in different degrees. A continuous innovation includes slight

improvements over time. Very little usually changes from year to year in automobiles, and even automobiles of the 1990s are driven much the same way that automobiles of the 1950 were driven. A dynamically continuousinnovation involves some change in technology, although the product is used much the same way that its predecessors were usede.g., jet vs. propeller aircraft. A discontinous innovation involves a product that fundamentally changes the way that things are donee.g., the fax and photocopiers. In general, discontinuous innovations are more difficult to market since greater changes are required in the way things are done, but the rewards are also often significant. Several factors influence the speed with which an innovation spreads. One issue is relative advantage (i.e., the ratio of risk or cost to benefits). Some products, such as cellular phones, fax machines, and ATM cards, have a strong relative advantage. Other products, such as automobile satellite navigation systems, entail some advantages, but the cost ratio is high. Lower priced products often spread more quickly, and the extent to which the product istrialable (farmers did not have to plant all their land with hybrid corn at once, while one usually has to buy a cellular phone to try it out) influence the speed of diffusion. Finally, the extent of switching difficulties influences speedmany offices were slow to adopt computers because users had to learn how to use them. Some cultures tend to adopt new products more quickly than others, based on several factors: Modernity: The extent to which the culture is receptive to new things. In some countries, such as Britain and Saudi Arabia, tradition is greatly valuedthus, new products often dont fare too well. The United States, in contrast, tends to value progress.

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Homophily: The more similar to each other that members of a culture are, the more likely an innovation is to spreadpeople are more likely to imitate similar than different models. The two most rapidly adopting countries in the World are the U.S. and Japan. While the U.S. interestingly scores very low, Japan scores high. Physical distance: The greater the distance between people, the less likely innovation is to spread. Opinion leadership: The more opinion leaders are valued and respected, the more likely an innovation is to spread. The style of opinion leaders moderates this influence, however. In less innovative countries, opinion leaders tend to be more conservative, i.e., to reflect the local norms of resistance. It should be noted that innovation is not always an unqualifiedly good thing. Some innovations, such as infant formula adopted in developing countries, may do more harm than good. Individuals may also become dependent on the innovations. For example, travel agents who get used to booking online may be unable to process manual reservations. Sometimes innovations are disadopted. For example, many individuals disadopt cellular phones if they find out that they dont end up using them much.

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Buying Behavior A marketing firm must ascertain the nature of the customers buying behavior, if it is to market its product properly. In order to entice and persuade a consumer to buy a product, marketers try to determine the behavioral process of how a given product is purchased. Buying behavior is usually split in two prime strands, whether selling to the consumer, known as business-to-consumer (B2C) or another business, similarly known as businessto-business (B2B). B2C buying behavior This mode of behavior concerns consumers, in the purchase of a given product. As an example, if one pictures a pair of sneakers, the desire for a pair of sneakers would be followed by an information search on available types/brands. This may include perusing media outlets, but most commonly consists of information gathered from family and friends. If the information search is insufficient, the consumer may search for alternative means to satisfy the need/want. In this case, this may be buying leather shoes, sandals, etc. The purchase decision is then made, in which the consumer actually buys the product. Following this stage, a post-purchase evaluation is often conducted, comprising an appraisal of the value/utility brought by the purchase of the sneakers. If the value/utility is high, then a repeat purchase may be bought. This could then develop into consumer loyalty, for the firm producing the pair of sneakers. B2B buying behavior Relates to organizational/industrial buying behavior.B2C and B2B behavior are not exact, as similarities and differences exist. Some of the key differences are listed below: In a straight re-buy, the fourth, fifth and sixth stages are omitted. In a modified re-buy scenario, the fifth and sixth stages are precluded. In a new buy, all aforementioned stages are conducted.

