According to the old-school of thought, the marketing funnel appeared like this: in this funnel the marketer required to fill the top of the funnel with as many leads (prospective customers) as possible since the bottom of funnel only filters out a small percentage of concluding customers.

But today, a majority of business firms understand that their relationship with the customer should not end at the bottom of the cone-shaped marketing funnel. Instead, it should open up the funnel after a person purchases a firm’s product. Firms today invest on retraining the customer forever. Firms try to capture the customer’s journey after a person buys product of the firm. At its core, customer relationship management (CRM) is all of the activities, strategies and technologies that companies use to manage their connections with their current and potential customers. The proverb “customer is king/queen” is literally practiced through the marketing funnel; therefore today’s funnel looks like this.

Role of CRM:  Customer Relationship Management helps firms to build association with their customers. CRM helps firms to create loyalty and customer continuation. Customer’s experience with a firm increases their loyalty towards it. Product quality and loyalty goes hand in hand and increasing the sales of a firm. CRM is a management strategy that results in increased profits for a business. At its core, a CRM as a tool creates a simple user-related collection of data that helps businesses recognize and communicate with customers in a quantifiable way.

A far-sighted business firm therefore needs to adopt various strategies to influence consumers at each stage of the funnel. Stages such as awareness, comprehension, conviction, action can be geared by follow-up telephone calls, sending them positive press reviews, reminders, or updated corporate communication. The sales and marketing departments must guide this traffic of the prospective customers through the funnel using strategies that are designed to be effective at each stage. At each stage of the corporate communication, firms need to update it with latest trends.

Role of Social Media: A marketing funnel starts with awareness. Please understand this fact that a firm cannot do anything until consumers become aware of the existence of their brand. Social media gives business marketers a direction to communicate with customers, and to find specific potential consumers. It personalizes the “brand” and helps business to spread the firm’s message in a comfortable and informal way. It helps in creating awareness and harnessing the power of word-of-mouth, which is much more effective than traditional advertising.

Effective marketing strategies a must in each funnel stage:  marketing activities must be conducted in such a way that they must facilitate consumers through the funnel process. The activities must engage promotional activities to create awareness about the products, detail of the benefits compared with the competitor’s product, chart the advantages of how a purchase will benefit the customer, or offer a special promotion that infuses the sale. Once the sale is complete, marketers needs to engage the customer to get feedback and retain loyalty, as that can lead to repeat business and referrals.

Marketing and sales funnel is one and the same: Some companies differentiate between a marketing funnel and a sales funnel, but both can work together seamlessly. The distinction in both is immaterial. Marketing is responsible for generating traffic at the top and through the middle of the funnel, and as these leads or buyer prospects get closer to a decision, the sales activity clicks.

Marketing funnel is based on technology: Digital technology is part and parcel of business and cannot be ignored by marketers. The marketing funnel offers a good example of this fact. The buying process has become faster than before. Majority buyers do their own research online, comparing features and benefits of competitive products, rather than relying on a company’s traditional marketing activities to guide them through the funnel stages. This means buyers enter the funnel at a point where they are more prepared to make a sale. It also means companies need to get information online; they need to upgrade their website, blogs with product content, price, discounts, warranty, guaranty etc, etc. Post purchase review has become an essential feature these days.

Funneling is a continuous non-stop process: No company can ever say that they have completed marketing activity. The world is changing fast. So does the customers’ needs, wants and demands. The competition is fierce in every walk of life. There is nothing called product loyalty in business world. Continuous improvement in marketing helps firms to achieve better returns on their investment in marketing. Continuous improvement is a form of quality management that focuses on making small additional improvements to a process, rather than trying to achieve major changes. In marketing, at each stage of funneling, firms can keep doing continuous improvement to achieve goals such as increasing the accuracy in segmenting, targeting and positioning of course by using product differentiation strategy.

