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Principles of Marketing

<<< Previous CONSUMER BUYING BEHAVIOR (CONTINUED):Personal Factors, Psychological Factors Next >>>
 
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Principles of Marketing ­ MGT301
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Lesson ­ 15
Lesson overview and learning objectives:
In last Lesson we discussed the Consumer Buying behavior its model and characteristics that can
influence the decision for buying process. Today we will be continuing the same topic and will
discuss the remaining factors that influence the buying process and decision of consumers.
So our today's topic is:
CONSUMER BUYING BEHAVIOR (CONTINUED):
c
Personal Factors
A buyer's decisions also are influenced by personal characteristics such as the buyer's age and life-
cycle stage, occupation, economic situation, lifestyle, and personality and self-concept.
I. Age and Life-Cycle Stage
People change the goods and services they buy over their lifetimes. Tastes in food, clothes,
furniture, and recreation are often age related. Buying is also shaped by the stage of the family life
cycle--the stages through which families might pass as they mature over time. Marketers often
define their target markets in terms of life-cycle stage and develop appropriate products and
marketing plans for each stage. Traditional family life-cycle stages include young singles and
married couples with children.
II. Occupation
A person's occupation affects the goods and services bought. Blue-collar workers tend to buy
more rugged work clothes, whereas white-collar workers buy more business suits. Marketers try to
identify the occupational groups that have an above-average interest in their products and services.
A company can even specialize in making products needed by a given occupational group. Thus,
computer software companies will design different products for brand managers, accountants,
engineers, lawyers, and doctors.
III. Economic Situation
A person's economic situation will affect product choice. Marketers of income-sensitive goods
watch trends in personal income, savings, and interest rates. If economic indicators point to a
recession, marketers can take steps to redesign, reposition, and reprice their products closely.
IV. Lifestyle
People coming from the same subculture, social class, and occupation may have quite different
lifestyles. Life style is a person's pattern of living as expressed in his or her psychographics. It
involves measuring consumers' major AIO dimensions--activities (work, hobbies, shopping, sports,
social events), interests (food, fashion, family, recreation), and opinions (about themselves, social
issues, business, products). Lifestyle captures something more than the person's social class or
personality. It profiles a person's whole pattern of acting and interacting in the world.
Several research firms have developed lifestyle classifications. It divides consumers into eight
groups based on two major dimensions: self-orientation and resources. Self-orientation groups
include principle-oriented consumers who buy based on their views of the world; status-oriented buyers
who base their purchases on the actions and opinions of others; and action-oriented buyers who are
driven by their desire for activity, variety, and risk taking. Consumers within each orientation are
further classified into those with abundant resources and those with minimal resources, depending on
whether they have high or low levels of income, education, health, self-confidence, energy, and
other factors. Consumers with either very high or very low levels of resources are classified
without regard to their self-orientations (actualizers, strugglers). Actualizers are people with so
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many resources that they can indulge in any or all self-orientations. In contrast, strugglers are
people with too few resources to be included in any consumer orientation.
V. Personality and Self-Concept
Each person's distinct personality influences his or her buying behavior. Personality refers to the
unique psychological characteristics that lead to relatively consistent and lasting responses to one's
own environment. Personality is usually described in terms of traits such as self-confidence,
dominance, sociability, autonomy, defensiveness, adaptability, and aggressiveness. Personality can
be useful in analyzing consumer behavior for certain product or brand choices. For example,
coffee marketers have discovered that heavy coffee drinkers tend to be high on sociability. Thus,
to attract customers, Starbucks and other coffeehouses create environments in which people can
relax and socialize over a cup of steaming coffee.
Many marketers use a concept related to personality--a person's self-concept (also called self-image).
The basic self-concept premise is that people's possessions contribute to and reflect their identities;
that is, "we are what we have." Thus, in order to understand consumer behavior, the marketer
must first understand the relationship between consumer self-concept and possessions. For
example, the founder and chief executive of Barnes & Noble, the nation's leading bookseller, notes
that people buy books to support their self-images:
d
Psychological Factors
A person's buying choices are further influenced by four major psychological factors: motivation,
perception, learning, and beliefs and attitudes.
