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M Unit-7 Marketing Management.Pdf SUBJECT – MANAGEMENT SUBJECT CODE – 17 UNIT – VII 9118 888 501 [2] Sl. NO CONTENTS 1 Consumer Behaviour 2 Model of consumer Behaviour 3 Branding Management 4 Industrial Buying Behaviour 5 Supply Chain Management (SCM) 6 Service marketing 7 Customer Relationship Management 8 Retailing 9 Emerging Trends in Marketing 10 International marketing 3 CHAPTER -1 CONSUMER BEHAVIOUR Consumer / Buyer: Although it is important for the firm to understand the buyer and accordingly evolve its marketing strategy, the buyer or consumer continues to be an enigma – sometimes, responding the way the marketer wants and on other occasions just refusing to buy the product from the same marketer. For this reason, the buyers’ mind has been termed as a black box. The marketer provides stimuli but he is uncertain of the buyer’s response. This stimulus is a combination of product, brand name, colour, style, packaging, intangible services, merchandising, shelf display, advertising, distribution, publicity, and others. Further, today’s customer is greatly influenced by the media, especially electronic. Technological developments in the field of information, biotechnology and genetics, and intensive competitions in all products and services are also impacting consumer choices. Stages in Customer Life Cycle are as follows: (i) Prospects (ii) First time buyer (iii)Repeat buyer (iv) Core buyer (v) Defector (i) Prospects: These are all those individuals who have not yet bought the firm’s product / brand. They are being targeted for acquisition. This stage requires huge investments in awareness creation especially when the product or the firm or brand is new in the market. In the case of consumer products and services, the marketer has to invest in the communication channels which reach the target market. Hence data relating to readership and viewership of the print and electronic media is required for media selection. (ii) First Time Buyer: Once the prospect has decided to buy, the customer enters the trail stage. The customer is now evaluating the firm, product and the entire purchase and consumption experience. The firm’s strategy should be to create an experience for the customer to repeat his purchase. It has to continuously reassure the customer that his decision was correct. 4 Also, the firm needs to reinforce the customer’s belief in the superiority of the product. In order to achieve the above objectives, the company needs to focus on factors that create an everlasting experience. This includes the experience at product delivery with sales and customer service personnel. Follow up customer care calls with appropriate advertising campaigns can create a satisfied customer. (iii) Repeat Buyers: These are the customers repeating their purchase. They are satisfied with their first experience and find value in the current offer of the company. At this stage, firm need to keep in mind that these customers are still vulnerable to competitor poaching. Hence it needs to continuously strengthen the product value by removing any dissatisfaction. (iv) Core Customers: They are the fulcrum of any company as they account for its overall profitability. Hence core customers are very critical and precious. In most companies, they are generally about two or three percent of their total customers. Firms evolve strategies to expand this base and also to keep them happy and satisfied. Core customers are those who do not switch their brand / supplier. They perceive their switching costs to be high as they understand the product and the brand, are familiar with sales and service personnel and know the company better than other customers. Core customers are also those, who despite competition, prefer to remain with the company and the product / brand. They buy not just the core product but also several other products from the company. They also induce other customers. (v) Defectors: These are customers who have rejected the company’s offerings. Defection occurs across all the above stages of customer life cycle. One needs to analyse the causes of such defection and take steps to correct the situation. Some of the most common causes of defection are: (a) Poor after sales service of the company (b) Rude, discourteous and indifferent sales personnel (c) Lack of personal touch as the company automates all its operations and customer interfaces (d) Delayed or no response to customer complaints What does the Customer Buy? To most of us, there appears to be an obvious answer to this question – product / service. But this is not a comprehensive description. For, when one examines the different products or services bought by a customer, one can categorise them into two groups, namely: 5 (a) High involvement products (b) Low involvement products. The differentiation between products and services is created on the basis of the customer involvement level in product selection. This is based on the extent to which the customer perceives the product as representing his or her personality and lifestyle. There are two types of the