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CHAPTER 2
THEORITICAL FOUNDATION
2.1 Marketing
2.1.1 Definition Marketing
According to Kotler Keller (2013:27) “Marketing is about identifying and
meeting human and social needs. One of the shortest good definitions of marketing is
“Meeting needs profitably”.”
Furthermore Kotler Armstrong also mentioned (2012:29) “Marketing as the
process by which companies create value for customers and build strong customer
relationships in order to capture value from customers in return”.
From the two definitions of marketing above, it can be concluded
fundamentally that marketing is a process to identify and meet the needs and wants
of customers, providing value in order to satisfy and retain strong relationships with
customers and their trust in return.
2.1.2 Marketing Concept
Marketing concept is define as “The Marketing concept holds that achieving
organizational goals depends on knowing the needs and wants of target markets and
delivering the desired satisfactions better than competitors do” (Kotler Armstrong,
2012: 34).
In Kotler Keller (2013:40) point of view marketing concept is “the marketing
concept holds that the key to achieving organizational goals is being more effective
than competitors in creating, delivering, and communicating superior customer value
to your target markets”.
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Based on these definitions author conclude that marketing concept is the key
to achieve the organization goals by being better than competitor in first knowing
what target market’s needs and wants and then developing, delivering,
communicating customer value to the customers.
2.1.3 Marketing Mix
According to Kotler Armstrong’s (2012: 75) definition of marketing mix is
“The marketing mix is the set of tactical marketing tools that the firm blends to
produce the response it wants in the target market.”
According to McCarthy in the book that is edited by Kotler Keller (2013:47)
said, “McCarthy classified various marketing activities into marketing-mix tools of
four broad kinds, which he called the four Ps of marketing: product, price, place, and
promotion”.
But according to Lovelock Wirtz (2011:44) marketing mix have extended
adding three Ps that is connected with service deliver and they are; process, physical
environment and people. He described “ Collectively, these seven elements- the
“7Ps” of service marketing- represent the ingredients required to create viable
strategies for meeting customer needs profitably in a competitive marketplace.”
Kotler Armstrong (2012:75) here describes these 4Ps:
1. Product
Product is the combination goods and service (variety, quality, designs,
features, brand name, packaging and service) that company provides and
offers to the target market.
2. Price
Price is number of the amount of money that is set by the company and
customers must pay that amount of money to able to own the product.
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3. Place
Place also known as destination is where company do their activities and
also to have it available to target consumers.
4. Promotion
Promotion is activities that communicate about the product goods and
service and to convince customers to buy it.
Lovelock Wirtz (2011:47) has describes these extra 3Ps for service
marketing:
5. Process
Process is delivering product that need well design sequence of effective
procedure to target customers.
6. Physical environment
Physical environment also known as service-scape, which involve
tangible evidence design such as buildings, landscaping, interior
furnishing, equipment, staff members, and uniforms. These will impact
on customer satisfaction and service productivity.
7. People
People are the ones who have direct interaction between servicers and
customers. They require interpersonal skills and positive attitude to work
well individually or as teamwork to bring out the best for customers.
Therefore author conclude that Lombok Merah uses service marketing mix
7Ps as a marketing tool that serve product as well as service to meet customer wants
and needs profitably in a competitive marketplace.
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2.2 Promotion
2.2.1 Definition of promotion
Promotion is one of the 7Ps in service marketing mix. Kotler Armstrong
(2013: 76) defines the promotion as “Promotion means activities that communicate
the merits of the product and persuade target customers to buy it”.
Whereas Belch Belch (2009: 18) defines promotion as “Promotion has been
defined as the coordination of all seller initiated efforts to set up channels of
information and persuasion in order to sell goods and services or promote an idea.”
From this definition author conclude that promotion is one of the elements in
marketing mix that uses communication or promotion mix to promote ideas and to
sell by persuade the target market about the product value from the company and to
create exchange through marketing.