I. Motivation
A person has many needs at any given time. Some are biological, arising from states of tension such
as hunger, thirst, or discomfort. Others are psychological, arising from the need for recognition,
esteem, or belonging. Most of these needs will not be strong enough to motivate the person to act
at a given point in time. A need becomes a motive when it is aroused to a sufficient level of
intensity. A motive (or drive) is a need that is sufficiently pressing to direct the person to seek
satisfaction. Psychologists have developed theories of human motivation. Two of the most
popular--the theories of Sigmund Freud and Abraham Maslow--have quite different meanings
for consumer analysis and marketing.
II. Maslow's Theory of Motivation
1.
2.
Safety Needs
Physiological Needs
Physiological Needs
4.
3.
Personal
Needs
Social Needs
Social Needs
Safety Needs
Safety Needs
Physiological Needs
Physiological Needs
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Abraham Maslow sought to explain why people are driven by particular needs at particular times.
Why does one person spend much time and energy on personal safety and another on gaining the
esteem of others? Maslow's answer is that human needs are arranged in a hierarchy, from the most
pressing to the least pressing. Maslow's hierarchy of needs is shown in Figure. In order of
importance, they are physiological needs, safety needs, social needs, esteem needs, and self-actualization
needs. A person tries to satisfy the most important need first. When that need is satisfied, it will
stop being a motivator and the person will then try to satisfy the next most important need. For
example, starving people (physiological need) will not take an interest in the latest happenings in
the art world (self-actualization needs), nor in how they are seen or esteemed by others (social or
esteem needs), nor even in whether they are breathing clean air (safety needs). But as each
important need is satisfied, the next most important need will come into play.
III. Perception
A motivated person is ready to act. How the person acts is influenced by his or her own perception
of the situation. All of us learn by the flow of information through our five senses: sight, hearing,
smell, touch, and taste. However, each of us receives, organizes, and interprets this sensory
information in an individual way. Perception is the process by which people select, organize, and
interpret information to form a meaningful picture of the world.
People can form different perceptions of the same stimulus because of three perceptual processes:
selective attention, selective distortion, and selective retention. People are exposed to a great
amount of stimuli every day. For example, the average person may be exposed to more than 1,500
ads in a single day. It is impossible for a person to pay attention to all these stimuli. Selective
attention--the tendency for people to screen out most of the information to which they are
exposed--means that marketers have to work especially hard to attract the consumer's attention.
Even noted stimuli do not always come across in the intended way. Each person fits incoming
information into an existing mind-set. Selective distortion describes the tendency of people to
interpret information in a way that will support what they already believe. Selective distortion
means that marketers must try to understand the mind-sets of consumers and how these will affect
interpretations of advertising and sales information.
IV. Learning
When people act, they learn. Learning describes changes in an individual's behavior arising from
experience. Learning theorists say that most human behavior is learned. Learning occurs through
the interplay of drives, stimuli, cues, responses, and reinforcement.
V. Beliefs and Attitudes
Through doing and learning, people acquire beliefs and attitudes. These, in turn, influence their
buying behavior. A belief is a descriptive thought that a person has about something.
Buying behavior differs greatly for a tube of toothpaste, a tennis racket, an expensive camera, and a
new car. More complex decisions usually involve more buying participants and more buyer
deliberation. Figure shows types of consumer buying behavior based on the degree of buyer
involvement and the degree of differences among brands.
C. Types Buying Behaviors:
 Complex Buying Behavior
Consumers undertake complex buying behavior when they are highly involved in a purchase and
perceive significant differences among brands. Consumers may be highly involved when the
product is expensive, risky, purchased infrequently, and highly self-expressive. Typically, the
consumer has much to learn about the product category. For example, a personal computer buyer
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may not know what attributes to consider. Many product features carry no real meaning: a
"Pentium Pro chip," "super VGA resolution," or "megs of RAM."
This buyer will pass through a learning process, first developing beliefs about the product, then
attitudes, and then making a thoughtful purchase choice. Marketers of high-involvement products
must understand the information-gathering and evaluation behavior of high-involvement
consumers. They need to help buyers learn about product-class attributes and their relative
importance, and about what the company's brand offers on the important attributes. Marketers
need to differentiate their brand's features, perhaps by describing the brand's benefits using print
media with long copy. They must motivate store salespeople and the buyer's acquaintances to
influence the final brand choice.
