Consumer Behavior

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December 3, 2017
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December 4, 2017

Consumer Behavior

————————————————- Question Q1. (a) What is the difference between primary and secondary research? Under what circumstances might the availability of secondary data make primary research unnecessary? Q1. (b) What is opinion leadership? Q2. (a) What are the strengths and weaknesses of motivational research? Q2. (b) What is social class? Q3. (a) What is the relationship between Brand loyalty and brand equity? What role do concepts play in the development of marketing strategies? Q3. (b) Sony is introducing a new 27- inch TV with a picture- in- picture feature.

How should the company position and advertise the product to (i) Generation- X Consumers (ii) Affluent’ baby boomers. Q4. (a): Are there any circumstances in which information from advertisement likely to be more influential than word of mouth? Q4. (b) Find two ads that depict two different defence mechanisms and discuss their effectiveness. Q5. (a) How can marketers use measures of recognition and recall to study the extent of consumer learning? Q5. (b) What is market Segmentation? How is the practice of market segmentation related to the marketing concept?

Q6. (a) What is cross- cultures consumer analysis? How can a multinational company use cross- cultural research to design each factor in its marketing mix? Q6. (b) How should marketers promote products and services to working women? What appeals should they use? Explain. Q6. (c) For what kinds of audiences could you consider using comparative advertising? Why? 1. What is the difference between primary and secondary research? Under what circumstances might the availability of secondary data make primary research unnecessary? 1. PRIMARY RESEARCH Primary Sources

Some definitions of primary sources: 1 Primary sources are original materials on which other research is based 2 They are usually the first formal appearance of results in the print or electronic literature (for example, the first publication of the results of scientific investigations is a primary source. ) 3 They present information in its original form, neither interpreted nor condensed nor evaluated by other writers. 4 They are from the time period (for example, something written close to when what it is recording happened is likely to be a primary source. 5 Primary sources present original thinking, report on discoveries, or share new information. Some examples of primary sources: 1 Scientific journal articles reporting experimental research results 2 Proceedings of Meetings, Conferences and Symposia. 3 Technical reports 4 Dissertations or theses (may also be secondary) 5 Patents 6 Sets of data, such as census statistics 7 Works of literature (such as poems and fiction) 8 Diaries 9 Autobiographies 10 Interviews, surveys and fieldwork 11 Letters and correspondence 12 Speeches 13 Newspaper articles (may also be secondary) 14 Government documents 5 Photographs and works of art 16 Original documents (such as birth certificate or trial transcripts) 17 Internet communications on email, listservs, and newsgroups ALSO This means gathering information directly from the consumers which could involve – using questionnaire. – using focus group [ face to face interview ] – telephone interviews – panel interviews – person to person interviews And so on. 1. MERITS – from the primary source. – original information. – current data. – reliable. – clearly defined. 2. DEMERITS – time consuming. – expensive process. – difficult to procure, sometimes. . LIMITATIONS. – due to time/ cost factors, the amount of data gathering is restricted. 2. SECONDARY RESEARCH Secondary Sources Secondary sources are less easily defined than primary sources. What some define as a secondary source, others define as a tertiary source. Nor is it always easy to distinguish primary from secondary sources. A newspaper article is a primary source if it reports events, but a secondary source if it analyses and comments on those events. In science, secondary sources are those which simplify the process of finding and evaluating the primary literature.

They tend to be works which repackage, reorganize, reinterpret, summarise, index or otherwise “add value” to the new information reported in the primary literature. More generally, secondary sources Some Definitions of Secondary Sources: 1 Describe, interpret, analyze and evaluate the primary sources 2 Comment on and discuss the evidence provided by primary sources 3 Are works which are one or more steps removed from the event or information they refer to, being written after the fact with the benefit of hindsight. Some examples of secondary sources: 1 Bibliographies (may also be tertiary) Biographical works 3 Commentaries 4 Dictionaries and encyclopedias (may also be tertiary) 5 Dissertations or theses (more usually primary) 6 Handbooks and data compilations (may also be tertiary) 7 History 8 Indexing and abstracting tools used to locate primary & secondary sources (may also be tertiary) 9 Journal articles, particularly in disciplines other than science (may also be primary) 10 Monographs (other than fiction and autobiography) 11 Newspaper and popular magazine articles (may also be primary) 12 Review articles and literature reviews 13 Textbooks (may also be tertiary) 4 Treatises works of criticism and interpretation ALSO Means gathering information indirectly from the published source Which could involve – using census data. – buying published data from bureaus – gathering data from stock exchange – collecting information from company annual reports. And so on. 1. MERITS – from the secondary source. – easy to source – less time required. – less expensive. 2. DEMERITS – repackaged information. – re- interpretation. – not so reliable. – old data and not current. 3. LIMITATIONS. – not current data.

Under what circumstances might the availability of secondary data make primary research unnecessary? THE CIRCUMSTANCES INCLUDE – data used for developing strategic planning. – data used for developing corporate planning. – data used for developing business planning. – data used for developing marketing planning. – data used for developing demand forecasting. And so on. QUESTION 2 2. What is opinion leadership? @@@ The opinion leader is the agent who is an active media user and who interprets the meaning of media messages or content for lower- end media users.

Typically the opinion leader is held in high esteem by those that accept his or her opinions. Opinion leadership tends to be subject specific, that is, a person that is an opinion leader in one field may be a follower in another field. An example of an opinion leader in the field of computer TECHNOLOGY , might be a neighborhood computer service technician. The technician has access to far more information on this topic than the average consumer and has the requisite background to understand the information, though the same person might be a follower at another field and ask others for advice.

Key opinion leaders (kols) are physicians who influence their peers’ medical practice, including but not limited to prescribing behavior. Pharmaceutical companies generally engage key opinion leaders early in the drug development process to provide advocacy activity and key marketing feedback . Key opinion leaders generally belong to a specific area of expertise, such as oncology, cardiology, diabetes, or sometimes do specialized work in very niched therapeutic areas such as Colorectal Cancer (CRC), Non Small Cell Lung Cancer (NSCLC).

