What is Marketing?

Introduction to Marketing - ii
Higher Diploma in Digital Marketing

Thejani Warnathunga
MSc Strategic Marketing (Cardiff Met., UK)
BBM Marketing (Special) (UOK, Sri Lanka)
Key Learnings

• Understand and explain buyer behavior and types of buyers

• Understand buyer decision process

• Explain and apply Stimulus Response Model in case studies

• Application of STP and the extended marketing mix

• Understand and explain concepts of international marketing

 Business Markets
Business markets refer to organizations, businesses or entities
that acquire products and services for use in the production of
other services and products.
B2B & B2C
Markets Consumer Markets
Consumer markets refer to markets whereby businesses or
producers sell their products or services directly to the final
consumers.
B2B & B2C
Customers Rational Emotional
Feature – driven Benefit – driven
Logical Often impulsive
Long decision making process Short decision making process
Multiple decision makers Single decision maker
Buying Decision
Process
Buyer Behavior

Generally speaking, there are different consumer buying behaviors, which can be categorized
in the following:

1. Extended Decision-Making - Extended Decision-Making occurs when consumers are

buying a rather expensive product.

2. Limited Decision-Making - Speaking of Limited Decision-Making, consumers are faced

with limited decision making. This essentially means that there is a limiting variety or
availability of this product on the market.
3. Habitual Buying Behavior - Habitual Buying Behavior plays a big role in our daily
routine. We do not put a lot of thought or research into buying a product that is incredibly
cheap and available in masses, at the same time.

4. Variety-Seeking Buying Behavior

You display this type of purchase behavior when there are visible differences between a
product within the existing brands. You, as a consumer, might want to try out a similar
product of various brands out of curiosity.
What are Buyer Types?

Buyer types are a set of categories that describe the spending habits of consumers. Consumer
behavior reveals how to appeal to people with different habits and preferences. The spending
habits of a company’s consumer base significantly affect its overall business.

1. Spendthrifts
Spendthrifts are a group of consumers who spend without hesitation. The spendthrifts feel little or
no pain in making a purchase. They love purchasing what catches their eye immediately.
Spendthrifts are more likely to resort to impulse buying.
• They lack self-control in spending.
• They are more likely to incur debts.
• They are not savers.
2. Average Spenders
Average spenders spend on what they believe is appropriate. They weigh their options and decide
on what they think is a good investment. Average spenders know how their budget looks, and thus
they act accordingly.
• Make comparisons, search for discount codes, and finally make the decision

3. Frugalists
The frugalist is the terminology that is used to describe people with a tendency of holding onto and
saving their money as long as they can, as opposed to spending it. Frugalists prefer to save rather
than to spend money. They love to keep their money safe in a savings account rather than spend it.
• They feel the pain of purchase.
• They are overly self-controlled.
• They are savers.
 Stimulus
Response Model
Stimulus Response Model – Consumer Behavior
Stimulus Response Model ctd.

Stimulus: any change in an organism’s

environment that causes the organism to react. It
is a fancy way of saying “cause”.

Example: An animal is cold so it moves into the

sun.

Response: how the organism reacts to a stimulus

and results in a change in behavior. (It is a fancy
way of saying “effect”.)

Example: Getting a drink when you are thirsty.

Types of Stimuli

External stimulus: a stimulus that comes from outside an organism.

Examples:
1. You feel cold so you put on a jacket.
2. A snake lunges at a rabbit so it runs away.
3. A dog feels hot so it goes to lay in the shade

Internal stimulus: a stimulus that comes from inside an organism.

Examples:
1. You feel hungry so you eat some food.
2. A cat feels thirsty so it drinks water.
3. A dog feels hot so it goes to lay in the shade.
Animals can respond to stimuli in two ways

1. In a way that they learned. We call this learned behavior.

OR

2. In a way that they were just born knowing how to do. We call this
instinct.
Learned Behavior

A response to a stimulus that an animal was taught.