 Dissonance-Reducing Buying Behavior
Dissonance reducing buying behavior occurs when consumers are highly involved with an
expensive, infrequent, or risky purchase, but see little difference among brands. For example,
consumers buying carpeting may face a high-involvement decision because carpeting is expensive
and self-expressive. Yet buyers may consider most carpet brands in a given price range to be the
same. In this case, because perceived brand differences are not large, buyers may shop around to
learn what is available, but buy relatively quickly. They may respond primarily to a good price or to
purchase convenience.
After the purchase, consumers might experience post purchase dissonance (after-sale discomfort) when
they notice certain disadvantages of the purchased carpet brand or hear favorable things about
brands not purchased. To counter such dissonance, the marketer's after-sale communications
should provide evidence and support to help consumers feel good about their brand choices.
 Habitual Buying Behavior
Habitual buying behavior occurs under conditions of low consumer involvement and little
significant brand difference. For example, take salt. Consumers have little involvement in this
product category--they simply go to the store and reach for a brand. If they keep reaching for the
same brand, it is out of habit rather than strong brand loyalty. Consumers appear to have low
involvement with most low-cost, frequently purchased products.
In such cases, consumer behavior does not pass through the usual belief-attitude-behavior
sequence. Consumers do not search extensively for information about the brands, evaluate brand
characteristics, and make weighty decisions about which brands to buy. Instead, they passively
receive information as they watch television or read magazines. Ad repetition creates brand
familiarity rather than brand conviction. Consumers do not form strong attitudes toward a brand; they
select the brand because it is familiar. Because they are not highly involved with the product,
consumers may not evaluate the choice even after purchase. Thus, the buying process involves
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brand beliefs formed by passive learning, followed by purchase behavior, which may or may not be
followed by evaluation.
Because buyers are not highly committed to any brands, marketers of low-involvement products
with few brand differences often use price and sales promotions to stimulate product trial. In
advertising for a low-involvement product, ad copy should stress only a few key points. Visual
symbols and imagery are important because they can be remembered easily and associated with the
brand. Ad campaigns should include high repetition of short-duration messages. Television is
usually more effective than print media because it is a low-involvement medium suitable for
passive learning. Advertising planning should be based on classical conditioning theory, in which
buyers learn to identify a certain product by a symbol repeatedly attached to it.
Marketers can try to convert low-involvement products into higher-involvement ones by linking
them to some involving issue. Procter & Gamble does this when it links Crest toothpaste to
avoiding cavities. At best, these strategies can raise consumer involvement from a low to a
moderate level. However, they are not likely to propel the consumer into highly involved buying
behavior.
a. Variety-Seeking Buying Behavior
Consumers undertake variety seeking buying behavior in situations characterized by low consumer
involvement but significant perceived brand differences. In such cases, consumers often do a lot of
brand switching. For example, when buying cookies, a consumer may hold some beliefs, choose a
cookie brand without much evaluation, then evaluate that brand during consumption. But the next
time, the consumer might pick another brand out of boredom or simply to try something different.
Brand switching occurs for the sake of variety rather than because of dissatisfaction.
In such product categories, the marketing strategy may differ for the market leader and minor
brands. The market leader will try to encourage habitual buying behavior by dominating shelf
space, keeping shelves fully stocked, and running frequent reminder advertising. Challenger firms
will encourage variety seeking by offering lower prices, special deals, coupons, free samples, and
advertising that presents reasons for trying something new.
D. Buyer Decision Process
Now that we have looked at the influences that affect buyers, we are ready to look at how
consumers make buying decisions. Figure shows that the buyer decision process consists of five
stages: need recognition, information search, evaluation of alternatives, purchase decision, and post purchase
behavior. Clearly, the buying process starts long before actual purchase and continues long after.
Marketers need to focus on the entire buying process rather than on just the purchase decision.
The figure implies that consumers pass through all five stages with every purchase. But in more
routine purchases, consumers often skip or reverse some of these stages. A woman buying her
regular brand of toothpaste would recognize the need and go right to the purchase decision,
skipping information search and evaluation. However, we use the model in Figure because it
shows all the considerations that arise when a consumer faces a new and complex purchase
situation.