Some kols also belong to administration, the FDA or EMEA. Pharmaceutical companies engage kols in publications, conducting of clinical trials, or conducting marketing research through online panels. Individual whose ideas and behavior serve as a model to others. Opinion leaders communicate messages to a primary group, influencing the attitudes and behavior change of their followers. Therefore, in certain marketing instances, it may be advantageous to direct the communications to the opinion leader alone to speed the acceptance of an advertising message.

For example, advertisers may direct a dental floss promotion to influential dentists or a fashion campaign to female celebrities. In both instances, the advertiser is using the opinion leader to carry and “trickle down” its message to influence its target group. Because of the important role opinion leaders play in influencing markets, advertisers have traditionally used them to give testimonials Pharmaceutical companies actively engage key opinion leaders in their drug development process. Key opinion leaders are physicians who are held in high esteem by their peers.

Their inputs can be invaluable while conducting clinical trials. Since they are experts in their fields, they also have the ability to influence their peers’ medical practice and prescribing behavior. Why are key opinion leaders important? * Provide advocacy activity: They can champion the products that they believe in. They can act as change agents and help direct how your product is perceived in the market * Provide marketing insights: They can be engaged in focus groups in a variety of ways. For example: You can conduct market research through an online panel of these experts.

Their feedback can also help you test market your drugs before they are made available to the public * Be a part of primary investigations: They can be engaged in conducting clinical trials that can help you test the efficacy of your pharmaceutical products Key opinion bloggers Some key opinion leaders may use blogs to reach out to their peers as well as the general public. This further expands their circle of influence. They can connect with millions of people almost instantaneously and play a significant role in shaping their perceptions. In their blogs, key opinion bloggers may talk about their patients’ experience with a certain drug.

They may also discuss the pros and cons of a particular line of treatment, which requires a specific prescription. In addition, they may give insights about new developments in their field and how they influence current realities. Both their actual experience with patients as well as their subjective opinions can hugely impact the opinions of their peers as well as the general public. * Key opinion leader identification: Information gathering from publicly available resources as well as commercial resources * Development of primary profiles: Development of a database that suits your exact needs.

We can help you gather information about specialists in different fields including niche therapeutic areas such as Colorectal Cancer (CRC) and Non Small Cell Lung Cancer (NSCLC) * Capturing of complete profiles: Development of a database that includes information such as: * Physician’s full name * Address * Qualifications * Current position * Research activities * National association memberships * Awards * Any advisory roles to pharmaceutical majors 3. What are the strengths and weaknesses of motivational research?

Systematic analysis of the motives behind consumer decisions, used especially by advertisers and marketers to assess attitudes toward products and services. Also called motivation research. Studies conducted in order to determine the motivations behind consumer purchases. The research is psychologically oriented and attempts to learn why people behave as they do, why they make certain purchases, and why they respond to specific types of advertising appeals. The resultant information is used by advertisers and advertising agencies to plan new products, develop advertising campaigns, and, in general, to create more effective advertising.

Why Is Satisfying Your Customers Important? Satisfying customers is the only way to stay competitive in today’s marketplace. Customers have an expectation of service and product performance that must be met. The balancing act between what customers want and what your company can provide must be optimized in order to maximize your firm’s long- term profits. This occurs in two ways: * With precise information, companies can focus on issues that truly drive customer satisfaction. A directed focus often leads to cost reductions because companies can emphasize improvement in areas of customer concern and de- emphasize focus in other areas. Focusing on motivators of customer satisfaction leads to more loyal customers, who tend to be the most profitable customers (i. e. , repeat business is usually the most profitable). An inclusive customer satisfaction and loyalty program can, therefore, be considered a source of future profits. The goal of Decision Analyst’s Customer Satisfaction & Loyalty research is to help companies maximize long- term profitability through reaping the “lifetime value” of its customers. Types Of Customer Satisfaction Research MOTIVATION RESEARCH

Helpful in determining strengths and weaknesses of corporate satisfaction and loyalty programs, motivation research is usually an introductory step in developing an integrated customer satisfaction and loyalty system. Our experts conduct in- depth motivational research interviews with both employees and customers to develop insight into the performance of your current satisfaction program. Recommendations to improve customer satisfaction and loyalty are made based on this motivational research. TRACKING STUDIES Studies repeated at specified intervals give organizations a history of nformation about customer or employee satisfaction, revealing trends in both satisfaction and loyalty. Tracking studies are especially useful in determining and monitoring key variables that influence satisfaction and loyalty- which in turn, influence company profitability. Tracking studies may be conducted using any of the following methods: * Telephone * Mail * Internet * Interactive Voice Response Systems Transaction Monitoring These studies provide insight into customer satisfaction at different points of customer contact.

For example, customers who call a customer care center would complete a satisfaction survey soon after their call- center experience. Other customers who purchase a product in a retail operation would receive a questionnaire requesting information on that experience. Transaction monitoring focuses on increasing customer satisfaction at particular stages or in specific places. Such a microexamination of customer behavior allows companies to improve profitability through streamlining processes and improved customer loyalty. Transaction monitoring may be conducted using any of the following methods: * Telephone Mail * Internet * Interactive Voice Response Systems Exception Systems The exception- system approach allows for the identification of problems that may occur in an organization by encouraging customers to give input when they feel dissatisfied. The goal, therefore, is to identify areas of weakness that should be addressed to improve customer satisfaction. Exception systems may use any of the following methods: * Internet * Interactive Voice Response Systems * Comment Cards Customer Value Analysis This analysis gives customer satisfaction and loyalty programs an added level of information about customers.

A typical customer value analysis classifies customers based on how much they spend and how much value they add to your company. Specifically, the analysis allows a directed set of actions to be developed to increase satisfaction and loyalty of the most profitable and valuable customers. Marketing Consulting Decision Analyst consultants provide insight into all variables that influence customer satisfaction and loyalty, such as product design, strategic positioning, brand strength and brand equity, product quality, competitive activity, customer service, and advertising.

Through a careful examination of these variables and the interactions among them, our consultants develop a satisfaction strategy that will maximize long- term profitability. Employee Satisfaction Research Employee satisfaction measurement is a crucial first step in most corporate satisfaction and loyalty programs. Employees are the contact points between the corporate brand and customers. Dissatisfied employees often lead to dissatisfied customers. Employee satisfaction can help maximize long- term profitability in four ways: * Happy employees tend to do higher quality work. Happy employees tend to be more productive. * Happy employees are more likely to stay with your company. * Happy employees tend to create happy customers. Employee Perception Research Studying employees’ perceptions offers insight into their knowledge of customer satisfaction. If employees incorrectly believe customers are satisfied, it is unlikely that changes will be made in product or service levels to attempt to satisfy customers. Likewise, if employees incorrectly believe customers are dissatisfied, changes in products or services that could adversely affect customer satisfaction could be implemented.

