Consumer Behavior - Taking a step back

Dear Students!

Good morning and welcome back to the campus!

I’m happy that the average age of the campus halved in the last two days. Like I always say, the soul of the campus rests in the library while the heart, in its students. Today is a big day, we’re having the second day of PGP inauguration and kick starting about 300 new careers. I’m sure you are all brimming with optimism and a positive outlook of what’s out there in store for you.

Last year was the first time I started teaching formally. As a first-time teacher, I faced many new challenges. One of the key issues that I faced was the difference in the level of inputs students were getting in different sections. I then thought it would be a good idea for me to document the class and its key learnings in a crisp newsletter format. Consequently, I did write after every session I taught and discovered that my students too were deriving value from the write ups. It also appears that the readership from those outside who were outside the course was also rising. Therefore, I have made up my mind to continue with this habit of writing to you after each session. My hope is that these letters help spark conversations, refresh your memories, and present those ideas and thoughts that I find it difficult to cope with during regular class hours. I also would like to use this opportunity to with access to some interesting anecdotes and offer you links to resources that you may find useful. So, here goes:

During the first session of consumer behavior, we decided to take a step back and revisit the learnings we had from the previous courses. Specifically, we looked at the learnings from the Marketing Management 101 Course.

Marketing Myopia

The concept of "Marketing Myopia" was first introduced by Theodore Levitt in his famous article published in the Harvard Business Review in 1960. Interestingly, the article has been part of necessary readings for over sixty years. One of my favorite marketing professors, Dr. Krishanu Rakshit, once told us when we were in class, “Despite being part of the course for 60 odd years, the essence of this article is something that almost everyone missed when they become a manager”. And he was right. Interestingly, I think Marketing Myopia holds the honor of being published in the same outlet (the HBR) thrice – proof that we are not alone in our journey to grasp the ideas in the article. This is why I am going to take on the responsibility to talk about this some more.

In his article. Levitt suggests that instead of believing that they were in the business of making a certain product, companies should understand that they were in the business of satisfying customer needs. This principle underpins the modern understanding of marketing and the importance of customer orientation over a pure product orientation.

He proposes some interesting ideas – specifically, he points us to the ‘orientations’ that keep us from being ‘marketing oriented’.

Production Orientation: Imagine an Indian mithai shop that insists on making huge batches of 'Bitter Gourd Burfi' every day, believing the mantra "If you make it, they will come." Sadly, customers flock to the neighboring shops for Gulab Jamun and Jalebi, leaving the Bitter Gourd Burfi to pile up like a sugary, unwanted mountain.

Product Orientation: Think of a company that's just invented the 'Roti-Matic 5000', a machine so sophisticated it not only makes the perfect roti, but also fills it with any stuffing of your choice, rolls it up, and serenades you with a Bollywood tune. Problem? Most customers can't even figure out how to plug it in, let alone navigate the complex curry-stuffed concert experience.

Selling Orientation: Picture a door-to-door salesman in Mumbai, lugging around a suitcase full of top-of-the-line thermal jackets designed for sub-zero temperatures. He's doing his pitch about withstanding Himalayan winters and fighting off frostbite, all while the listener is sitting in their living room, desperately fanning themselves in the Mumbai heat.

Eventually, Marketing orientation is what people need. In other words, businesses would be wise to ask: "What does the customer want? What problems are they facing, and how can we solve them?". Levitt argued that businesses will do better in the end if they concentrate on meeting customers’ needs rather than on selling products.

Next, we discussed the Macro Marketing Environment. Specifically, we discussed the PESTEL framework and when to (and not to use) it (and other frameworks).

The PESTEL Framework

I’m pretty sure the PESTEL framework is the first of many frameworks with such interesting letter combinations that you are going to be learning. PESTEL is specifically used to understand the Macro Marketing Environment. The expansion of each of the letters Political, Environmental, Social, Technological, Environmental, and Legal are all forces that one expects to impact any given business. It’s important to note that the impact does not necessarily have to be a positive one, it could also be negative. And it is not necessary that all factors influence a business at any given point in time.

PESTEL is very useful and it helps us identify potential opportunities and threats linked to strategic business planning and decision-making. By examining these factors, marketing managers can navigate the complexities of the external marketing environment, and thereby adapt to changes, capitalize on opportunities, and reduce the risk of being blindsided by disruptions.

Having said that, it’s useful to understand why we come up with some interesting acronyms from time to time. The way I think about it, these frameworks are ‘ways of thinking’. They suggest to an uninformed person about the directions to think about. Think about it like this. If you were to build a house, you first build the framework.