 Need Recognition
The buying process starts with need recognition--the buyer recognizes a problem or need. The
buyer senses a difference between his or her actual state and some desired state. The need can be
triggered by internal stimuli when one of the person's normal needs--hunger, thirst--rises to a level
high enough to become a drive. A need can also be triggered by external stimuli. At this stage, the
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marketer should research consumers to find out what kinds of needs or problems arise, what
brought them about, and how they led the consumer to this particular product.
By gathering such information, the marketer can identify the factors that most often trigger interest
in the product and can develop marketing programs that involve these factors.
 Information Search
An aroused consumer may or may not search for more information. If the consumer's drive is
strong and a satisfying product is near at hand, the consumer is likely to buy it then. If not, the
consumer may store the need in memory or undertake an information search related to the need.
At one level, the consumer may simply enter heightened attention. The consumer can obtain
information from any of several sources. These include personal sources (family, friends, neighbors,
acquaintances), commercial sources (advertising, salespeople, dealers, packaging, displays, Web sites),
public sources (mass media, consumer-rating organizations), and experiential sources (handling,
examining, using the product). The relative influence of these information sources varies with the
product and the buyer. Generally, the consumer receives the most information about a product
from commercial sources--those controlled by the marketer. The most effective sources, however,
tend to be personal. Commercial sources normally inform the buyer, but personal sources legitimize
or evaluate products for the buyer.
People often ask others--friends, relatives, acquaintances, professionals--for recommendations
concerning a product or service. Thus, companies have a strong interest in building such word-of-
mouth sources. These sources have two chief advantages. First, they are convincing: Word of mouth
is the only promotion method that is of consumers, by consumers, and for consumers. Having loyal,
satisfied customers that brag about doing business with you is the dream of every business owner.
Not only are satisfied customers repeat buyers, but they are also walking, talking billboards for
your business. Second, the costs are low. Keeping in touch with satisfied customers and turning
them into word-of-mouth advocates costs the business relatively little.
As more information is obtained, the consumer's awareness and knowledge of the available brands
and features increases. The information also helped her drop certain brands from consideration. A
company must design its marketing mix to make prospects aware of and knowledgeable about its
brand. It should carefully identify consumers' sources of information and the importance of each
source. Consumers should be asked how they first heard about the brand, what information they
received, and what importance they placed on different information sources.
 Evaluation of Alternatives
We have seen how the consumer uses information to arrive at a set of final brand choices. How
does the consumer choose among the alternative brands? The marketer needs to know about
alternatives evaluation--that is, how the consumer processes information to arrive at brand
choices. Unfortunately, consumers do not use a simple and single evaluation process in all buying
situations. Instead, several evaluation processes are at work.
The consumer arrives at attitudes toward different brands through some evaluation procedure.
How consumers go about evaluating purchase alternatives depends on the individual consumer
and the specific buying situation. In some cases, consumers use careful calculations and logical
thinking. At other times, the same consumers do little or no evaluating; instead they buy on
impulse and rely on intuition. Sometimes consumers make buying decisions on their own;
sometimes they turn to friends, consumer guides, or salespeople for buying advice.
Marketers should study buyers to find out how they actually evaluate brand alternatives. If they
know what evaluative processes go on, marketers can take steps to influence the buyer's decision.
 Purchase Decision
In the evaluation stage, the consumer ranks brands and forms purchase intentions. Generally, the
consumer's purchase decision will be to buy the most preferred brand, but two factors can come
between the purchase intention and the purchase decision. The first factor is the attitudes of others. The
second factor is unexpected situational factors. The consumer may form a purchase intention based on
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factors such as expected income, expected price, and expected product benefits. However,
unexpected events may change the purchase intention. Thus, preferences and even purchase
intentions do not always result in actual purchase choice.
Post purchase Behavior
The marketer's job does not end when the product is bought. After purchasing the product, the
consumer will be satisfied or dissatisfied and will engage in post purchase behavior of interest to
the marketer. What determines whether the buyer is satisfied or dissatisfied with a purchase? The
answer lies in the relationship between the consumer's expectations and the product's perceived
performance. If the product falls short of expectations, the consumer is disappointed; if it meets
expectations, the consumer is satisfied; if it exceeds expectations, the consumer is delighted.