Employee perception studies are, therefore, a crucial component of satisfaction programs that are geared to maximize long- term corporate profitability. Dealer Satisfaction Research Among automotive OEM’s, managing expectations of new vehicle dealers is a critical component in optimizing business relationships and managing long term profitability. Satisfaction with financing, service promotion, parts delivery and product issues are some of the essential types of information required to effectively manage dealer relations.

We use both qualitative and quantitative techniques to help oems diagnose problems and track satisfaction among their dealer body. QUESTION 4. 4. What is social class? Social class It is a group of people within a society who possess the same socioeconomic status. The term was first widely used in the early 19th century, following the industrial and political revolutions of the late 18th century. The most influential early theory of class was that of KARL MARX, who focused on how one class controls and directs the process of production while other classes are the direct producers and the providers of services to the dominant class.

The relations between the classes were thus seen as antagonistic. MAX WEBER emphasized the importance of political power and SOCIAL STATUS or prestige in maintaining class distinctions. Despite controversies over the theory of class, there is general agreement on the characteristics of the classes in modern capitalist societies. In many cases the upper class has been distinguished by the possession of largely inherited wealth, while the working class has consisted mostly of manual labourers and semiskilled or unskilled workers, often in service industries, who earn moderate or low wages and have little access to inherited wealth.

The middle class includes the middle and upper levels of clerical workers, those engaged in technical and professional occupations, supervisors and managers, and such self- employed workers as small- scale shopkeepers, businesspeople, and farmers. There is also often an urban substratum of permanently jobless and underemployed workers termed the “underclass. ” In CLASS SOCIETY , class is a key feature of life, and the cause and consequence of an individual’s class often deeply scores their life. QUESTION 5 What is the relationship between brand equity? What role do concepts play in the development of marketing strategies?

BRAND ADVERTISING MEANS CREATING A BRAND IDENTITY FOR THE PRODUCT THROUGH – symbol / logo / fonts/ color/ sound. – product features/ benefits/ quality/ certainty/ reliability/delivery/ packaging/design. WITH WHICH CREATE – a perception through – a visual/ communication/ behavior WHICH RESULTS IN A BRAND PERSONALITY WHICH CONSISTS OF – BRAND PERMEATION – BRAND DISTINCTIVENESS – BRAND VALUES – BRAND IMAGE WHICH HELPS TO DEVELOP 1. BRAND PLATFORM, WHICH INCLUDES – vision – mission – value – personality – positioning – strategy 2. BRAND ARCHITECTURE, WHICH INCLUDES association – commitment – earnings – essence – identity – extension – harmonization – image – licensing WHICH CREATES FOR THE PRODUCT – sales – market share – consumer preference – builds loyalty – raises relative price WHICH RAISES THE PRODUCT BRAND EQUITY – distinctiveness – perceived quality – value – permeation – personality – competitive innoculation – potential WHY BRANDING IS IMPORTANT FOR A PRODUCT TO BE SUCCESSFUL, IT MUST – bring continuous sales – gain market share, – win consumer preference – build loyalty – raises the relative price.

WHICH RAISES THE EQUITY/ BRAND EQUITY OF THE PRODUCT THAT IS WHY BRANDING IS SO IMPORTANT. This equity value is very important to the company and the figures below indicate the reason: BRAND EQUITY VALUE OF [US DOLLARS] 1. Coca – Cola 65. 3 BILL. 2. Microsoft 58. 7 BILL. 3. IB M 57. 1 BILL. 4. GE 51. 5 BILL. 5. Nokia 33. 7BILL. 6. Toyota 32. 1 BILL. 7. Intel 30. 9 BILL 8. McDonald’s 29. 4 BILL. 9. Disney 29. 2 BILL. 10. Mercedes- Benz 23. 6 BILL. PRODUCT BRANDING Branding is very important today, from both Sides of the marketing equation.

FACTOR ONE MARKETERS’ SIDE The marketers create a platform for their product’s brand Through – symbol / logo / fonts/ color/ sound. – product features/ benefits/ quality/ certainty/ reliability/delivery/ packaging/design. Favorable brand attitudes are the determinants of brand loyalty – consumers must like the product in order to develop loyalty to it. In order to convert occasional purchasers into brand loyalists, habits must be reinforced. Consumers must be reminded of the value of their purchase and encouraged to continue purchasing the product in the future.

To encourage repeat purchases, advertisement before and after the sale is critical. In addition to creating awareness and promoting initial purchases, advertising shapes and reinforces consumer attitudes so these attitudes mature into beliefs, which need to be reinforced until they develop into loyalty. Ads reinforce consumer’s perception and behavior. Remember, it is easier to reinforce behaviors than to change them and the sale is just the beginning of an opportunity to turn the purchaser into a loyalist. The marketers adopt the following to develop brand loyalists. Develop an unbeatable product – if you want to keep customers, make sure they can get what they want from your product. 2 Give customers an incentive to repeat- purchase – chance to win a prize, gift with a certain number of proofs of purchase, in- pack discount coupon, etc. 3 Stand behind your product – if customers don’t trust the product, they won’t purchase it again. 4 Know your trophy customers and treat them best of all. 5 Make it easier to buy your brand than competing brands – availability and simplicity are keys in today’s high- speed world.

Customers appreciate convenience more than ever. 6 Go to your customers – bring the product to customers when possible. 7 Become a customer service champion – seek to serve the customer and they will repeat- purchase…again and again! FACTOR SECOND BUYERS’ SIDE On the other side of the marketing equation. Brand loyalty is a consumer’s preference to buy a particular brand in a product category. It occurs because consumers perceive that the brand offers the right product features, images, or level of quality at the right price. This perception becomes the foundation for a new buying habit.