2.2.2 Promotion mix
According to Kotler Armstrong (2012: 432) promotion mix is “Promotion
mix-also called its marketing communication mix- consists of specific blend of
advertising, public relations, personal selling, sales promotion, and direct marketing
tools that the company uses to persuasively communicate customer value and build
customer relationship.”
And according to Kotler Keller (2013: 498) marketing communication is
define, as “Marketing communications are the means by which firms attempt to
inform, persuade, and remind consumers-direct or indirectly- about the products and
brands they sell.”
From the definitions above, author can conclude that marketing
communication mix or promotion mix is combination of different variable of
elements to communicate with their target markets about the company’s product and
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also to develop customer relationships. Every elements of promotion mix plays a
distinctive role, these 5 major promotion mix are define as follows:
1. Advertising
Advertising is a non-personal interaction and a paid form of promotion of
ideas by an identified sponsor such as print media, internet, and
broadcast.
2. Sales promotion
It is used for short-term motive aim in a company to aim the target
customers to purchase, trial or service such as consumer promotion like
coupons, discounts, and demonstration.
3. Personal selling
Personal selling is presented by the firm’s sale force, a face-to-face
interaction with prospect customers to aim to increase sales and develop
customer relationships. Such as sales presentation, answering questions
and making orders.
4. Public relations
A public relation is also known as publicity, it is to build a good
reputation image, able to handle and manage off any negative news. Such
as press release, special events and sponsorship.
5. Direct marketing
Direct marketing is using devices that directly communicate with
customers for their direct response, dialogue from particular customers
and prospects or enrich lasting customer relationships. Such as telephone
marketing, and catalogs.
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2.3 Personal Selling
2.3.1 Definition of Personal Selling
Personal selling is one factor of the success of a marketing program. Personal
selling is basically does activities that intended to build up target market’s
preferences, persuasion of product or service and to build customer relationship.
Below are some terms personal selling according to the experts:
According to Kotler Armstrong (2012: 448) personal selling is “ It involves
personal interaction between two or more people, so each person can observe the
other’s need and characteristics and make quick adjustment.”
According to Belch belch (2009: 25) personal selling is “A form of person-toperson communication in which a seller attempts to assist and/or persuade
prospective buyers to purchase the company’s product or service or to act on an
idea.” He also mention that the interaction can be flexible, meaning the salespeople
sees the customer’s reactions and able to modify the message specific for their need
or situation.
From the definitions author quoted above, it can be concluded that personal
selling involves direct contact between buyers and salespeople in the process of
identify buyer’s need and assisting and/or persuasion to purchase the company good
and service. The direct contact is personal and flexible able to modify depending on
the reaction from different types of customers.
A journal written by Neville Stein, Horticulture Week (June 8 2012):24
Marketing Communication, he stated “The purpose, simple, is to identify your
customer’s needs and to show them how those can be met with your product or
service.” He also mentioned that he believes personal selling will be the strategic for
a modern business because human natures like the personal touch.
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2.3.2 Types of Personal Selling
According to Belch Belch (2009: 598) personal selling consist of three types
that are; order taking, creative selling, and missionary sales reps.
1. Order taking
It is often classified as inside order takers, where salesperson works inside the
office and receive orders by phone, mail, or the Internet. In other words their
responsible is to get orders by customers.
2. Creative selling
Creative selling also knowns as order getter. Salesperson having direct
contacts in indentify prospects, assess the situation, determine the needs to be
met, present the capabilities for satisfying these needs and get an order.
3. Missionary sales reps
It is a support role where they introduce new products, new promotions,
and/or new programs. They may have additional account service
responsibilities including customer relationship management.
It is conclude in this research author will be focusing Lombok Merah in the
creative selling type where it invloves salesperson as the “point person” that
represent on behalf of the company primarily responsible for completing the
exchange between seller and buyer.
A journal of Emerging Trend in Economics and Management Sciences 3(2)
(2012)- The Role of Personal Selling in Enhancing Client Satisfaction in Nigerian
Insurance Market has mentioned the types of personal selling that includes; Trade
Selling, Missionaryy Selling, Technical Selling also referred to as creative selling,
and New Business Selling.