The marketing funnel is visualization and perceptive to understand the process of turning leads (prospective customers) into real customers. The idea is that, like a funnel, marketers cast a broad net to capture as many leads as possible, and then slowly nurture prospective customers through the purchasing decision, narrowing down these customers in each stage of the funnel.

The funnel is a term for describing the route by which prospective customers, or prospects, become customers. The visualization of the process looks like a funnel. A larger number of prospects go in the top and are reduced to a lesser number of customers who come out at the bottom.

Few Buyer Behavior models are very useful to understand the concept:

The Economic Model: This model of consumer behavior suggests that people know all the facts that are relevant to a purchase. Consumers logically compare choices in terms of cost and value received to get the greatest satisfaction from spending their time and money. The Economic Model, one of the oldest models of Consumer Behavior tries to explain what a person is likely to buy and in what quantity. This model takes into consideration the behavior of an economic man which means a hypothetical person who behaves in exact accordance with his rational self-interest. Economic man gives foremost importance to the monetary or financial considerations while making a decision. The ultimate objective of an individual is the maximization of satisfaction by investing the minimum money resources for the satisfaction of his needs and wants. Though this model has certain limitations, it is one of the widely used models of consumer behavior. All students of marketing and business management must know this model.

Learning Model: This model suggests that a man gets information by learning and observing others. His core concepts are driven by stimulus, cues, responses and reinforcements which determine his needs and wants. Drive is a strong internal stimulus which compels action. This model is draws from Freudian psychology. It states that the individual consumer has some deep motives that drive him to make certain buying decisions. Observational learning occurs through observing the behavior of others. It is a form of social learning which takes various forms, based on various processes. In humans, this form of learning happens from childhood. The child observes his parents, siblings, teachers and neighbors in surroundings. Even as a person is growing, he/she educates to get more and more information.

The Sociological Model: According to the sociological model, the individual buyer behavior is influenced by society, close groups, social classes, population, income, castes, communities, family life cycle and other cultural aspects. The buying decisions of individuals are not totally based on utility; majority of buyers have a desire to follow the surroundings. Thus, as a part of sociological model the two important models are Nicosia model and Howard Sheth. A human being is analyzed as a system with stimuli as the input and behavior as the output of the system. The Nicosia model of buyer behavior was presented in 1966 by motivation and behavior expert Mr. Francesco Nicosia. The Howard Seth Model was presented in 1969 by John Howard and Jagdish Seth.

Psychoanalytical Model: This model draws from Freudian psychology. It states that the individual consumer has some deep motives that drive him to make certain buying decisions. The buyer has some hidden fears, hidden desires and subjective longings and personal wishes. His buying action can be affected by appealing to these desires. The psychoanalytical theory is credited to the work of noted psychologist Sigmund Freud. Freud introduced personality as a motivating factor in human behavior. According to this theory, the mental framework of a human being consists of three elements, namely: ID, ego and super ego. The id (or the instinctive or pleasure seeking element) is the group of inborn desires that a man is born with. It includes the aggressive, destructive and sexual drives of human. The superego (or the internal filter) presents to the individual the behavioral expectations of society. The ego (or the control device) maintains a balance between the id and the superego. The theory believes that a person is not able to satisfy all his needs within the boundaries of the society. These unsatisfied needs create tensions in an individual which have to be taken care of.

The Howard Sheth Model: This model serves as an incorporated framework for a very sophisticated comprehensive theory of consumer behavior. It should be noted that the authors John Howard and Jagdish Seth actually used the term buyer in their model to refer to industrial purchases as well as individual consumers. The model attempts to depict rational brand choice behavior by buyers under conditions of incomplete information and limited abilities. It distinguishes three levels of decision making:

• Extensive problem solving: this is an early stages of decision making in which the buyer has little information about brands and has not yet developed well defined and structured criteria by which to choose among the available products.
• Limited problem solving: This is more advanced stage; the choice criteria are well defined but the buyer is still unsure about which set of brands will best serve him. Thus, the consumer still experiences uncertainty about which brand is best.
• Routinized response behavior: Buyers have well defined choice criteria and also have strong tendency towards the brand. Little confusion exists in the consumer’s mind and he is ready to purchase a particular brand with little evaluation of alternatives. He is ready to take a chance.