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Consumer Buying Behavior

Possibly the most challenging concept in marketing deals with understanding why buyers do what they do (or dont do). But such knowledge is critical for marketers since having a strong understanding of buyer behavior will help shed light on what is important to the customer and also suggest the important influences on customer decision-making. Using this information, marketers can create marketing programs that they believe will be of interest to customers. As you might guess, factors affecting how customers make decisions are extremely complex. Buyer behavior is deeply rooted in psychology with dashes of sociology thrown in just to make things more interesting. Since every person in the world is different, it is impossible to have simple rules that explain how buying decisions are made. But those who have spent many years analyzing customer activity have presented us with useful guidelines in how someone decides whether or not to make a purchase. In fact, pick up any textbook that examines customer behavior and each seems to approach it from a different angle. The perspective we take is to touch on just the basic concepts that appear to be commonly accepted as influencing customer behavior. We will devote two sections of the Principles of Marketing tutorial to customer behavior. In this section we will examine the buying behavior of consumers (i.e., when people buy for personal reasons) while in section 4 we will examine factors that influence buyers decisions in the business market. This tutorial includes the following topics: 1. Consumer Buying Behavior 2. Types of Purchase Decisions 3. Why Consumers Buy 4. What Influences Purchasing

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5. Internal: Perceptual Filter 6. Internal: Knowledge and Attitude 7. Internal: Personality and Lifestyle 8. Internal: Roles and Motivation 9. External: Culture and Groups 10. External: Situation 11. How Consumers Buy 12. Purchase Decision Steps 1 and 2 13. Purchase Decision Steps 3, 4 and 5

Types of Consumer Purchase Decisions Consumers are faced with purchase decisions nearly every day. But not all decisions are treated the same. Some decisions are more complex than others and thus require more effort by the consumer. Other decisions are fairly routine and require little effort. In general, consumers face four types of purchase decisions: Minor New Purchases these purchases represent something new to a consumer but in the customers mind is not a very important purchase in terms of need, money or other reason (e.g., status within a group). Minor Re-Purchases these are the most routine of all purchases and often the consumer returns to purchase the same product without giving much thought to other product options (i.e., consumer is brand loyalty). Major New Purchases these purchases are the most difficult of all purchases because these are important to the consumer but the consumer has little or no previous experience

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making the purchase. This type of decision often (but not always) requires the consumer to engage in an extensive decision-making process. Major Re-Purchase - these purchase decisions are also important to the customer but the customer feels more confident in making the decision since they have experienced purchasing the product in the past.

For marketers it is important to understand how consumers treat the purchase decisions they face. If a company is targeting customers who feel a purchase decision is difficult (i.e., Major New Purchase), their marketing strategy may vary greatly from a company targeting customers who view the purchase decision as routine. In fact, the same company may face both situations at the same time; for some the product is new, while other customers see the purchase as routine. The implication of buying behavior for marketers is that different buying situations require different marketing efforts Why Consumers Buy As we discussed in Part 1: What is marketing? Customers make purchases in order to satisfy needs. Some of these needs are basic and must be filled by everyone on the planet (e.g., food, shelter) while others are not required for basic survival and vary depending on the person. It probably makes more sense to classify needs that are not a necessity as wants or desires. In fact, in many countries where the standard of living is very high, a large portion of the populations income is spent on wants and desires rather than on basic needs. In this tutorial when we mention the consumer we are referring to the actual buyer, the person spending the money. But is should also be pointed out that the one who does the buying is not necessarily the user of what is bought and that others may be involved in the buying decision in addition to the actual buyer. While the purchasing process in the consumer market is not as complex as the business market, having multiple people involved in a purchase decision is not unusual. For example, in planning for a family

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vacation the mother may make the hotel reservations but others in the family may have input on the hotel choice. Similarly, a father may purchase snacks at the grocery store but his young child may be the one who selected it from the store shelf. So understanding consumer purchase behavior involves not only understanding how decisions are made but also understanding the dynamics that influence purchases. What Influences Purchasing? As we discussed the decision-making process for consumers is anything but straight forward. There are many factors that can affect this process as a person works through the purchase decision. The number of potential influences on consumer behavior is limitless. However, marketers are well served to understand the KEY influences. By doing so they may be in a position to tailor their marketing efforts to take advantages of these influences in a way that will satisfy the consumer and the marketer (remember this is a key part of the definition of marketing).