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2.3.3 Aim of Personal Selling
According to Belch Belch (2009: 597) personal selling has responsibilities of
job requirements. Here are the following:
1. Locating prospective customers
This involves salespeople searching for qualified prospective customers.
Whether its leads (who may become customers) or prospects (who need the
product or service).
2. Determining customers’ needs and wants.
This involves salespeople gather information about what prospect wants and
needs, enable to decide the best way to approach in order to certain the
prospect capable of making purchase decision. Some cases, salesperson needs
to assist the prospect to determine what they need.
3. Recommending a way to satisfy the customers’ needs and wants.
This involves salespeople providing information, recommendation, or
alternative possible solutions that match with prospect’s wants and needs.
4. Demonstrating the capabilities of the firm and its products.
This involves salesperson demonstrating/show the prospect why they should
choose this product from this firm. Such as advertising and other promotional
tools.
5. Closing the sales
This involves salesperson to get the prospect to commit to purchase.
6. Following up and servicing the account
This involves salesperson to not end once the sales have been made. Keeping
existing customers is easier than attract new ones. Salesperson should
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maintain the relationship with the customers by keeping them satisfy through
follow up activities.
2.3.4 Components of Personal Selling
Personal selling focus on four components to a successful selling, it involves
steps from the start determining the prospects till closing the sales. According to
Reid Bojanic (2010:527) these are the 4 components:
1. Prospecting and qualifying
Sales activities consist of searching and determine selective prospects that are
believed to have the need and wants, willingness, readily accessible and
ability to purchase the product.
2. Planning and delivering sales presentations
Sales activities consist of introducing themselves, identify the product, and
being honest and assertive in planning an outline of what will the prospect’s
needs by asking probing questions about prospect’s needs and objectives.
Three types of probing questions and they are information gathering, problem
identification, and problem resolution. And last, to be active listener and
understand what prospect is trying to say. This is to avoid objections and gain
commitment from them.
3. Overcoming objections
Sales activities consist of determining if the prospect’s response is asking for
more information, condition of the sale, or an actual objection. After
determining, it must overcome the objection by agree and counter, turn the
objection into a reason for buying, seek more information and postpone the
objection.
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4. Closing the sale
Sales activities consist of summarizing the important purchase points and
have a confirmation from the prospect.
Author concludes these four elements are the basic process for sales to
interact with customer effectively. A journal written by Dave Kahle, The American
Salesman 54.7(Jul 2009):3-8 Good Questions and the Basic of Selling. He mentioned
these are the basic simple elements process for sales:
“1.Engage with the right people. 2.Make them feel comfortable with you.
3.Find out what they want. 4.Show them how what you have provides them what
they want. 5.Gain agreement on the next step. 6.ensure that they are satisfied, and
leverage that satisfaction to other opportunities.”
2.4 Consumer Behavior
2.4.1 Definition of Consumer Behavior
According to Kotler Keller (2013: 173) consumer behavior is “Consumer
behavior is the study of how individual, groups, and organizations select, buy, use,
and dispose of goods, services, ideas, or experiences to satisfy their needs and
wants.”
Thus according to Schiffman Kanuk (2010: 23) consumer behavior is
“Consumer behavior as the behavior that consumers display in searching for,
purchasing, using, evaluating, and disposing of products and services that they
expect will satisfy their needs.”
From the definition, author conclude that consumer behavior is the study of
how individual, groups and organization behave in different kinds of situation where
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they will face in selecting, buying, using in goods and service or experience to make
themselves satisfy.
2.4.2 Consumer Buying Behavior
According to Kotler Armstrong (2012: 178) consumer buying behavior is
“Consumer Buyer Behavior refers to the buying behavior of final consumersindividuals and households that buy goods and services for personal consumption.”
