Professor Engle
April 12, 2020
Part 1 - Consumer Behavior: How People Make Buying Decisions
Consumer Buying Behavior
Consumer behavior is explained as the selection, buying and consumption of goods or services to fulfill their wants that lead towards satisfaction. Consumer behavior usually involves different processes. First of all, the consumer efforts to find those commodities to which he would provide more utility and would like to consume. Then consumers estimate the money that he has to spend on buying commodities. At last, the consumer makes a comparison of the prices of commodities and after that, if it is suitable then he takes the final decision of buying commodities of his choice.
Product/Service: I am selecting refrigerators as a product that I will offer to customers.
1) Consumer Behavior Model- Environmental Factors
Many environmental factors affect consumer buying behavior like political environment, economic environment, social environment, technological environment, and cultural environment. I will elaborate on only the two more targeted in the present scenario.
The Technological Environment
Technology has brought much advancement not only to products and services, but it also has changed the way of promotional activities. Now there are a variety of features that are introduced like flex-zone, air filtration, adjustable shelves, spill-proof digital shelves, full extension drawers, full-width pantry drawers, electric temperature control, door alarms, designer LED lighting, under counter ice makers, under counter Kegerators. All these advancements are just due to technological advancement. Now the buying behavior of the consumer has changed and they prefer the latest technological product.
Technologies also alter the promotional mix in another significant way: They change the way firms market their products and services. Revolutionary changes originated through the internet, which introduces marketers to a new source that is fully supported for the promotion of goods and services. Marketers should follow technological improvements and adapt their approaches, to take benefit of the opportunities.
The Cultural Environment
Culture can be defined as the combination of art, customs, knowledge, morals, beliefs, value and habits acquired by society. Culture sets certain limitations on behavior that called norms and defilement of these cultural norms consequences in the formation of sanction. Both norms and sanctions affect the consumption pattern. Every society makes its own culture and that influences the choices, wants and behavior of consumers. Chinese don’t prefer durability while the Japanese prefer it. Like people of Islamic countries do not like and permit live-in relationship, it is the culture of Islamic countries, so unmarried live alone and prefer mini-fridge. While in Europe and other countries live-in relationships are common and buying behavior is the same. Therefore, marketers should consider the culture of different regions and countries. This cultural difference affects the decision-making process likewise in Asia subcontinent Pakistan and India, the culture of a joint family is common and in the joint family when we talk about our product they need for the bigger refrigerator as the more the members the more they need the space.
2). Consumer Behavior Model- Consumer Factors
Many consumer factors can influence consumer behavior. These factors are also called personal factors, including age, self-concept, occupation, economic situation, lifestyle, and personality. I am elaborating on only three factors as age, occupation, and lifestyle that I am considering more relevant with my product refrigerators.
Age
Age affects our decisions and self-concept because age influences the selection, buying, and consumption of products and services ranging from salt to car. That’s why appropriate age positioning is acute for many products. The consumers vary the decision and choices of services and goods with time. As there are different stages of life that a consumer experience with the passage of time such as singles, married, married couples with the child’s, etc. which support marketers to develop the best suitable products or services for each stage. A single person will prefer the mini-fridge, while the married couples will prefer the medium size fridge. While married couples with children will decide to buy large size refrigerators and more durable as well.
Occupation
Occupation is undoubtedly the most widely used factor because it initially weighs and describes consumers. Occupation is strongly linked with qualification. Mostly educated people are jobholders. The Income of a consumer depends upon his occupation. These things have a significant influence on buying behavior. The difference in buying and consumption behavior exists among different occupational classes. For instance, the CEO of any firm will attempt to buy French door refrigerators or Samsung Family Hub Refrigerator, whereas a low-income employee in the same firm will either not buy a refrigerator or either purchase a second-hand fridge or mini size fridge.
Lifestyle
Lifestyle is defined as the manner a person is alive in a society and is articulated by the kinds of stuff in the surroundings. Such as activities, hobbies, opinions, and interests define lifestyle and these things shape the pattern of interacting with others. Lifestyle influences the choices and buying patterns of consumers. Hence it is an important factor that impacts the consumer buying behavior. Consumers with a modern lifestyle will purchase French Door Refrigerators of the famous brands. While the traditional consumer will not consider recall branded and modern refrigerators because they will buy refrigerators to fulfill their needs.
3). Role of Involvement in Consumer Decision Making
Psychological state that stimulates consumers to be more careful and conscious to find products, services, and their consumption behavior and consumption pattern as well, is called consumer involvement. There are two levels of involvement, high-level involvement, and low-level involvement. Involvement enables consumers to think about different options and brand preferences before purchasing. Consumer puts intellectual and physical efforts into a buying decision, and that is involvement.
Based on involvement, consumer behavior is divided into four types, habitual buying behavior and variety-seeking buying behavior is included in low-level involvement. While harshness decreases buying behavior and complex buying behavior are included in high-level involvement. In the case of buying the refrigerator, the consumer shows complex buying behavior as he is more conscious and highly involved in perceiving differences among brands. He will evaluate different brands and their benefits and then he will select the best-suited product to purchase.