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For the purposes of this tutorial we will break these influences down into three main categories: Internal, External and Marketing. However, those interested in learning more about customer buying activity may want to consult one or more consumer behavior books where they will find additional methods for explaining consumer buying behavior. For the most part the influences are not mutually exclusive. Instead, they are all interconnected and, as we will see, work together to form who we are and how we behave. For each of the influences that are discussed we will provide a basic description and also suggest its implication to marketers. Bear in mind we only provide a few marketing implications for each influence; clearly there are many more.

INTERNAL INFLUENCES We start our examination of the influences on consumer purchase decisions by first looking inside ourselves to see which are the most important internal factors that affect how we make choices. Perceptual Filter Perception is how we see ourselves and the world we live in. However, what ends up being stored inside us doesnt always get there in a direct manner. Often our mental makeup results from information that has been consciously or unconsciously filtered as we experience it, a process we refer to as a perceptual filter. To us this is our reality, though it does not mean it is an accurate reflection on what is real. Thus, perception is the way we filter stimuli (e.g., someone talking to us, reading a newspaper story) and then make sense out of it.

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Perception has several steps. Exposure sensing a stimuli (e.g. seeing an ad) Attention an effort to recognize the nature of stimuli (e.g. recognizing it is an ad) Awareness assigning meaning to a stimuli (e.g., humorous ad for particular product) Retention adding the meaning to ones internal makeup (i.e., product has fun ads) How these steps are eventually carried out depends on a persons approach to learning. By learning we mean how someone changes what they know, which in turn may affect how they act. There are many theories of learning, a discussion of which is beyond the scope of this tutorial, however, suffice to say that people are likely to learn in different ways. For instance, one person may be able to focus very strongly on a certain advertisement and be able to retain the information after being exposed only one time while another person may need to be exposed to the same advertisement many times before he/she even recognizes what it is. Consumers are also more likely to retain information if a person has a strong interest in the stimuli. If a person is in need of new car they are more likely to pay attention to a new advertisement for a car while someone who does not need a car may need to see the advertisement many times before they recognize the brand of automobile. Marketing Implication: Marketers spend large sums of money in an attempt to get customers to have a positive impression of their products. But clearly the existence of a perceptual filter suggests that getting to this stage is not easy. Exposing consumers to a product can be very challenging considering the amount of competing product messages (ads) that are also trying to accomplish the same objective (i.e., advertising clutter). So marketers must be creative and use various means to deliver their message Once the message reaches consumer it must be interesting enough to capture their attention (e.g., talk about the products benefits). But attending to the message is not enough. For marketers the most critical step is the one that occurs with awareness. Here marketers must continually monitor and

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respond if their message becomes distorted in ways that will negatively shape its meaning. This can often happen due in part to competitive activity (e.g., comparison advertisements). Finally, getting the consumer to give positive meaning to the message they have retained requires the marketer make sure that consumers accurately interpret the facts about the product. Knowledge Knowledge is the sum of all information known by a person. It is the facts of the world as he/she knows it and the depth of knowledge is a function of the breadth of worldly experiences and the strength of an individuals long-term memory. Obviously what exists as knowledge to an individual depends on how an individuals perceptual filter makes sense of the information it is exposed to. Marketing Implications: Marketers may conduct research that will gauge consumers level of knowledge regarding their product. As we will see below, it is likely that other factors influencing consumer behavior are in large part shaped by what is known about a product. Thus, developing methods (e.g., incentives) to encourage consumers to accept more information (or correct information) may affect other influencing factors.

Attitude In simple terms attitude refers to what a person feels or believes about something. Additionally, attitude may be reflected in how an individual acts based on his or her beliefs. Once formed, attitudes can be very difficult to change. Thus, if a consumer has a negative attitude toward a particular issue it will take considerable effort to change what they believe to be true.