Learned Behavior

Even you have learned behavior. For example, you learned to read and to talk.
Instinct

An animal’s natural reaction to a stimulus.

It is an automatic reaction that the animal was not taught to do
 Segment Your Market
Your organization, product or brand cannot be all things to all people. Use
market segmentation to divide your customers into groups of people with
common characteristics.

STP • Demographic – by personal attributes such as age, marital status, gender,

ethnicity, sexuality, education, or occupation.
Segmentation • Geographic – by country, region, state, city, or neighborhood.
• Psychographic – by personality, risk aversion, values, or lifestyle.
• Behavioral – by how people use the product, how loyal they are, or the
benefits that they are looking for.
 Target Your Best Customers
Decide which segment to target by identifying the group that will offer the
largest return and will be the most profitable.

1. The profitability of each segment

STP Which customer groups contribute most to your bottom line?
2. The size and potential growth of each customer group
Targeting Is it large enough to be worth addressing?
Is steady growth possible?
3. How well your organization can survive this market?
Any legal, technological or social barriers that could have an impact?
 Position Your Offering
Identify how you should position your product to target the most valuable
customer segments. Then select the marketing mix that will be the most
effective.
STP
Consider why customers should purchase your product rather than those of

Positioning your competitors. Do this by identifying the unique selling proposition and
draw a positioning map to understand how each segment perceives your
product, brand or service.
USP – The one thing that makes your business better than the competition.
Marketing
Mix
Extended
Marketing
Mix
International Marketing

International marketing, also known as global marketing, involves marketing

products to people across the world. In other words, it’s any marketing activity that
occurs across borders. According to the American Marketing Association,
international marketing is a multinational process of planning and executing the
conception, pricing, promotion, and distribution of ideas, goods, and services to
create an exchange that satisfies individual and organizational objectives.
 • It involves two or more countries
• Unique marketing strategies for specific countries
International
• It enables exchange between a company and foreign customers
Marketing
Characteristics • Decisions are taken with reference to the global business
environment
 International businesses looking to sell their products or

Types of service in a new country usually start with export or licensing.

International Besides these options, other international marketing types
Marketing include contract manufacturing, joint venture, and foreign
direct investment (FID).
 Exporting refers to the practice of shipping goods
directly to a foreign country. Manufacturers looking to
expand their business to other countries often consider
exporting first. And that’s not surprising.
Exporting
Compared to the other international marketing types on
this list, exporting entails the lowest risk. It also has the
least impact on the company’s human resource
management.
 Licensing is an agreement whereby a company, known as
the licensor, grants a foreign firm the right to use its
intellectual property. It’s usually for a specific period, and
the licensor receives royalty in return.

Licensing You’ll find several examples of licensing of intellectual

property across the United States. These include patents,
copyrights, manufacturing processes, and trade names.

Some top global licensors include Disney, Iconix Brand

Group, and Warner Bros, to name a few.
 Franchising involves a parent company granting a foreign
firm the right to do business in its name. However,
franchises usually have to follow stricter guidelines in
running the business than licensing.
Franchising
This type of international marketing is also more prevalent
among service firms, such as hotels, rental services, and
restaurants. On the other hand, licensing is usually
restricted to manufacturing.
 A joint venture describes the combined effort of two
businesses from different countries to their mutual benefit.
It’s the participation of two or more companies jointly in an
enterprise in which each company:
• Contributes assets
Joint • Owns the entity to some degree
Venture • Shares risk
Perhaps the most popular international joint venture to date
is Sony-Ericsson. It’s a partnership between a Japanese
electronics company, Sony, and Swedish telecom
company Ericsson.
 In FID, a company places a fixed asset in a foreign country
to manufacture a product abroad.

Unlike joint ventures, the foreign company wholly owns

Foreign the subsidiary. As a result, it establishes either effective
Direct control or substantial influence over the decision-making
Investment process.

Examples of foreign direct investment include mergers,

acquisitions, retail, services, logistics, among others.
Thank You