4). Consumer Decision Making Process:
The consumer decision-making procedure is a six-step process and every step has its importance.
Need Recognition
The consumer decision-making procedure begins with need recognition. Need recognition can be generated either by internal stimuli or external stimuli. Food is our basic need and the preservation of food is our want, internal stimuli can generate the need for refrigerators. Another way to generate need is an advertisement that is an external stimulus. In these technological days, advertisement is the basic tool that generates needs. The Internet introduced marketers to a new source that is fully supported for the promotion of goods and services.
Information Search
The next step is information search and there are several sources through which consumers can obtain information. Like experiential sources (using the product, trial, handling and examining), personal sources (relatives, friends), public sources (mass media and internet), commercial sources (packaging, displays, dealers, websites, advertising, and salespeople). Information collection depends upon how much you are involved with product or service. In the case of complex buying behavior, consumers are highly involved, hence they get more information from different sources. And buying of a refrigerator comes in complex buying behavior and consumers can get information from public and commercial sources.
Evaluation of Alternatives
Alternative evaluation describes how consumer practice information to attain brand choices. Evaluation of buying alternatives depends upon the nature of product, service and buying behavior as well. In some cases, consumers calculate and think logically. While in some cases consumer just puts his/her purchase. Sometimes consumers decide on their own while sometimes they turn to dealers, salespersons, and advisors.
Hence marketers should study and analyze buyers to realize how they evaluate brand alternatives and what kind of behavior they have. In the case of refrigerator purchasing, consumers will evaluate all famous brands like Whirlpool, GE, Kenmore, Viking, LG, and Samsung.
Purchase Decision
At this stage, Consumers make preference among the brands of choice and finalize purchase intention. In the final purchase, two factors are involved attitude of others and unexpected situational factors. The attitude of others includes the attitude of family or friends that usually interrupt your purchase. Purchase intention depends upon the expected price of the product and the expected income of consumers. If these expectation changes, then purchase decision may also change.
Purchase
If the attitude of others does not interrupt the consumer and expected situational factors like expected price and expected income remains unchanged, then the consumer finally purchases the product.
Post-purchase behavior
After buying the product, the consumer may be satisfied or dissatisfied. If the consumer is satisfied, then he will give good feedback, talk favorably to others and suggest the same product or service to others. Satisfaction depends upon the match of expectations and perceived performance. If perceived performance is lower than consumers' expectations, then consumers will be dissatisfied. In the case of the refrigerator, we have to provide a warranty, guarantee and after-sale services like repair and maintenance. All these post-purchase offers help to gain the trust of consumers. These also give them the confidence to purchase and satisfaction as well.
Part 2 - Market Segmentation, Targeting, and Positioning
1- Segmentation
Segmentation is the procedure of distributing a market into different groups that have different behaviors, characteristics, and needs of buying and will prefer different products, services, and programs. The mass market can be divided into different segments such as demographic, geographic, behavioral and psychographic segmentation.
Demographic Segmentation
segmentation includes division of a market into different segments based on several variables such as family life cycle, occupation, age, religion, education, gender, nationality, generation, race, and family size.
Age: 12-19, 20-29, 30-50, 51-64, 65+
Under the age of 19 usually are the teenagers are students they need a mini-fridge. 20-29 is the age of the student or job holders as well they also need a mini-fridge for preservation. Above 30 mostly people get married or may involve in the family require medium size and more quality-oriented refrigerators. Consumer above 50 is positioned in the best place they need more reliable things.
Occupation: Labor, farmers, supervisors, students, managers, professionals, homemakers, unemployed, retired. High-income professionals prefer branded products of high quality while unemployed does not.
Family size and family life cycle: Young, singles, married, married with children, unmarried couples, 1-2 members, 3-4 members, 5+.
The married couple has the same buying behavior so it is one segment, while a married couple with children makes another segment, families with 5 members have the same characteristics of buying.
Psychographic Segmentation
Psychographic segmentation includes division of a market into different segments based on several variables such as lifestyle, social class, and personality characteristics.
Social class
There are different social classes such as lower, lower middle, lower uppers, upper uppers, upper-middle, middle class. On these bases, different segments are formed which have different behavior. Advance technological refrigerators can fulfill the need of upper middles and upper, while normal refrigerators can fulfill the need of lower middle.
Lifestyle
There are different segments of customers that can be formed on the base of lifestyles like achievers, strivers, and survivors. Achievers usually like to take more risks and try new technological things.
Behavioral Segmentation
Behavioral segmentation includes division of a market into different segments based on several variables such as uses, attitude, response or knowledge on a product. Many segments can be formed on behavioral base like benefits, user status, user rate, loyalty status, attitude toward the product.
Benefits sought segmentation
Under these different segments have different preferences and buying behavior characteristics like some customer prefers quality while others services and economy and some prefer convenience and speed. These preferences make different segments.
2- Target Market
Market targeting includes the evaluation of each market segment and analyzes its attractiveness for the selection of one or more segments to come in. In the case of Freshly Refrigerators, I will target two segments.