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Marketing Implication: Marketers facing consumers who have a negative attitude toward their product must work to identify the key issues shaping a consumers attitude then adjust marketing decisions (e.g., advertising) in an effort to change the attitude. For companies competing against strong rivals to whom loyal consumers exhibit a positive attitude, an important strategy is to work to see why consumers feel positive toward the competitor and then try to meet or beat the competitor on these issues. Alternatively, a company can try to locate customers who feel negatively toward the competitor and then increase awareness among this group Personality An individuals personality relates to perceived personal characteristics that are consistently exhibited, especially when one acts in the presence of others. In most, but not all, cases the behaviors one projects in a situation is similar to the behaviors a person exhibits in another situation. In this way personality is the sum of sensory experiences others get from experiencing a person (i.e., how one talks, reacts). While ones personality is often interpreted by those we interact with, the person has their own vision of their personality, called self concept, which may or may not be the same has how others view us. Marketing Implication: For marketers it is important to know that consumers make purchase decisions to support their self concept. Using research techniques to identify how customers view themselves may give marketers insight into products and promotion options that are not readily apparent. For example, when examining consumers a marketer may initially build marketing strategy around more obvious clues to consumption behavior, such as consumers demographic indicators (e.g., age, occupation, income). However, in -depth research may yield information that shows consumers are purchasing products to fulfill self-concept objectives that have little to do with the demographic category they fall into (e.g., senior citizen may be making purchases that make them feel younger). Appealing to

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the consumers self concept needs could expand the market to which the product is targeted. Lifestyle This influencing factor relates to the way we live through the activities we engage in and interests we express. In simple terms it is what we value out of life. Lifestyle is often determined by how we spend our time and money. Marketing Implication: Products and services are purchased to support consumers lifestyles. Marketers have worked hard researching how consumers in their target markets live their lives since this information is key to developing products, suggesting promotional strategies and even determining how best to distribute products. The fact that lifestyle is so directly tied to marketing activity will be further examined as we discuss developing target market strategies (See Part 5 Targeting Markets). Roles Roles represent the position we feel we hold or others feel we should hold when dealing in a group environment. These positions carry certain responsibilities yet it is important to understand that some of these responsibilities may, in fact, be perceived and not spelled out or even accepted by others. In support of their roles, consumers will make product choices that may vary depending on which role they are assuming. As illustration, a person who is responsible for selecting snack food for an office party his boss will attend may choose higher quality products than he would choose when selecting snacks for his family. Marketing Implication: Advertisers often show how the benefits of their products aid consumers as they perform certain roles. Typically the underlying message of this promotional approach is to suggest

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that using the advertisers product will help raise ones status in the eyes of others while using a competitors product may have a negative effect on status. Motivation Motivation relates to our desire to achieve a certain outcome. Many internal factors we have already discussed can affect a customers desire to achieve a certain outcome but there are others. For instance, when it comes to making purchase decisions customers motivation could be affected by such issues as financial position (e.g., can I afford the purchase?), time constraints (e.g., do I need to make the purchase quickly?), overall value (e.g., am I getting my moneys worth?), and perceived risk (e.g., what happens if I make a bad decision). Marketing Implication: Motivation is also closely tied to the concept of involvement, which relates to how much effort the consumer will exert in making a decision. Highly motivated consumers will want to get mentally and physically involved in the purchase process. Not all products have a high percentage of highly involved customers (e.g., milk) but marketers who market products and services that may lead to high level of consumer involvement should prepare options that will be attractive to this group. For instance, marketers should make it easy for consumers to learn about their product (e.g., information on website, free video preview) and, for some products, allow customers to experience the product (e.g., free trial) before committing to the purchase. EXTERNAL INFLUENCES Consumer purchasing decisions are often affected by factors that are outside of their control but have direct or indirect impact on how we live and what we consume. Culture Culture represents the behavior, beliefs and, in many cases, the way we act learned by interacting or observing other members of society. In this way much of what we do is

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shared behavior, passed along from one member of society to another. Yet culture is a broad concept that, while of interest to marketers, is not nearly as important as understanding what occurs within smaller groups or sub-cultures to which we may also belong. Sub-cultures also have shared values but this occurs within a smaller groups. For instance, sub-cultures exist where groups share similar values in terms of ethnicity, religious beliefs, geographic location, special interests and many others. Marketing Implication: As part of their efforts to convince customers to purchase their products, marketers often use cultural representations, especially in promotional appeals. The objective is to connect to consumers using cultural references that are easily understood and often embraced by the consumer. By doing so the marketer hopes the consumer feels more comfortable with or can relate better to the product since it corresponds with their cultural values. Additionally, smart marketers use strong research efforts in an attempt to identify differences in how sub-culture behaves. These efforts help pave the way for spotting trends within a sub-culture, which the marketer can capitalize on through new marketing tactics (e.g., new products, new sales channels, added value, etc.).