Purchase decision is about which brand will the customer prefer and purchase
at the end. Purchase behavior is described into two three kinds of purchase; trial
purchase (Investigating stage where the consumer attempted to assess a product
through direct consumption). Repeat purchase (which usually signifies that the
product meets the customer’s approval and that they consumer is willing to use it
again), and long-term commitment purchase (which consumer moves directly from
evaluating to long-term commitment without the chances for an actual trail)
(Schiffman Kanuk 2010: 497).
Everyday consumers determine various purchase options. From the above
definition the conclusion will be consumer purchase behavior is for their personal
consumption whether it's a trial purchase, repeat purchase or a long-term
commitment purchase.
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2.4.3 Influence of Consumer Buying Decision
Kotler Armstrong (2012: 159) has mentioned 4 factors that influence the
consumer buying decision. Below this diagram 2.2, will be explaining the factors
that influence the consumer buying decision.
Factors That Influence Consumer Buying Decision
Cultural
Culture
Subculture
Social
class
Social
Personal
Reference
groups
Age and life
cycle stage
occupation
Psychologic
al
Motivation
Economic
situation
Perception
Family
Roles and
status
Buyer
Learning
Personality
and selfconcept
Beliefs and
attitudes
Picture 2.1 Factors That Influence Consumer Buying Decision
Source: Philip Kotler and Gary Armstrong (2012:159)
1. Cultural factors
Cultural factors influence consumer behavior in a wide-ranging and deep
understanding. It consists of cultural, subcultural and social class.
a. Culture is set of basic desire, values, perception, and behavior that are
learned by a member of society from family and other important tradition.
b. Subculture is a group of smaller member people that shares the similar
experience value, and behavior.
c. Social class is comparatively stable in where society members share
similar interest, behavior and values.
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2. Social factors
Social factors influences consumer behavior, examples like family, reference
group, and the role and status.
a. Reference group is a group that can provide direct or indirect influence on
the attitude and behavior of people.
b. Family is members that can be powerful influence on buying behavior.
Family is the most important society among the others.
c. The role and status define the person’s position inside the group, such as
family, clubs, organizations and communities. This status reflects their
esteem given by society.
3. Personal factors
Decision is also influence by person’s buyer traits such as age and life cycle
stage, occupation, economic situation, lifestyle and personality and selfconcept.
a. Age and life cycle stage is buyers tend to buy according to their lifetimes.
The taste of things will match with their age related.
b. Occupation in different kind of job will require different needs. And these
influence their behavior in purchasing.
c. Economic situation is state of economy that will affect a person choice of
product. State of economy will be personal income, savings, and interest
rate.
d. Lifestyle is how the person’s pattern of daily life is. Such as his or her
activities, interests and opinions.
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e. Personality and self-concept is different people have different personality.
Personalities are the unique psychological characteristic from every
people. And these personalities will influence their self-decision-making.
4. Psychological factors
When a person is purchasing, it is also influence by four major; motivation,
perception, learning and beliefs and attitudes.
a. Motivation is a strong drive that directs the person in order to meet the
satisfaction of the needs.
b. Perception is a process through which information is selected, organize,
and interpret to make it meaningful.
c. Learning is changing from past experience that effect in individual’s
behavior.
d. Beliefs and attitudes; belief is a descriptive though that a person holds
about something. Attitude is a person’s consistent evaluation towards an
object or idea
Thus, author concludes that factors influencing the consumer’s behavior have
many variables involved and all of these factors influence one another. A journal by
Barmola, Kailash Chndra;Srivastava, S K. Productivity 51.3(Oct-Dec 2010):268275, Role of Consumer Behavior in Present Marketing Management Scenario. It
mentioned, “Consumer behavior is influenced by various factors like individual,
environment, and decision making.”