1. 30-50 years old upper to upper-middle class.
2. Consumers who want a quality product and more concerned with health and safety.
Freshly refrigerators will offer high technological, convenient, customize and easy to use refrigerators and it will make continuous innovation and deliver new products. These target segments are perfect for our offers because such individuals pay more and like technology.
Size, growth, competition, and stability make the market more attractive. There are more chances of survival of large firms. And firms of smaller size are expected to have less chance of surviving in a market than bigger firms. Freshly refrigerator will do business at a large level.
Criteria for Market Attractiveness
Market growth is another factor that affects market attractiveness; brands which have more market growth are most familiar and famous. Stability is another factor that affects the market attractiveness, stability in policies and prices. As rapid changes in price can finish the confidence of customers from the product. There should be a proper period for a stable price. The Next factor is competition when there is more competition; it becomes difficult to attract customers. In the case of competition, strategies should be designed that make the product
extraordinary than competitors.
3-Target market strategy
Here the target market strategy we use is privileged marketing, which refers to target those specific people who are most suitable clients for your product which you decide to target like we decide to target two segments, that are explained earlier. This type of marketing is the best way to ignore mass marketing and giving your customers respect and dignity to gain their attraction. It is the marketing that has the right action at the right time and once you get the customer's attention no one can change it.
Differentiated Marketing
I will decide to target only two segments and design separate offers for each. Freshly refrigerator will offer advanced technological, convenience and customize refrigerators. It this way Freshly Refrigerator will sell more and achieve a stronger place within both market segments as defined earlier in the target section. In the present scenario, we use some of the magazines like digest, probe. That is most common in the upper-middle and upper class. Also the email marketing to the top-level areas and the high salaried person from the income study.
Because the development of a stronger place in different segments generated more sales than mass marketing or undifferentiated marketing. As our brand is delivering two major qualities that high-quality product and reliability. We are using most advance technology. So we are going to target the upper-middle class and upper class with the age limit as defined earlier. This is segment is generally brand conscious in their purchase so it is easy to get more business out of them.
4- Positioning
On the base of significant attributes, the product occupies a distinct place in the mind of the customer that is called product positioning. Marketers usually prepare a map, which is called a perceptual positioning map, to analyses the position of their product and competitor’s product.
Here I draw a map of Freshly Refrigerator and take two attributes, Quality, and Reliability. Major competitors are Whirlpool Refrigerator, Samsung Refrigerator, General Electric Refrigerator, Viking Refrigerator, Kenmore Refrigerator, Maytag Wide Refrigerator, and Frigidaire Refrigerator. This map clearly defines the position of Freshly Refrigerator. The map is below;
Reliability high
Whirlpool
Samsung
General Electric
Freshly
Frigidaire
May Tag
Viking
Reliability Low
Quality
High
Quality
Low
References
Chivandi, A., Samuel, M. O., & Muchie, M. (2019, June 14). Social Media, Consumer Behavior, and Service Marketing. Retrieved April 12, 2020, from https://www.intechopen.com/books/consumer-behavior-and-marketing/social-media-consumer-behavior-and-service-marketing
Kahraman1, N., & Tunga2, M. A. (2019, January 18). International Journal ofIntelligent Systems and Applications in Engineering. Retrieved April 12, 2020, from https://ijisae.org/IJISAE/article/view/879/pdf
Haque, Abdullah, & Anis. (2019, May 28). Elements of advertisement and their impact on buying behaviour: A study of skincare products in Malaysia. Retrieved April 12, 2020, from http://m.growingscience.com/beta/msl/3234-elements-of-advertisement-and-their-impact-on-buying-behaviour-a-study-of-skincare-products-in-malaysia.html
Ghosal, I. (2019, January). A Research Paper to Identify the Potential Cause of Declining Handloom Sarees and also to Indicate Opportunities for Revival: A Case Study of Handloom Tant Sarees of Begampur, Hooghly DistrictA Research Paper to Identify the Potential Cause of Declining Handloom Sarees and also to Indicate Opportunities for Revival: A Case Study of Handloom Tant Sarees of Begampur, Hooghly District. Retrieved April 12, 2020, from https://www.researchgate.net/publication/332781351_A_Research_Paper_to_Identify_the_Potential_Cause_of_Declining_Handloom_Sarees_and_also_to_Indicate_Opportunities_for_Revival_A_Case_Study_of_Handloom_Tant_Sarees_of_Begampur_Hooghly_District
Schamp, C., Heitmann, M., & Katzenstein , R. (2019, February 13). Consideration of ethical attributes along the consumer decision-making journey. Retrieved April 12, 2020, from https://link.springer.com/article/10.1007/s11747-019-00629-x
Radu, V., Philip, K., & Gavrilescu, M. (2019, November 26). Consumer behavior in marketing - patterns, types, segmentation - Omniconvert Blog. Retrieved April 12, 2020, from https://www.omniconvert.com/blog/consumer-behavior-in-marketing-patterns-types-segmentation.html
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