Other Group Membership In addition to cultural influences, consumers belong to many other groups with which they share certain characteristics and which may influence purchase decisions. Often these groups contain opinion leaders or others who have major influence on what the customer purchases. Some of the basic groups we may belong to include: Social Class represents the social standing one has within a society based on such factors as income level, education, occupation Family ones family situation can have a strong effect on how purchase decisions are made

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 Reference groups most consumers simultaneously belong to many other groups with which they associate or, in some cases, feel the need to disassociate.

Marketing Implications: Identifying and understanding the groups consumers belong to is a key strategy for marketers. Doing so helps identify target markets, develop new products, and create appealing marketing promotions to which consumers can relate. In particular, marketers seek to locate group leaders and others to whom members of the group look for advice or direction. These opinion leaders, if well respected by the group, can be used to gain insight into group behavior and if these opinion leaders accept promotional opportunities could act as effective spokespeople for the marketers products. Situation A purchase decision can be strongly affected by the situation in which people find themselves. Not all situations are controllable, in which case a consumer may not follow their normal process for making a purchase decision. For instance, if a person needs a product quickly and a store does not carry the brand they normally purchase, the customer may choose a competitors product. Marketing Implications: Marketers can take advantage of decisions made in uncontrollable situations in at least two ways. First, the marketers can use promotional methods to reinforce a specific selection of products when the consumer is confronted with a particular situation. For example, automotive services can be purchased that promise to service vehicles if the user runs into problems anywhere and at anytime. Second, marketers can use marketing methods that attempt to convince consumers that a situation is less likely to occur if the marketers product is used. This can also be seen with auto products, where marketers explain that using their product will prevent unexpected damage to their vehicles.

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How Consumers Buy So now that we have discussed the factors influencing a consumers decision to purchase, lets examine the process itself. This process is presented in a sequence of 5 steps as shown below. However, whether a consumer will actually carryout each step depends on the type of purchase decision that is faced. For instance, for minor re-purchases the consumer may be quite loyal to the same brand, thus the decision is a routine one (i.e., buy the same product) and little effort is involved in making a purchase decision. In cases of routine, brand loyal purchases consumers may skip several steps in the purchasing process since they know exactly what they want allowing the consumer to move quickly through the steps. But for more complex decisions, such as Major New Purchases, the purchasing process can extend for days, weeks, months or longer. So in presenting these steps marketers should realize that, depending on the circumstances surrounding the purchase, the importance of each step may vary.

1. Need/Want/Desire is recognized In the first step the consumer has determined that for some reason he/she is not satisfied (i.e., consumers perceived actual condition) and wants to improve his/her situation (i.e., consumers perceived desired condition). For instance, internal triggers, such as hunger or thirst, may tell the consumer that food or drink is needed. External factors can also trigger consumers needs. Marketers are particularly good at this through advertising, in store displays and even the intentional use of scent (e.g., perfume counters). At this stage the decision-making process may stall if the consumer is not motivated to continue (see Motivation above). However, if the consumer does have the internal drive to satisfy the need they will continue to the next step.