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2.4.4 Process of Buying Decision
According to Kotler Armstrong(2012: 176) buying decision consist of five
stages that shows possibilities that arise when a prospect facing purchase situation
from the process of before and after purchasing. And these are the following;
Need
recognition
Information
search
Evaluation
of
alternatives
Purchase
decision
Post
purchase
behavior
Picture 2.2 The Buyer Decision Process
Source: Kotler and Armstrong (2012: 176)
1. Need recognition
Consumer will buy a product as a solution to the problems it faces. The
problem will be motivated by the need at hand. Without the introduction of
the problems that arise, consumers cannot determine which products will be
purchase.
2. Information Search
After understanding the problems that exist, consumers will be motivated to
seek information to solve the existing problems through information search.
Information search can be obtained from personal sources (family, friends
etc.), commercial sources (advertising, displays etc.), public sources (mass
media, internet searches etc.), and experiential sources (examining, using the
product etc.).
3. Evaluation of alternatives
Once consumers have a wide range of information, consumer will evaluate
alternatives to address the problems it faces.
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4. Purchase decision
After consumers evaluate strategic alternatives exist, consumer will make a
purchase decision. Purchase intention such as expected income, expected
price, and expected product benefits, however sometimes in situation
between purchase intention and purchase decision may have a different result
in purchasing due to other things that need to be considered.
5. Post purchases behavior
An evaluation process consumer does not just end at the stage of making a
purchase decision. After purchasing the product, consumers will evaluate
whether the product is in accordance with expectations. In this case, the result
will either be satisfaction or dissatisfaction. Consumer will be satisfied if the
product is in accordance with expectations and will most likely purchase
again in the future. Consumer will be dissatisfied if the product is not in
accordance with expectations and this will reduce the chances of consumer
purchasing in the future. Satisfied customers will tend to buy the product
again, let others know about the product, pay less attention to other brands
and advertising. And even will buy other product from the company.
As author conclude above describe the customer buying decision consist of 5
steps of process while facing purchasing situation. According to a journal by Novita
Klarisa; Pengaruh Bauran Promosi Terhadap Keputusan Pembelian Konsumen Di
Swalayan Maxi Balikpapan, she also stated that buying process consist of these 5
steps. I quote “Menurut Kotler(2003:204), terdapat beberapa tahap-tahap proses
dalam melakukan keputusan pembelian yaitu: Pengenalan Masalah, Pencarian
Informasi, Evaluasi Alternatif, Keputusan Pembelian, dan Perilaku Pasca
Pembelian..”
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2.5 Relationship between Personal Selling towards Buying Decision
According to some journals that have explained the relationship between
personal selling towards buying decision, here are some examples;
1. Author Ananda Fortunisa and Andrew Arief Agassi in the journal Pesan
Iklan Televisi Dan Personal Selling: Alat Promosi Untuk Peningkatan
Keputusan Pembelian (2012) has stated that “Dengan indikator tersebut
dihasilkan kesimpulan bahwa variabel personal selling berpengaruh
signifikan terhadap keputusan pembelian djarum black.” This means the
result of the conclusion in this research indicate variable of personal selling
significantly influence-buying decision at Djarum Black.
2. Author Novita Klarisa in the journal Pengaruh Bauran Promosi Terhadap
Keputusan Pembelian Konsumen Di Swalayan Maxi Balikpapan (2013) has
stated that variable personal selling has positive effect towards buying
decision.
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2.6 Framework
This is the outline of this research:
Marketing Mix
Product
Promotion Mix
Place
Advertising
Price
Marketing
Direct
Promotion
Marketing
Process
Public Relation
Physical
Sales Promotion
environment
Personal Selling
People
Picture 2.3 The Framework
Customer
Buying
Decision
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2.6.1 Concept framework
This is the outline of the 2 variables. Personal selling is the independent
variables (variable X) and consumer buying decision is the dependent variable
(variable Y)
Personal Selling
Customer Buying Decision
(Variable X)
(Variable Y)
 Prospecting and qualifying
 Need recognition
 Planning and delivering sales
 Information search
 Overcoming objections
 Evaluation of alternative
 Closing the sale
 Purchase decision
 Post purchase decision