Basically, consumers initially will make a trial purchase of the brand and, after satisfaction, tend to form habits and continue purchasing the same brand because the product is safe and familiar. CORE BRAND LOYALISTS seek distinct advantages: 1 Products are perceived as effectively differentiated from their competitors. 2 Products satisfy consumer needs on both intellectual and emotional levels. 3 Products consistently deliver on their brand promise, thus they consistently deliver value. When brands resonate with customers at this level, there is a powerful emotional relationship in place. This is the key element that leads to loyalty.

THE PRODUCT OFFERS, EXACTLY, WHAT THE BRAND LOYALISTS SEEK: – product distinctiveness – product perceived quality – product value for money. – product permeation – product personality – product competitive innoculation – product’s perceived potential What role do concepts play in the development of marketing strategies? The Marketing concept holds that the key to achieving organizational. Goals consist in determining the need and wants of Target market and delivering the desired satisfactions more effectively and efficiently than competitors. The Marketing concept rests on four main pillars, namely – target market, customer needs, – coordinated marketing, and – profitability. In general words marketing is a planned approach to identify and Gain the support of users and develop appropriate Services in a manner which benefits the users . Marketing includes selling, advertising, physical distribution, Sales promotion, etc. For marketing, first thing is an appropriate Marketing plan; this is the main part of successful Marketing because under marketing plan we discuss what user need, plan information products and services, price of information product and services, How to promote information product and services, etc.

Marketing – Marketing is the process through we assess the need of market/customer/user, and we provides those Service which satisfy the needs profitably. “Marketing is a stance and an attitude that focuses on meeting the need of users. So marketing is related to management, because management is the key to successful Marketing. Marketing and Strategy Strategy is the key to successful marketing. Marketing Is a management discipline, and it is equally a part of Organizational and management philosophy, reflected In attitudes and approaches across the whole Organization.

Marketing provides the focus for Successful organizations. The starting point lies in Recognizing the fact that ‘Marketing deals with Identifying and meeting human and social Needs. Further, marketing is a management process because it identifies the Customer need and than meets customer Requirements product/services efficiently and Profitably, and in the whole process strategy plays a More important role, so successful marketing depends Upon good strategy. Marketing Approach The marketing approach is used for devising the Marketing plan, identifying users needs, and Organizational strategy.

Under the marketing Approach we mainly discuss these points: – Target audience, competition and distinctive offer. – Design of four Ps ; Cs: Product – Customer needs and wants Price – Cost to user Place – Convenience Promotion – Communication – Systems to interface with target audience. – Production and delivery systems. – Planning, organization and control of all the above. Marketing Strategy Marketing strategy is a process that can allow an Organization to concentrate its limited resources to Grab the greatest opportunities to increase sales and achieve a sustainable competitive advantage.

A Marketing strategy should be centered on the key Purpose that in academic libraries user/customer Satisfaction is the main goal. A marketing strategy is a written plan which combines the efforts to plan Information product and product development, and the Ways to promote information products and services, How to price information product and services, and their distribution. It identifies the marketing goals, and explains how they will be achieved within a stated timeframe. Marketing strategy determines the choice of target market segment, Positioning, marketing mix, and allocation of Resources.

Marketing strategy is a written marketing plan which covers all the functions of marketing from beginning to end. The plan helps to answer the following broad Questions: 1. What is the current situation regarding the product or the services? 2. Where should the information centre/product/ Services be in the next one year? Two years? Five Years? 3. How does the product/service Get there to realize specific targets? 4. To assess whether the product Or services realize the goals and target set? Functions of marketing strategy The functions of marketing strategy include the Following activities : –

Analysis of users – Planning new products, marketing plans and Target markets – Implementation of the plans related to marketing – Control with regard to standards, quality, progress Of marketing goals and expected results – Identification of objectives in line with parent Organization’s goals – Promoting demand for existing products and Services – Development of new and viable product and Services, which have a sound client base. – Execution of preparatory analysis assists staff in Developing a customer- oriented outlook.

Preparation of the plan and the implementation of Activities encourage and motivate staff to develop a proactive stance in the target market. Conclusion marketing strategy is the key to the successful Proliferation; under a strategy where we incorporate All the important points like identifying organizational Goals; customer analysis; competitor analysis; plan for specific product/services, etc. Finally, marketing Is a strategic level activity; it needs senior Management involvement at all the levels and it must Be on all agendas. QUESTION 6

Sony is introducing a new 27 inch TV with a picture- in- picture feature. How should the company position and advertise the product to (i) Generation- X consumers (ii) Affluent baby boomers. Picture in Picture (pip) is a feature of some television receivers and similar devices. One program (channel) is displayed on the full TV screen at the same time as one or more other programs are displayed in inset windows. Sound is usually from the main program only. Picture in Picture requires two independent tuners or signal sources to supply the large and the small picture.

Two- tuner pip TVs have a second tuner built in, but a single- tuner pip TV requires an external signal source, which may be an external tuner, like VCR / DVD etc. A) Generation X consumers Functionality; Here’s how to market to Gen Xers: * Appeal to their sense of fun and creativity. * Include lots of visuals, headlines quotes, etc. In print materials (See Wired Magazine for examples) * Communicate directly and openly. They’ll see through anything else. * Use their language. Either it “rules” or it “sucks. ” * Demonstrate how your product or service can educate them. Gen Xers love learning. * Offer a variety of times for events.

Keep in mind that unlike preceding generations, this one has a life. * Schedule business events in the daytime. B) Affluent baby boomers Here’s how to market to AFFLUENT BABY BOOMERS: Functionality; * Connect with boomers’ sense of themselves as trailblazers. * Focus on their lives, not their ages. * Link your brand with a major life event. * Relate to the generation’s penchant for self- improvement through self- exploration. * Fulfill boomers’ constant need for more. * Realize that well- being has many meanings. * Think solutions, not problems. * Don’t assume that all boomers are the same. * Recognize their need for indulgence.

QUESTION 7 Are there any circumstances in which information from advertisements is likely to be more influential than word of mouth (WOM)? A certain range of products / services are likely to be influenced by the advertisements. 1. PCs / Laptops – you read the specifications and short list and then see the demonstrations, before you decide to buy. 2. CLOTHINGS. – you see the advertisements and almost decide. Then visit the shop, before you buy. Whereas food products, you rely on ” word of mouth”. Antecedents of word- of- mouth What are the reasons (antecedents) to proactively spread the word about products and services?