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2. Search for Information Assuming consumers are motivated to satisfy his or her need, they will next undertake a search for information on possible solutions. The sources used to acquire this information may be as simple as remembering information from past experience (i.e., memory) or the consumer may expend considerable effort to locate information from outside sources (e.g., Internet search, talk with others, etc.). How much effort the consumer directs toward searching depends on such factors as: the importance of satisfying the need, familiarity with available solutions, and the amount of time available to search. To appeal to consumers who are at the search stage, marketers should make efforts to ensure consumers can locate information related to their product. For example, for marketers whose customers rely on the Internet for information gathering, attaining high rankings in search engines has become a critical marketing objective. 3. Evaluate Options Consumers search efforts may result in a set of options from which a choice can be made. It should be noted that there may be two levels to this stage. At level one the consumer may create a set of possible solutions to their needs (i.e., product types) while at level two the consumer may be evaluating particular products (i.e., brands) within each solution. For example, a consumer who needs to replace a television has multiple solutions to choose from such as plasma, LCD and CRT televisions. Within each solution type will be multiple brands from which to choose. Marketers need to understand how consumers evaluate product options and why some products are included while others are not. Most importantly, marketers must determine which criteria consumers are using in their selection of possible options and how each criterion is evaluated. Returning to the television example, marketing tactics will be most effective when the marketer can tailor their efforts by knowing what benefits are most important to consumers when selecting options (e.g., picture quality, brand name, screen size, etc.) and then determine the order of importance of each benefit.

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4. Purchase In many cases the solution chosen by the consumer is the same as the product whose evaluation is the highest. However, this may change when it is actually time to make the purchase. The intended purchase may be altered at the time of purchase for many reasons such as: the product is out-of-stock, a competitor offers an incentive at the pointof-purchase (e.g., store salesperson mentions a competitors offer), the customer lacks the necessary funds (e.g., credit card not working), or members of the consumers reference group take a negative view of the purchase (e.g., friend is critical of purchase). Marketers whose product is most desirable to the consumer must make sure that the transaction goes smoothly. For example, Internet retailers have worked hard to prevent consumers from abandoning online purchase (i.e., online shopping carts) by streamlining the checkout process. For marketers whose product is not the consumers selected product, last chance marketing efforts may be worth exploring, such as offering incentives to store personnel to talk up their product at the checkout line. 5. After-Purchase Evaluation Once the consumer has made the purchase they are faced with an evaluation of the decision. If the product performs below the consumers expectation then he/she will reevaluate satisfaction with the decision, which at its extreme may result in the consumer returning the product while in less extreme situations the consumer will retain the purchased item but may take a negative view of the product. Such evaluations are more likely to occur in cases of expensive or highly important purchases. To help ease the concerns consumers have with their purchase evaluation, marketers need to be receptive and even encourage consumer contact. Customer service centers and follow-up market research are useful tools in helping to address purchasers concerns. As weve seen, consumer purchasing is quite complex.

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Cognitive and personal biases in decision making It is generally agreed that biases can creep into our decision making processes, calling into question the correctness of a decision. Below is a list of some of the more common cognitive biases. Selective search for evidence - We tend to be willing to gather facts that support certain conclusions but disregard other facts that support different conclusions. Premature termination of search for evidence - We tend to accept the first alternative that looks like it might work. Conservatism and inertia - Unwillingness to change thought patterns that we have used in the past in the face of new circumstances. Experiential limitations - Unwillingness or inability to look beyond the scope of our past experiences; rejection of the unfamiliar. Selective perception - We actively screen-out information that we do not think is salient. Wishful thinking or optimism - We tend to want to see things in a positive light and this can distort our perception and thinking. Recency - We tend to place more attention on more recent information and either ignore or forget more distant information. Repetition bias - A willingness to believe what we have been told most often and by the greatest number of different of sources. Anchoring - Decisions are unduly influenced by initial information that shapes our view of subsequent information.

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Group think Peer pressure to conform to the opinions held by the group. Source credibility bias - We reject something if we have a bias against the person, organization, or group to which the person belongs: We are inclined to accept a statement by someone we like. Incremental decision making and escalating commitment - We look at a decision as a small step in a process and this tends to perpetuate a series of similar decisions. This can be contrasted with zero-based decision making. Inconsistency - The unwillingness to apply the same decision criteria in similar situations. Attribution asymmetry We tend to attribute our success to our abilities and talents, but we attribute our failures to bad luck and external factors. We attribute other's success to good luck, and their failures to their mistakes. Role fulfillment - We conform to the decision making expectations that others have of someone in our position. Underestimating uncertainty and the illusion of control - We tend to underestimate future uncertainty because we tend to believe we have more control over events than we really do. Faulty generalizations - In order to simplify an extremely complex world, we tend to group things and people. These simplifying generalizations can bias decision making processes. Ascription of causality - We tend to ascribe causation even when the evidence only suggests correlation. Just because birds fly to the equatorial regions when the trees lose their leaves, does not mean that the birds migrate because the trees lose their leaves