The larger the gap between expectations and performance, the greater the consumer's
dissatisfaction. This suggests that sellers should make product claims that faithfully represent the
product's performance so that buyers are satisfied. Some sellers might even understate
performance levels to boost consumer satisfaction with the product. For example, Boeing's
salespeople tend to be conservative when they estimate the potential benefits of their aircraft. They
almost always underestimate fuel efficiency--they promise a 5 percent savings that turns out to be
8 percent. Customers are delighted with better-than-expected performance; they buy again and tell
other potential customers that Boeing lives up to its promises.
Almost all major purchases result in cognitive dissonance, or discomfort caused by post purchase
conflict. After the purchase, consumers are satisfied with the benefits of the chosen brand and are
glad to avoid the drawbacks of the brands not bought. However, every purchase involves
compromise. Consumers feel uneasy about acquiring the drawbacks of the chosen brand and
about losing the benefits of the brands not purchased. Thus, consumers feel at least some post
purchase dissonance for every purchase.
Why is it so important to satisfy the customer? Such satisfaction is important because a company's
sales come from two basic groups--new customers and retained customers. It usually costs more to
attract new customers than to retain current ones, and the best way to retain current customers is
to keep them satisfied. Customer satisfaction is a key to making lasting connections with
consumers--to keeping and growing consumers and reaping their customer lifetime value.
Satisfied customers buy a product again, talk favorably to others about the product, pay less
attention to competing brands and advertising, and buy other products from the company. Many
marketers go beyond merely meeting the expectations of customers--they aim to delight the
customer. A delighted customer is even more likely to purchase again and to talk favorably about
the product and company.
A dissatisfied consumer responds differently. Whereas, on average, a satisfied customer tells 3
people about a good product experience, a dissatisfied customer gripes to 11 people. In fact, one
study showed that 13 percent of the people who had a problem with an organization complained
about the company to more than 20 people. Clearly, bad word of mouth travels farther and faster
than good word of mouth and can quickly damage consumer attitudes about a company and its
products.
Therefore, a company would be wise to measure customer satisfaction regularly. It cannot simply
rely on dissatisfied customers to volunteer their complaints when they are dissatisfied. Some 96
percent of unhappy customers never tell the company about their problem. Companies should set
up systems that encourage customers to complain. In this way, the company can learn how well it is
doing and how it can improve. The 3M Company claims that over two-thirds of its new-product
ideas come from listening to customer complaints. But listening is not enough--the company also
must respond constructively to the complaints it receives.
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 The Buyer Decision Process for New Products
We have looked at the stages buyers go through in trying to satisfy a need. Buyers may pass quickly
or slowly through these stages, and some of the stages may even be reversed. Much depends on
the nature of the buyer, the product, and the buying situation.
We now look at how buyers approach the purchase of new products. A new product is a good,
service, or idea that is perceived by some potential customers as new. It may have been around for
a while, but our interest is in how consumers learn about products for the first time and make
decisions on whether to adopt them. We define the adoption process as "the mental process
through which an individual passes from first learning about an innovation to final adoption, and
adoption as the decision by an individual to become a regular user of the product.
Stages in the Adoption Process
Consumers go through five stages in the process of adopting a new product:
 Awareness: The consumer becomes aware of the new product, but lacks information about
it.
 Interest: The consumer seeks information about the new product.
 Evaluation: The consumer considers whether trying the new product makes sense.
 Trial: The consumer tries the new product on a small scale to improve his or her estimate
of its value.
 Adoption: The consumer decides to make full and regular use of the new product.
This model suggests that the new-product marketer should think about how to help consumers
move through these stages. A manufacturer of large-screen televisions may discover that many
consumers in the interest stage do not move to the trial stage because of uncertainty and the large
investment. If these same consumers were willing to use a large-screen television on a trial basis for
a small fee, the manufacturer should consider offering a trial-use plan with an option to buy.