Consumers are sometimes more likely to exchange word- of- mouth. The following reasons have been found to promote product recommendations: * Extreme satisfaction or dissatisfaction with a product or service : actual experience with product or service was much more or much less than expected. * Commitment to the firm * Novelty of the product * Public interest in product (e. g. , cultural products, entertainment) * Difficulty of evaluating product quality prior to purchase (when alternatives are difficult to evaluate before purchase, consumers often engage in WOM to gather more information)

Consequences of word- of- mouth Under what circumstances do consumer rely on word- of- mouth? * They have little knowledge in a product category. * They perceive high risk in decision making . * They are deeply involved in the purchase decision . Why do certain personal sources of information have more influence than others? Some factors have been identified to increase the influence of WOM on decision making: * Source expertise . * Tie strength . * Demographic similarity (age, sex, and social status) * Perceptual affinity (attitudinal/lifestyle) Demographic similarity only strengthens the effect of WOM for ‘personal’ products (i. . , products that require a high degree of trust, confidence and intimacy, such as to choose a personal physician); for impersonal products (e. g. , a television) it is more likely that dissimilar persons are asked/listened to. What are the effects of WOM on a macro level? Numerous websites provide the opportunity for researchers to gather actual WOM information, and determine its effect on product sales (macro level). WOM studies generally take into account the volume (total amount) and valence (positive/negative) of the WOM messages. Occasionally, these studies also take into account duration, intensity, and dispersion .

Mostly these studies are performed for the motion pictures industry and books. The results of WOM on sales are: * Volume impacts sales, but valence not : WOM creates awareness for the product (target) but does not change the evaluation of the quality. Sales are only influenced through higher awareness . WOM is here said to have an informative effect not a persuasive effect. This is the case in all circumstances. An Absolutely fantastic example would be the advertising method employed by McDonald’s the quality of the product is atrocious yet people eat the stuff in preference to better quality product.

If you want your kids to eat broccoli or Brussels sprouts all you have to do is put it in a bag or package with Ronald McDonald on it. Advertising is most definitely the most influential. Advertising is so powerful that young people think an Apple pie is a rolled up pastry tube with Apple in it that has been deep fried in cheap oil. QUESTION 9 9. How can marketers use measures of recognition and recall to study the extent of consumer learning? The term LEARNING: Learning is a “change” in knowledge, behaviour, attitudes, values, priorities, or Creativity that can result when learners interact with information.

It occurs to the Extent that learners are motivated to change, and it is applied in the real world to the Extent they take successful steps to integrate that learning into the real world Situation. What does learning do? It helps the CONSUMERS TO become motivated to learn AND MAKE DECISION: Helps the consumers effectively handle the information and Experience. Helps the consumers develop knowledge, skills, values and Attitudes and creative ideas. Helps the consumers transfer their learning to the application of the product/service 1. LEARNING Broadens the consumers’ interests / awareness. . LEARNING broadens the consumers’ product perspectives. 3. LEARNING Exposes the consumers to new avenues of practices / thoughts. 4. LEARNING Prepares the consumers for greater responsibility in usage of the product. 5. LEARNING Permits the consumers to greater interaction internal/external channels. 6. LEARNING Helps to prepare the consumer to understand the promotions. 7. LEARNING Helps to provide the consumer with modern practices. 8. LEARNING Helps the consumers to share ideas concepts with others. 9.

LEARNING Helps the consumers to accept / manage new technologies. 10. LEARNING Helps the consumers to accept / manage new processes. 11. LEARNING Helps the consumers to accepts / manage new life style culture. 12. LEARNING Helps the consumers to accepts / manage new usages. And so on.. HOW DATABASE IS USED FOR LEARNING 1. DATA – is collected and organized. 2. DATA CHANGED INTO INFORMATION. – organized data are summarized and processed, Analyzed and put into meaningful information format. 3. INFORMATION IS SYNTHESISED INTO KNOWLEDGE. 4. nowledge is transferred through development into ”learning”. 5. learning is applied to marketing. The learning data comes from the study of consumer behavior. Learning of the consumers helps to design the marketing applications more accurately. CONSUMER Buying Behavior is the decision processes and acts of people involved in buying and using products. Need to understand: 1 Why consumers make the purchases that they make? 2 What factors influence consumer purchases? 3 The changing factors in our society. Consumer Buying Behavior refers to the buying behavior of the ultimate consumer.

A firm needs to analyze buying behavior for: 1 Buyers reactions to a firms marketing strategy has a great impact on the firms success. 2 The marketing concept stresses that a firm should create a MARKETING MIX that satisfies (gives utility to) customers, therefore need to analyze the what, where, when and how consumers buy. 3 Marketers can better predict how consumers will respond to marketing strategies. CONSUMER BUYING BEHAVIOR Stages of the Consumer Buying Process Six Stages to the Consumer Buying Decision Process (For complex decisions). Actual purchasing is only one stage of the process.

Not all decision processes lead to a purchase. All consumer decisions do not always include all 6 stages, determined by the degree of complexity… discussed next. The 6 stages are: Problem Recognition(awareness of need)- – difference between the desired state and the actual condition. Deficit in assortment of products. Hunger- – Food. Hunger stimulates your need to eat. Can be stimulated by the marketer through product information- – did not know you were deficient? I. E. , see a commercial for a new pair of shoes, stimulates your recognition that you need a new pair of shoes.

Information search- – 1 Internal search, memory. 2 External search if you need more information. Friends and relatives (word of mouth). Marketer dominated sources; comparison shopping; public sources etc. A successful information search leaves a buyer with possible alternatives, the evoked set. Hungry, want to go out and eat, evoked set is 1 Chinese food 2 Indian food 3 Burger king 4 Klondike kates etc Evaluation of Alternatives- – need to establish criteria for evaluation, features the buyer wants or does not want. Rank/weight alternatives or resume search.

May decide that you want to eat something spicy, indian gets highest rank etc. If not satisfied with your choice then returns to the search phase. Can you think of another restaurant? Look in the yellow pages etc. Information from different sources may be treated differently. Marketers try to influence by “framing” alternatives. Purchase decision- – Choose buying alternative, includes product, package, store, method of purchase etc. Purchase – May differ from decision, time lapse between 4 & 5, product availability. Post- Purchase Evaluation- – outcome: Satisfaction or Dissatisfaction.