Nicosia Model:  This model explains the behaviour of the buyer by establishing a link between the organization & its prospective consumers. The model is based on the buyer’s responses to a stimulus (message) sent by a firm. A message from the firm first influences the predisposition of the consumer towards the product or service. Based on the prevailing situation the consumer will develop a certain attitude towards the product. This may result in a search for the product or the consumer may evaluate certain attributes of the product. If the consumer is satisfied, it may result in a positive response, with a decision to buy the product or the reverse may happen.

The decision-making process is divided into four areas:

1. Consumer attitudes are shaped by information from the marketer. In this stage information flows from the sender (marketer) to the receivers (buyers).
2. Consumer is always looking for information about specific category products and he assesses the information from various sources valuing his perspective. During the assessment the consumer allocates appropriate weight to each information piece. His choices of decisions are based on his viewpoints, they can many times be vague to describe. When the consumer gets satisfied with his analysis of a given product, he makes a decision of buying the product.
3. At this stage consumer buys the product.
4. Consumer experiences the purchase: he might or might not feel gratified. Based on his experience he tags his purchase as “good”, “bad”, “horrible,” or “overwhelming”. The last step is not only the consumption of a product but also a very important factor for the future decisions of the consumer. Feedback is also a very important factor for the company. Based on the feedback, the company prepares future product policy, its advertising and communications targeted to the consumer.

Conspicuous (which means visible) consumption is the spending of money on luxury goods and services to display financial power to the public. In the 19th century, the term conspicuous consumption was introduced by the economist and sociologist Thorstein Veblen in his book “The theory of leisure class: An Economic Study in the Evolution of Institutions.” In that 19th-century social and historical context, the term “conspicuous consumption” was used to describe the men, women, and families of the upper class who showed off their great wealth as a means of publicly manifesting their social power and prestige either real or seeming.

As society, we are so obsessed with social class. I think it has more to do with psychology than sociology. When we think about ourselves as a people, we swiftly fall back on class stereotypes: HIG (High Income Group), MIG (Middle Income Group) and LIG (Low Income Group). Also, we are so attracted to the way the rich and famous lead their lives, that subconsciously we follow literary classics, great movies and drama, television shows etc. To the conspicuous consumer, a public display of wealth and power is a means either of attaining or of maintaining a given social status. Flashy people in society use such behavior to maintain or gain higher social status. Most classes have a flashy consumers who affect and influence the others in those classes. The lavish consumption of goods is meant to provoke the envy of other people. The term conspicuous compassion is used to describe the deliberate charitable donations of money in order to enhance the social stature of the donor. It is a display of superior socio-economic status. Flashiness as a behavior is deeply entrenched in culture the society. It is extremely important to recognize the way in which conspicuous consumption directs our spending habits, and our consumption pattern.

Conspicuous consumption is swelling the luxury markets across the world. The number of luxury goods and services buyers in the developed world is being swelled by two other trends. First, consumers are increasingly adopting a “trading up, trading down” shopping strategy. Many traditional mid-market shoppers are abandoning middle-of-the-range products for a mix of lots of extremely cheap goods and a few genuine luxuries that they would once have thought out of their price league. Alongside this “selective extravagance” is the growth of “fractional ownership”: time-shares in luxury goods and services formerly available only to those paying full price. Fractional ownership first got noticed when firms such as NetJets started selling access to private jets. It has since spread to luxury resorts, fast cars and much more.

Robust sales of luxury cars and fine art and artifacts have helped push the global luxury goods market higher than €1tn (£700bn), according to a new report, despite slowing demand for personal luxuries such as jewellery and handbags. The annual report from consultancy Bain & Co. Chinese consumers account for 31% of global luxury sales, followed by US consumers at 24% and Europeans at 18%.