Products: [a] High Involvement Products: These have the following characteristics: (a) High Price:- Generally, these products are priced high in a particular product group. For example, a colour TV is a high involvement product within the entertainment electronics segment, but, perhaps, pocket transistors are not. (b) Complex Features:- High involvement products have complex features, requiring the customer to spend more time on familiarizing and internalizing them. It is no wonder colour TVs, VCRs, DVD Players, cars, motorcycles, computers, washing machines, or refrigerators come with an easy-to-understand product manual describing the features in simple terms. (c) Large Differences between Alternatives:- If the customers perceive significant differences between alternatives, then the product is a high involvement one. For example, if the customer perceives major differences between Indian, Japanese, or American cars, then the car purchase decision is a high involvement one. This is because these perceived differences enhance the need to learn about them and evaluate each of the given alternatives against a decision criteria. (d) High Perceived Risks:- If the customer perceives a high risk in using the product, then he or she may spend considerable time in (i) Evaluating what constitutes risk (ii) How to minimise it, and (iii) How to avoid it. Besides, the customer may even evaluate whether the risk is worth taking. Cosmetics, hair dyes, flying an airplane for the first time, and the like, are all perceived high risk situations. Hence these are high involvement product use situations. Reflect Self-concept of Buyer: 6 This is the single most important factor in making a product a high involvement one. Each of us has a self image and we behave in a manner that will help us reinforce this image for others. We buy products and services that reflect this self concept. Choice of cars, houses, clothes, restaurants, perfumes, cosmetics, and jewellery all reflect a customer’s self-concept. Often, customers spend considerable time in selecting a brand in these product groups. [b] Low Involvement Products: (a) Does not Reflect Buyer’s Self-concept:- In the first place, these products are more personal to the buyer and they do not reflect his or her self-concept. Toilet soaps and other toiletries are examples of products that are perceived by customer as not expressing his or her image. (b) Alternatives within the Same Product Class are Similar:- The customer does not perceive much difference between different brands in the same product class. (c) Frequent Brand Switching Behaviour:- Due to the perceived lack of difference between brands, brand loyalty in these products is low. (d) Buying Situations:- It is not only that products differ. Even the buying situation differs. Each time the buyer is to take a purchase decision, it may or may not be the same as the previous one. The differentiation between the two buying situations may be caused by the absence of any or all of the following factors. (a) awareness about competing brands in a product group (b) customer has a decision criteria (c) customer is able to evaluate and decide on his choice. Viewed against these parameters, one may observe that it is not the product that differentiates one buying situation from another; rather it is the time that the buyer spends in learning and evaluating the alternatives or finally selecting one of them. Howard and Sheth have described these buying situations as being: (a) Reutilized response behaviour (b) limited problem solving (c) Extensive problem solving (a) Routinised Response Behaviour or Straight Rebuy: 7 This buying situation is characterised by the presence of all the above three criteria. In other words, here the customer is aware of his choices and, knows what he is looking for as the decision is based on experience of either self or others. Generally, the customer spends little or no time in choosing an alternative. Brand loyalty is relatively high here. (b) Limited Problem Solving or Modified Rebuy: This is a buying situation with a difference. This could be, for example, introduction of a new brand or product often requiring a change in the customer’s decision criteria. (c) Extensive Problem Solving or New Task: This is a buying situation perceived to be high on risk. This situation requires extensive learning on the part of the customer. The reason for this is that here, the customer is not aware of available alternatives, has no decision criteria, and hence is unable to evaluate different brands. This could be caused by relocation of the customer to a new and unknown environment, or by the introduction of a technologically superior product. Factors of Buyer Motivations: 1. Economic Factors: The well known economist, Adam Smith, provided the earliest understanding of the rationale of buyer behaviour. According him “a human being is a rational individual. He or she evaluates various alternatives and will buy or select alternatives where the marginal utility is more than the marginal price he or she paid for it.
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