Cognitive Dissonance, have you made the right decision. This can be reduced by warranties, after sales communication etc. After eating an Indian meal, may think that really you wanted a chinese meal instead. Types of Consumer Buying Behavior Types of consumer buying behavior are determined by: 1 Level of Involvement in purchase decision. Importance and intensity of interest in a product in a particular situation. 2 Buyers level of involvement determines why he/she is motivated to seek information about a certain products and brands but virtually ignores others.

High involvement purchases Honda Motorbike, high priced goods, products visible to others, and the higher the risk the higher the involvement. Types of risk: 1 Personal risk 2 Social risk 3 Economic risk The four type of consumer buying behavior are: 1 Routine Response/Programmed Behavior- – buying low involvement frequently purchased low cost items; need very little search and decision effort; purchased almost automatically. Examples include soft drinks, snack foods, milk etc. 2 Limited Decision Making- – buying product occasionally.

When you need to obtain information about unfamiliar brand in a familiar product category, perhaps. Requires a moderate amount of time for information gathering. Examples include Clothes- – know product class but not the brand. 3 Extensive Decision Making/Complex high involvement, unfamiliar, expensive and/or infrequently bought products. High degree of economic/performance/psychological risk. Examples include cars, homes, computers, education. Spend alot of time seeking information and deciding. Information from the companies MM; friends and relatives, store personnel etc.

Go through all six stages of the buying process. 4 Impulse buying, no conscious planning. The purchase of the same product does not always elicit the same Buying Behavior. Product can shift from one category to the next. For example: Going out for dinner for one person may be extensive decision making (for someone that does not go out often at all), but limited decision making for someone else. The reason for the dinner, whether it is an anniversary celebration, or a meal with a couple of friends will also determine the extent of the decision making. Categories that Effect the Consumer Buying Decision Process

A consumer, making a purchase decision will be affected by the following three factors: * PERSONAL * PSYCHOLOGICAL * SOCIAL The marketer must be aware of these factors in order to develop an appropriate MARKETING MIX for its target market. Personal Unique to a particular person. Demographic Factors. Sex, Race, Age etc. Who in the family is responsible for the decision making. Young people purchase things for different reasons than older people. Psychological factors Psychological factors include: 1 Motives: * A motive is an internal energizing force that orients a person’s activities toward satisfying a need or achieving a goal.

Actions are effected by a set of motives, not just one. If marketers can identify motives then they can better develop a marketing mix. MASLOW hierarchy of needs!! 2 Physiological 3 Safety 4 Love and Belonging 5 Esteem 6 Self Actualization Need to determine what level of the hierarchy the consumers are at to determine what motivates their purchases. 1 Perception: * What do you see?? Perception is the process of selecting, organizing and interpreting information inputs to produce meaning. IE we chose what info we pay attention to, organize it and interpret it.

Information inputs are the sensations received through sight, taste, hearing, smell and touch. * Selective Exposure- select inputs to be exposed to our awareness. More likely if it is linked to an event, satisfies current needs, intensity of input changes (sharp price drop). * Selective Distortion- Changing/twisting current received information, inconsistent with beliefs. * Advertisers that use comparative advertisements (pitching one product against another), have to be very careful that consumers do not distort the facts and perceive that the advertisement was for the competitor.

A current example… MCI and AT;T… do you ever get confused? * Selective Retention- Remember inputs that support beliefs, forgets those that don’t. Average supermarket shopper is exposed to 17,000 products in a shopping visit lasting 30 minutes- 60% of purchases are unplanned. Exposed to 1,500 advertisements per day. Can’t be expected to be aware of all these inputs, and certainly will not retain many. * Interpreting information is based on what is already familiar, on knowledge that is stored in the memory. 2 Ability and Knowledge: * Need to understand individual’s capacity to learn.

Learning, changes in a person’s behavior caused by information and experience. Therefore to change consumers’ behavior about your product, need to give them new information re: product… free sample etc. * South Africa… open bottle of wine and pour it!! Also educate American consumers about changes in SA. Need to sell a whole new country. * When making buying decisions, buyers must process information. Knowledge is the familiarity with the product and expertise. * Inexperience buyers often use prices as an indicator of quality more than those who have knowledge of a product.

Non- alcoholic Beer example: consumers chose the most expensive six- pack, because they assume that the greater price indicates greater quality. * Learning is the process through which a relatively permanent change in behavior results from the consequences of past behavior. 3 Attitudes: * Knowledge and positive and negative feelings about an object or activity- maybe tangible or intangible, living or non-living Drive perceptions Individual learns attitudes through experience and interaction with other people. * Consumer attitudes toward a firm and its products greatly influence the success or failure of the firm’s marketing strategy. Personality: * All the internal traits and behaviors that make a person unique, uniqueness arrives from a person’s heredity and personal experience. Examples include: 5 Workaholism 6 Compulsiveness 7 Self confidence 8 Friendliness 9 Adaptability 10 Ambitiousness 11 Dogmatism 12 Authoritarianism 13 Introversion 14 Extroversion 15 Aggressiveness 16 Competitiveness. Traits effect the way people behave. Marketers try to match the store image to the perceived image of their customers. There is a weak association between personality and Buying Behavior, this may be due to unreliable measures. Nike ads.

Consumers buy products that are consistent with their self concept. 1 Lifestyles: * Recent US trends in lifestyles are a shift towards personal independence and individualism and a preference for a healthy, natural lifestyle. * Lifestyles are the consistent patterns people follow in their lives. * Ex: Healthy foods for a healthy lifestyle. Sun tan not considered fashionable in US until 1920’s. Now an assault by the American Academy of Dermatology. * * Social Factors * Consumer wants, learning, motives etc. , are influenced by opinion leaders, person’s family, reference groups, social class and culture. Opinion leaders: * Spokesperson etc. , Marketers try to attract opinion leaders… they actually use (pay) spokespeople to market their products. Michael Jordon (Nike, McDonalds, Gatorade etc. ) * Can be risky… Michael Jackson… OJ Simpson… Chevy Chase 3 Roles and Family Influences: * Role – things you should do based on the expectations of you from your position within a group. People have many roles. Husband, father, employer/ee. Individuals role are continuing to change therefore marketers must continue to update information.