The Indian economy continued to perform well in 2015 and Indian luxury goods was able to post strong growth. The market is still in a nascent stage and has many opportunities for growth amongst international players. The urban rich consumer base of India is indulging highly in luxury goods for both style and prominence reasons. Apart from the economic and demographic factors, during 2015 luxury players invested in marketing campaigns to increase the awareness of luxury goods among local consumers.  A study stated that with the increasing brand awareness and growing purchasing power of the upper class in tier II and III cities, Indian luxury market is expected to cross $18.3 billion by 2016 from $14.7 billion in 2015; it is growing at a compounded annual growth rate (CAGR) of about 25%.

The factors that have fuelled the luxury industry’s growth are rising disposable incomes, brand awareness amongst the youth and purchasing power of the upper class in Tier II & III cities in India. Areas such as five star hotels and fine-dining, electronic gadgets, luxury personal care, and jewelry performed well in the year of 2015 and are expected to grow by 30-35% over the next three years. Big ticket spends such as on luxury cars mainly SUVs are likely to continue, growing upwards of 18-20% over the next three years, driven by consumption in smaller towns and cities.

A recent research also suggests that the luxury sector is swelling in apparel and accessories, pens, home decor, watches, wines and spirits and jewellery, services such as spas, concierge service, travel & tourism, fine dining and hotels and assets, yachts, fine art, automobiles. According to the study, the high internet penetration across tier-II and tier-III cities along with high disposable income shall lead to approximately 100 million transactions on the Internet by 2020. As a result, the luxury consumption is going to increase manifold in the country.

In the book “Income, Saving and the Theory of Consumer Behavior” (1949), J.S. Duesenberry proposed that a person’s conspicuous consumption psychologically depends not only upon the actual level of spending, but also depends upon the degree of his or her spending, as compared with and to the spending of other people. The conspicuous consumer is motivated by the importance he/she gets and society’s opinion about them. The status and the opinion of the social and economic reference groups are very important for conspicuous consumers.

Over-sized houses aids other forms of conspicuous consumption: such as an over-sized garage for the family’s over-sized motor vehicles, buying more clothing to fill larger clothes closets etc. hence, conspicuous consumption becomes a self-generating cycle of spending money for the sake of social prestige. Similar to the consumer trend for over-sized houses is the drift towards buying over-sized light-trucks, specifically the off-road sport utility vehicles as a form of psychologically comforting conspicuous consumption, because such big motor-vehicles usually are bought by people who reside in a city, an urban nuclear family.

High levels of conspicuous consumption may be seen as socially undesirable on two grounds; firstly, as it is often associated with high relative income, high levels of conspicuous consumption may be an indicator of high levels of income inequality, which may be found intrinsically or instrumentally objectionable; secondly conspicuous consumption differs from other forms of consumption in that the main reason for the purchase of positional goods is not due to the additional direct utility provided by the goods alleged high quality, but rather the social status associated with the consumption of that good.

So, is conspicuous consumption good or bad? The fact is that it stimulates economic growth. Because people spend their discretionary income, it increases the likelihood that the working class will be able to make more money. When you buy a product, the company you are buying from makes money. When they make money, they can afford to hire more workers. They can also then afford to pay their workers higher wages. When the workers get higher wages, they can afford a reasonable living standard, if they work two jobs or more, quit one, leaving it open for someone else who is unemployed. They also could afford to consume a bit more than the bare necessities and buy more products, further stimulating the business. This is an infinity symbol of transfer of wealth. The money keeps traveling than remaining stagnant. More millionaires in the society will spend more money which will stimulate markets, jobs, and boost the economy. Also economies grow because of luxury tax applied to goods and services for conspicuous consumption. It is a type of progressive sales tax that at least partially corrects the negative externality associated with the conspicuous consumption of luxury goods.