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CHAPTER III RESEARCH METHODOLOGY

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RESEARCH METHODOLOGY

RESEARCH TOPIC A STUDY ON CONSUMER BUYING BEHAVIOR OF GODREJ HOME APPLIANCES THROUGH DIRECT SALES

RESEARCH OBJECTIVE To study the consumer buying behavior for Godrej & Boyce manufacturing co.ltd. Bhubaneswar branch. To study the view of people about various factors while buying from Direct Sales Bhubaneswar To know customer income range and their ability to purchase To know the reaction regarding after sales service.

TYPES OF RESEARCH Exploratory Research Descriptive Research

UNIVERSE Lucknow

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SAMPLE SIZE 100 SAMPLING METHOD Area sampling

DATA COLLECTION METHOD Primary data collection Through questionnaire.

Secondary data collection Books, Magazines & Websites

Data collection 1. Measurement instrument: structured questionnaire 2. Method: survey

Sources of data

A. Primary data- primary data were collected through a well structured questionnaire designed separately for consumers. A pilot survey was conducted to test the utility of the questionnaire and necessary changes being made.

B. Secondary data- secondary data are collected from various WEB SITES (www.yahooanswers.com, www.godrej.com, www.google.com ) Book (Philip Kotler) etc.

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Sampling Sample size: Total sample size is 100 respondent valid. Sample procedure Area sampling Sample area: Lucknow Analysis Data collected from the survey through systematically framed questionnaires and those are being analyzed and shown in graphical representation

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Chapter IV DATA ANALYSIS AND INTERPRETATION

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DATA ANALYSIS AND INTERPRETATION

............................................................................... 1. Family size
Less than 4 member 4-6 members More than 6 member 20 65 15

15

20 Less than 4 member 4-6 members 65 More than 6 member

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2. Do you know about Godrej product?

Yes No 65 45

45 65 Yes No

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3. Which products you have purchased of Godrej?

Refrigerator Microwave Washing machine Water purifier None of above 35 10 25 20 10

10 20 35 Refrigerator Microwave Washing machine 25 10 Water purifier None of above

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4. From where would you like to buy Godrej products?

Multi brand outlets 20

Exclusive showroom

15

Retail store Shopping malls

45 20

20

20 Multi brand outlets 15 Exclusive showroom Retail store Shopping malls

45

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5. Which factor influences you to purchase Godrej products?

Company brand name Promotional activities Products features Service Influence by other

40 20 20 15 5

15

5 40 Company brand name Promotional activities

20 20

Products features Service Influence by other

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6. When you prefer to buy electronic products? a. Exchange offer b. Discount offer c. Sales promotions d. Seasonal e. Other [ ] [ ] [ ] [ ] [ ]

5 40

5 Exchange offer 40 Discount offer Sales promotions 10 Seasonal Other

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7. Satisfaction level with Godrej products?

Extremely unsatisfied Somehow unsatisfied Satisfied Somehow satisfied Extremely satisfied 2 3 80 10 5

2 3 10 5 Extremely unsatisfied Somehow unsatisfied Satisfied 80 Somehow satisfied Extremely satisfied

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8. Which brand you like most?

Godrej Samsung LG Videocon Other 45 27 13 10 5

10 13

5 45 Godrej Samsung LG

27

Videocon Other

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9. What were the factors that persuaded you to come to your chosen brand?
Company advertisements: Talk to friends and colleagues Dealer s efforts Any other 50 40 5 5

5 5 50 40

Company advertisements: Talk to friends and colleagues Dealer s efforts Any other

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10. Would you wait for festive season to avail discounts?