Family is the most basic group a person belongs to. Marketers must understand: 4 That many family decisions are made by the family unit 5 Consumer behavior starts in the family unit 6 Family roles and preferences are the model for children’s future family (can reject/alter/etc) 7 Family buying decisions are a mixture of family interactions and individual decision making 8 Family acts an interpreter of social and cultural values for the individual. The Family life cycle: families go through stages, each stage creates different consumer demands: 1 Bachelor stage… ost of BUAD301 2 Newly married, young, no children… me 3 Full nest I, youngest child under 6 4 Full nest II, youngest child 6 or over 5 Full nest III, older married couples with dependant children 6 Empty nest I, older married couples with no children living with them, head in labor force 7 Empty nest II, older married couples, no children living at home, head retired 8 Solitary survivor, in labor force 9 Solitary survivor, retired 10 Modernized life cycle includes divorced and no children. 1 Reference Groups: Individual identifies with the group to the extent that he takes on many of the values, attitudes or behaviors of the group members. * Families, friends, sororities, civic and professional organizations. Any group that has a positive or negative influence on a persons attitude and behavior. Membership groups (belong to) Affinity marketing is focused on the desires of consumers that belong to reference groups. Marketers get the groups to approve the product and communicate that approval to its members. Credit Cards etc.!! * Aspiration groups (want to belong to) Disassociate groups (do not want to belong to)

Honda, tries to disassociate from the “biker” group. * The degree to which a reference group will affect a purchase decision depends on an individuals susceptibility to reference group influence and the strength of his/her involvement with the group. 2 Social Class: * An open group of individuals who have similar social rank. US is not a classless society. US criteria; occupation, education, income, wealth, race, ethnic groups and possessions. * Social class influences many aspects of our lives. IE upper middle class Americans prefer luxury cars Mercedes. 3 Upper Americans- upper- upper class, . %, inherited wealth, aristocratic names. 4 Lower- upper class, 1. 2%, newer social elite, from current professionals and corporate elite 5 Upper- middle class, 12. 5%, college graduates, managers and professionals 6 Middle Americans- middle class, 32%, average pay white collar workers and blue collar friends 7 Working class, 38%, average pay blue collar workers 8 Lower Americans- lower class, 9%, working, not on welfare 9 Lower- lower class, 7%, on welfare Social class determines to some extent, the types, quality, quantity of products that a person buys or uses.

Lower class people tend to stay close to home when shopping, do not engage in much prepurchase information gathering. Stores project definite class images. Family, reference groups and social classes are all social influences on consumer behavior. All operate within a larger culture. 1 Culture and Sub-culture: Culture refers to the set of values, ideas, and attitudes that are accepted by a homogenous group of people and transmitted to the next generation. Culture also determines what is acceptable with product advertising. Culture determines what people wear, eat, reside and travel.

Cultural values in the US are good health, education, individualism and freedom. In american culture time scarcity is a growing problem. IE change in meals. Big impact on international marketing. Culture effects what people buy, how they buy and when they buy. Understanding Consumer Buying Behavior offers consumers greater satisfaction . We must assume that the company has adopted the Marketing Concept and are consumer oriented. How learning data is applied to marketing applications. * strategic marketing – using database knowledge , through LEARNING, For developing strategic marketing programs marketing research. – using database knowledge , through LEARNING, for Research / analysis /reviews OF MARKET FACTS. * market forecast. – using database of market information, through LEARNING,To develop future market forecast. * consumer behavior – using research database on buying consumer behavior, Through LEARNING, to develop product marketing strategy. * organizational buyer behavior. – using research database on organization buyer behavior, Through LEARNING, to develop marketing proposal. * Marketing Strategy using database of market information [internal/external], Through LEARNING, for developing various marketing strategies. * Strategic market Planning – using database of market information [ internal/external ], Through LEARNING, for developing MARKETING PLANS. * marketing environments database – using database of information on Political/legal/economic/social/technological, through LEARNING, To develop strategic marketing plans. * market segmentation – using database of market information/ factors, through LEARNING, For segmenting the markets for the business development market targeting. – using database of market information, through LEARNING, for better And improved penetration of market for market share * market positioning. – using database of market information, through LEARNING, for the Product managers to help them to position the product * Channel marketing – using database of market information, through LEARNING, for the selection and development of channels for product distribution * New Product Development & Strategy. – using database of market information, through LEARNING, for The development / planning of new products pricing strategy – using database of market information, through LEARNING, For the development of price/ pricing / trade terms etc * Marketing Logistics – using database of market/sales information,through LEARNING, For the development of logistics strategies. * physical distribution. – using database of market information, through LEARNING, for the Setting up / managing the physical distribution * Marketing Mix. – using database of market information, through LEARNING,For developing the effective marketing mix selection * promotions using database of market information, through LEARNING,For deciding the best promotion mix * selling – using database of market information, through LEARNING, for the Purpose of developing sales development plans/sales planning etc * online marketing – using database of market information , through LEARNING, For online marketing effectiveness * telemarketing – using database of market /sales information, through LEARNING, Database for telemarketing. * customer servicing – using database of market /sales information, through LEARNING, For effective customer servicing. BRAND MANAGEMENT – using database of market /sales information, through LEARNING, For managing the life cycle of the product This learning theory is close to the marketing concept. Control Theory Definition This theory of motivation proposed by William Glasser contends that behavior is never caused by a response to an outside stimulus. Instead, the control theory states that behavior is inspired by what a person wants most at any given time: survival, love, power, freedom, or any other basic human need. Discussion

Responding to complaints that today’s students are “unmotivated,” Glasser attests that all living creatures “control” their behavior to maximize their need satisfaction. According to Glasser, if students are not motivated to do their schoolwork, it’s because they view schoolwork as irrelevant to their basic human needs. Boss teachers use rewards and punishment to coerce students to comply with rules and complete required assignments. Glasser calls this “leaning on your shovel” work. He shows how high percentages of students recognize that the work they do- – even when their teachers praise them- – is such low- level work.