The framework helps you support the walls, and the ceiling and offers a space for the floor. You can choose to (or not to) fill up each aspect. But you can safely take it that an average house is going to have each of those framework constituents. Therefore, it’s important for us as students to not get distracted by just the terminologies (remember how we were getting excited about the VFX for Adipurush?). It’s easy for us to talk about the VFX, but what is critical when using a framework is to exercise discipline and apply them as intended. Imagine if we were to take a framework for a house and plug in an umbrella for the ceiling. Are they both surfaces that keep water from falling down? Sure! But can you use one in lieu of another? Maybe not! Therefore, when we speak about the technological factors influencing Adipurush, we need to think about OTT platforms, use of the internet to pirate the content, and maybe VR headsets that can make you travel to Lanka thousands of years back. So remember, use frameworks as a source of direction, as ways to think about something. Exercise care to ensure that you do not forcefit concepts and ideas!

After this, we discussed the contributions of another Titan of Marketing - Jerome McCarthy.

The 4Ps of marketing

Jerome McCarthy, a renowned American marketing professor, is best known for his conceptualization of the '4 Ps' of marketing: Product, Price, Place, and Promotion. These are essential components of the marketing mix that can help a business to achieve its marketing objectives in a target market. McCarthy believed that the marketing manager's role was to serve as a 'mixer of ingredients'. Marketing managers must creatively blend the 4Ps to effectively communicate and deliver products or services that satisfy customer needs while achieving organizational objectives. It's a constant juggle, where changing one element may require changes in others for optimal results. Understanding and mastering this delicate balance, according to McCarthy, is the key to successful marketing management.

We then briefly touched upon the idea of Needs vs Wants.

Needs vs Wants:

In the marketing world, needs and wants are like hunger and a craving for a triple cheese pizza with extra olives and pineapple (yes, pineapple, let's not get into that debate now).

A need is something essential, something you can't live without, like food when you're hungry. If your stomach is growling and you're feeling weak, any food will do. Even if it's just a stale cracker or a simple dal and rice, it'll meet the need. On the other hand, a want is like craving that specific triple cheese pizza from your favorite pizza joint. Sure, you're hungry, but you don't just want to eat anything. You want the cheese-pull, the tangy sauce, the slightly crispy crust, the blend of toppings that’s just so...divine. You could eat that stale cracker or the dal and rice and survive, but it wouldn't satisfy your specific want.

In marketing, understanding the difference helps businesses to position their product or service. If they're marketing something that satisfies a basic need, the focus might be on availability, reliability, or affordability. If it's about fulfilling a want, they might emphasize specific features, branding, luxury, exclusivity, or other elements that make their product stand out as not just any pizza, but the triple cheese pizza of your dreams!

Interestingly, there has been a lot of work on identifying the various needs we are able to experience- remember the Maslow's Hierarchy of Needs? You should go and revisit that now! And take time to re-read this section from the textbook.

The levels of products:

We then spoke about the three levels of a product – in other words, the core product, the actual product, and the augmented product. These ideas provide us a way to understand the complexities of a product beyond its physical or tangible attributes.

Core Product: This is the basic reason why a consumer purchases a product. It refers to the fundamental benefit or solution it provides to the customer. For example, if we consider a mobile phone, its core product is communication. The core product satisfies the most basic need or want of the consumer.

Actual Product: This is what most people think of under the heading of "product" - it's the tangible, physical product. Sticking with the mobile phone example, the actual product includes the phone's design, brand name, features, packaging, and so on. It's the physical device with which you text, make calls, or browse the internet.

Augmented Product: This level includes any additional, non-tangible value or service that differentiates the product from competitors. For the mobile phone, these might be a warranty, customer service, free delivery, free software updates, or any other added benefit that enhances the user experience.

We did have a funny debate around how Adipurush the movie could be viewed through this lens. (There was a story about this that I posted just last week – do check it out).

We then talked a bit about the product life cycle and how it’s different from the diffusion of innovation model (despite their similar looking graphs).

In short, the Product Life Cycle primarily looks at the product's journey from a company's perspective (sales, revenue, and strategic decisions) – (this can and has been argued against, particularly in light of the three levels of a product that we just covered), while the Diffusion of Innovation model looks at the same journey from the consumers' perspective (how and when different groups of consumers adopt the product) (see what I did there!?) . Both are valuable, but they provide different angles on the product's journey through the market, but they are not to be confused with one another. Do check out the textbook once again (yes, yes, ‘Again’!).

We then quickly pranced through the ideas of social responsibility and marketing ethics and closed the class.

This was a marathon!!

Let me get ready for work now! See you guys on campus!