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Table of Contents:
  1. PRINCIPLES OF MARKETING:Introduction of Marketing, How is Marketing Done?
  2. ROAD MAP:UNDERSTANDING MARKETING AND MARKETING PROCESS
  3. MARKETING FUNCTIONS:CUSTOMER RELATIONSHIP MANAGEMENT
  4. MARKETING IN HISTORICAL PERSPECTIVE AND EVOLUTION OF MARKETING:End of the Mass Market
  5. MARKETING CHALLENGES IN THE 21st CENTURY:Connections with Customers
  6. STRATEGIC PLANNING AND MARKETING PROCESS:Setting Company Objectives and Goals
  7. PORTFOLIO ANALYSIS:MARKETING PROCESS,Marketing Strategy Planning Process
  8. MARKETING PROCESS:Analyzing marketing opportunities, Contents of Marketing Plan
  9. MARKETING ENVIRONMENT:The Companyís Microenvironment, Customers
  10. MARKETING MACRO ENVIRONMENT:Demographic Environment, Cultural Environment
  11. ANALYZING MARKETING OPPORTUNITIES AND DEVELOPING STRATEGIES:MIS, Marketing Research
  12. THE MARKETING RESEARCH PROCESS:Developing the Research Plan, Research Approaches
  13. THE MARKETING RESEARCH PROCESS (Continued):CONSUMER MARKET
  14. CONSUMER BUYING BEHAVIOR:Model of consumer behavior, Cultural Factors
  15. CONSUMER BUYING BEHAVIOR (CONTINUED):Personal Factors, Psychological Factors
  16. BUSINESS MARKETS AND BUYING BEHAVIOR:Market structure and demand
  17. MARKET SEGMENTATION:Steps in Target Marketing, Mass Marketing
  18. MARKET SEGMENTATION (CONTINUED):Market Targeting, How Many Differences to Promote
  19. Product:Marketing Mix, Levels of Product and Services, Consumer Products
  20. PRODUCT:Individual product decisions, Product Attributes, Branding
  21. PRODUCT:NEW PRODUCT DEVELOPMENT PROCESS, Idea generation, Test Marketing
  22. NEW PRODUCT DEVELOPMENT:PRODUCT LIFE- CYCLE STAGES AND STRATEGIES
  23. KEY TERMS:New-product development, Idea generation, Product development
  24. Price the 2nd P of Marketing Mix:Marketing Objectives, Costs, The Market and Demand
  25. PRICE THE 2ND P OF MARKETING MIX:General Pricing Approaches, Fixed Cost
  26. PRICE THE 2ND P OF MARKETING MIX:Discount and Allowance Pricing, Segmented Pricing
  27. PRICE THE 2ND P OF MARKETING MIX:Price Changes, Initiating Price Increases
  28. PLACE- THE 3RD P OF MARKETING MIX:Marketing Channel, Channel Behavior
  29. LOGISTIC MANAGEMENT:Push Versus Pull Strategy, Goals of the Logistics System
  30. RETAILING AND WHOLESALING:Customer Service, Product Line, Discount Stores
  31. KEY TERMS:Distribution channel, Franchise organization, Distribution center
  32. PROMOTION THE 4TH P OF MARKETING MIX:Integrated Marketing Communications
  33. ADVERTISING:The Five Mís of Advertising, Advertising decisions
  34. ADVERTISING:SALES PROMOTION, Evaluating Advertising, Sales Promotion
  35. PERSONAL SELLING:The Role of the Sales Force, Builds Relationships
  36. SALES FORCE MANAGEMENT:Managing the Sales Force, Compensating Salespeople
  37. SALES FORCE MANAGEMENT:DIRECT MARKETING, Forms of Direct Marketing
  38. DIRECT MARKETING:PUBLIC RELATIONS, Major Public Relations Decisions
  39. KEY TERMS:Public relations, Advertising, Catalog Marketing
  40. CREATING COMPETITIVE ADVANTAGE:Competitor Analysis, Competitive Strategies
  41. GLOBAL MARKETING:International Trade System, Economic Environment
  42. E-MARKETING:Internet Marketing, Electronic Commerce, Basic-Forms
  43. MARKETING AND SOCIETY:Social Criticisms of Marketing, Marketing Ethics
  44. MARKETING:BCG MATRIX, CONSUMER BEHAVIOR, PRODUCT AND SERVICES
  45. A NEW PRODUCT DEVELOPMENT:PRICING STRATEGIES, GLOBAL MARKET PLACE