Yes No

75 25

25

Yes 75 No

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11. Are you satisfied with the customer service after sales offered?
Good Average To be extent Need to be improved 70 20 7 3

7 20

3 Good Average 70 To be extent Need to be improved

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Chapter V Recommendation

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RECOMMENDATION

The company should follow the following advertising strategy It should do its advertisement by distributing its leaflets which will be very less expensive

It can get publicity by organizing interesting games with small prizes. Tangible advertisement of product which are new in market Advertisement in front of Malls, Big Bazaar, City Centre It will be less time consuming and less expensive in comparison to electronic and print media. Another benefit from this advertisement is that you can come across directly with consumers and can study their behavior.

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Chapter VI CONCLUSION

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After the successfully completion of my summer internship I understood that market research is an important aspects for a company through out the life cycle of a particular product. It helps in knowing the changing taste, preference, life style etc. of the consumer. During the training I found that Area Sampling method is a perfective market research technique. With reference to my research topic that is CONSUMER BUYING BEHAVIOR TOWARDS GODREJ HOME APPLIANCES. It was found that, 70% of the respondents have responded with a positive note. That means they are satisfied with their product. From the study it was found that most of the customers had gone for Godrej brand only due to exchange offer i.e. 85%. It was also found that Brand name and quality of the product are the first preference for the customers apart from age group. From the study it was also found that customers put more preference on product knowledge of the sales person during the purchase of the product. So the company should provide effective training to its sales person regarding product features. Eventually it can be concluded that Godrej Appliance has the market share in Lucknow. Exchange offer has been the reason to buy the Godrej product.

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BIBLIOGRAPHY

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BIBLIOGRAPHY

Marketing Management, A south Asian PerspectiveKotler Philip, Keller Kelvin, Koshy Abraham, Jha Mithileshwar, Edition-Twelfth edition. Publisher- Prentice Hall of India (p) Ltd,

Research Methodology- Kothari C.R., Edition-2004, reprint 2006 Publisher New Age International (P) Ltd, publishers Methods of Data Collection, page no- 95 Sampling Fundamentals, page no- 15 Websites www.godrej.com www.yahooanswers.com www.wikipedia.org www.scribd.com

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ANNEXURE

QUESTIONAIRE
A STUDY OF AN EFFECTIVE PROMOTIONAL

STRATEGY WHICH INFLUENCE CUSTOMER TO PURCHASE A PRODUCT OF GODREJ.

Personal Details-

Name:

................

Gender:

.......................................... Email ID: ................ ................................... Mobile No: .................... Address: ............................................................................... 12. Family size a. Less than 4 member b. 4-6 members c. More than 6 member [ ] [ ] [ ] Occupation:

13. Do you know about Godrej product? a. Yes b. No [ ] [ ]

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14. Which products you have purchased of Godrej? a. Refrigerator b. Microwave c. Washing machine d. Water purifier e. None of above [ ] [ ] [ ] [ ] [ ]

15. From where would you like to buy Godrej products? a. Multi brand outlets b. Exclusive showroom c. Retail store d. Shopping malls [ ] [ ] [ ] [ ]

16. Which factor influences you to purchase Godrej products? a. Company brand name b. Promotional activities c. Products features d. Service e. Influence by other [ ] [ ] [ ] [ ] [ ]

17. When you prefer to buy electronic products? f. Exchange offer g. Discount offer h. Sales promotions i. Seasonal j. Other [ ] [ ] [ ] [ ] [ ]

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18. Satisfaction level with Godrej products? a. Extremely unsatisfied b. Somehow unsatisfied c. Satisfied d. Somehow satisfied e. Extremely satisfied [ ] [ ] [ ] [ ] [ ]

19. Which brand you like most? a. Godrej b. Samsung c. LG d. Videocon e. Other [ ] [ ] [ ] [ ] [ ]

20. What were the factors that persuaded you to come to your chosen brand? a. Company advertisements: b. Talk to friends and colleagues c. Dealer s efforts d. Any other [ ] [ ] [ ] [ ]

Please specify .............

21. Would you wait for festive season to avail discounts? a. Yes b. No [ ] [ ]

22. Are you satisfied with the customer service after sales offered? a. Good b. Average c. To be extent d. Need to be improved [ ] [ ] [ ] [ ]

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