Lead teachers, on the other hand, avoid coercion completely. Instead, they make the intrinsic rewards of doing the work clear to their students, correlating any proposed assignments to the students’ basic needs. Plus, they only use grades as temporary indicators of what has and hasn’t been learned, rather than a reward. Lead teachers will “fight to protect” highly engaged, deeply motivated students who are doing quality work from having to fulfill meaningless requirements. How the Control Theory Impacts Learning Curriculum- – Teachers must negotiate both content and method with students.

Students’ basic needs literally help shape how and what they are taught. Instruction- – Teachers rely on cooperative, active learning techniques that enhance the power of the learners. Lead teachers make sure that all assignments meet some degree of their students’ need satisfaction. This secures student loyalty, which carries the class through whatever relatively meaningless tasks might be necessary to satisfy official requirements. Assessment- – Instructors only give “good grades”- – those that certify quality work- – to satisfy students’ need for power.

Courses for which a student doesn’t earn a “good grade” are not recorded on that student’s transcript. Teachers grade students using an absolute standard, rather than a relative “curve. ” QUESTION 10 10. What is market segmentation? How is the practice of market segmentation related to the marketing concept? Market Segmentation A Market segment is a subgroup of people or organizations sharing one or more characteristics that cause them to have similar product needs. Market segmentation is the process in marketing of dividing a market into distinct subsets (segments) that behave in the same way or have similar needs.

Because each segment is fairly homogeneous in their needs and attitudes, they are likely to respond similarly to a given marketing strategy. That is, they are likely to have similar feelings and ideas about a marketing mix comprised of a given product or service, sold at a given price, distributed in a certain way and promoted in a certain way. Broadly, markets can be divided according to a number of general criteria, such as by industry or public versus private sector. Small segments are often termed niche markets or specialty markets.

However, all segments fall into either consumer or industrial markets. Although it has similar objectives and it overlaps with consumer markets in many ways, the process of Industrial market segmentation is quite different. The overall intent is to identify groups of similar customers and potential customers; to prioritize the groups to address; to understand their behaviour; and to respond with appropriate marketing strategies that satisfy the different preferences of each chosen segment. Revenues are thus improved. Improved segmentation can lead to significantly improved marketing effectiveness.

With the right segmentation, the right lists can be purchased, advertising results can be improved and customer satisfaction can be increased The purpose for segmenting a market is to allow your marketing/sales program to focus on the subset of prospects that are “most likely” to purchase your offering. If done properly this will help to insure the highest return for your marketing/sales expenditures. Depending on whether you are selling your offering to individual consumers or a business, there are definite differences in what you will consider when defining market segments. For the individual consumer:

Social Esteem or Pleasure – your offering satisfies a purely emotional need in the consumer. Examples are a mink coat or a diamond ring. There are some products that are on the boundary between this category and the Functional category such as a Rolex watch (a Timex would satisfy the functional requirement and probably keep time just as well). Functional – your offering meets a functional requirement of the consumer such as a broom, breakfast cereal or lawnmower. From the above analysis, the marketing segment – helps to narrow the focus – helps to determine exactly what the consumer wants helps to determine the right place/ right price to deliver. – helps to satisfy the customer with his/her exact needs. This is exactly what has been termed as ”Marketing Concept”. Marketing concept It is a fundamental idea of marketing that organizations survive and prosper through meeting needs and wants of customers. This important perspective is commonly known as the marketing concept. The marketing concept is about matching a company’s capabilities with customer wants. What are customer wants? A want is a desire for a speciifc product/service to satisfy the underlying need. Customer wants are usually quite narrow.

Market Segmentation / Application Of The Marketing Concept. The purpose for segmenting a market is to allow your marketing/sales program to focus on the subset of prospects that are “most likely” to purchase your offering. If done properly this will help to insure the highest return for your marketing/sales expenditures. Depending on whether you are selling your offering to individual consumers or a business, there are definite differences in what you will consider when defining market segments. Category of Need The first thing you can establish is a category of need that your offering satisfies.

The following classifications may help. For businesses: 1 Strategic – your offering is in some way important to the enterprise mission, objectives and operational oversight. For example, a service that helped evaluate capital investment opportunities would fall into this domain of influence. The purchase decision for this category of offering will be made by the prospect’s top level executive management. 2 Operations – your offering affects the general operating policies and procedures. Examples might be, an employee insurance plan or a corporate wide communications system.

This purchase decision will be made by the prospect’s top level operations management. 3 Functional – your offering deals with a specific function within the enterprise such as data processing, accounting, human resources, plant maintenance, engineering design, manufacturing, inventory control, etc. This is the most likely domain for a product or service, but you must recognize that the other domains may also get involved if the purchase of the product or service becomes a high profile decision. This purchase decision will be made by the prospect’s functional management. For the individual consumer: Social Esteem or Pleasure – your offering satisfies a purely emotional need in the consumer. Examples are a mink coat or a diamond ring. There are some products that are on the boundary between this category and the Functional category such as a Rolex watch (a Timex would satisfy the functional requirement and probably keep time just as well). 2 Functional – your offering meets a functional requirement of the consumer such as a broom, breakfast cereal or lawnmower. Segmentation of Needs for business organizations Then you should establish what the need is and who is most likely to experience that need.

Your segmentation will be determined by a match between the benefits offered by your offering and the need of the prospect. Some “need” categories for segmentation include: Reduction in expenses Prospects might be businesses that are downsizing (right sizing), businesses that have products in the mature stage of their life cycle or individuals with credit rating problems. Improved cash flow Prospects might be businesses that have traditionally low profit margins, businesses that have traditionally high inventory costs or individuals that live in expensive urban areas. Improved productivity

Prospects might be businesses that have traditionally low profit margins, businesses that have recently experienced depressed earnings or individuals with large families. Improved manufacturing quality Prospects might be businesses with complex, multi- discipline manufacturing processes. Improved service delivery Prospects might be service businesses in highly competitive markets, product businesses requiring considerable post- sale support or individuals in remote or rural areas. Improved employee working conditions/benefits Prospects might be businesses where potential employees are in short supply.

Improvement in market share/competitive position Prospects might be new entrants to a competitive market. Need for education Prospects might be businesses or individuals looking for books on business planning, or seminars on Total Quality Management. Involvement with social trends Prospects might be businesses concerned with environmental protection, employee security, etc. Or individuals who believe in say ‘no’ to drugs, anti- crime, etc. Specific – relating to product/s