CHAPTER:2 2.1. Theory of consumer behavior and satisfaction Consumer wants and needs Demand is the economic principle that describes a consumer’s desire, willingness and ability to pay a price for a specific good or service. A firm in the market economy survives by producting goods that are in demand by consumers. A need is a consumer’s desire for a product’s or services specific benefit, where that be a functional or emotional. The emotional benefit tends to be a stronger driver for consumers, as functional benefits can easily copied by competitors. Customer decision process: There is a five step process that consumers can go through in marking a purchase decision. These steps include: Need recognition Information search Evaluation of alternative Purchase Post-purchase The customer decision process begins with need identification. Whether we act to resolve a particular problem depends upon two factors: the magnitude of the discrepancy between What we have and what we need and the importance of the problem. This involves the concept of consumer motivation, which is the internal drive consumers experience to fulfill conscious and unconscious wants and needs. Once the problem is recognized, it must be defined in such a way that the consumer can actually initiate the action that will bring about a relevant solution. 2.2: The four elements of the marketing mix The marketing mix and the 4ps of marketing are often used as synonyms for each other. in fact, they are not necessarily the same thing. “marketing mix” is a general phrase used To describe the different kinds of choices organizations have to make in the whole process of bringing a product or service to market. The 4ps is one way-probably the best- know way of defining the marking mix. Figure1: the four elements of the marketing mix Product Distribution QualityT Distribution channel Featureh Distribution area Brande Point of sale Packaging Warehouse Size4 Means of the transport Warrantyp Afters sales Marketing T mix Priceh Communication e Tariff Advertising Sale4 Sales force Discountp Sale promotion Credits terms Public relation Free advertising a r e : product/service. Place. Price. Promotion. A good way to understand the 4ps is by the questions that you need to defines your marketing mix. Here are some question that will help you understand and define each of the four elements: 1.product: The term “product” is defined as a anything either tangible or intangible, offered by the firm: as a solution to the needs and wants of the consumer: something that is profitable or Potentially profitable: and a goods or service that meets the requirements of the various governing offices or society. The two most common ways that products can differentiate are: Consumer goods versus industrial goods and Goods products (i.e durables and non-durables)versus service products Intangible products are service-based, such as the tourism industry, the hotel industry and the final industry. Tangible products are those that have an independent physical existence. Typical example of mass-product,tangible object are automobile and the disposable razor. A less obvious but ubiquitous mass produced service is a computer operating system. 2.placement: product distribution (or placement)is the process of making a product or service accessible for use or consumption by a consumer or business user, using direct indirect means with intermediaries. Distribution types Intensive distribution means the producer’s products are stocked in the majority of outlets. This strategy is common for basic supplies, snack food, magazine and soft drink beverages. Selective distribution means that the producer relies on a few intermediaries to carry their product. This strategy is commonly observed for more specialized goods that are carried through specialist dealers, for example, brands of craft tools or large appliances. Exclusive distribution mean that the producer selects only very few intermediaries. exclusive distribution is often characterized by exclusive dealing where the-re-seller carries only that producer’s products to the exclusion of all others. This strategy is typical of luxury goods retailers such as Gucci. The decision regarding how to distribution a product has, as its foundation, basic economic concepts, such as utility. Utility represents the advantage or fulfillment receives from consuming a good or service. Understanding the utility a consumer expects to receives from consuming a good or service. Understanding the utility a consumer expects to receive from product being offered can lead marketers to the correct distribution strategy. 3.promotion: The three basic objectives of promotion are: To present product information to targeted consumers and business customers. To increase demand among the target market To differentiate a product and create a brand identity. A marketer may use advertising, public relations, personal, direct marketing and sales promotion to achieve these objective. A promotional plan can have a wide range of objective, including: sales increases, news product acceptance, creation of brand equity, posting, competitive retaliations, or creation of a corporate image. 4.price: The price is the amount a customer pays for the product. The concept of value, which is the perceived utility a customer will receive from a product. Adjusting the prince has profound impact on the marketing strategy and depending on the price elasticity of the product, often it will affect the demand and sales as well. The marker should set a price that complements the other elements of the marketing mix. A well chosen price should (a) ensure survival (b) increase profit (c) generate sales (d) gain market share and establish an appropriate image. 2.2: The Concept and Theory of Consumer Behavior Consumer behavior is the study of how individual, group and organization select, buy, use and dispose of good, service, ideas or experience to satisfy there are need and wants. Masters must fully understand both the theory and reality of consumer behavior. A consumer’s buying behavior is influenced by culture, social, personal factors, of these: culture factors exert the broadest and deepest influence. The 4 factors influencing consumer behavior Find out what are the factors influencing consumer behavior, how they work and how to better understand them in order to better meet consumers’ expectations and improve your marketing strategy. There are 4 main types of factors influencing consumer behavior: cultural factor, social factors, personal factors and psychological factors. Table 2: The 4 factors influencing consumer behavior Culture Social Personal psychology *Culture *Group *Age *Motivation *Subculture *Family *occupation *perception buyer *Social Class *Status *Economic *Learning *Lifestyle *Beliefs *personal 1. Cultural factors Cultural factors are coming the different components related to culture or cultural environment from which the consumer belong-culture and social environment. Culture is crucial when it comes to influenced by his family, his cultural environment or society that will “teach” him values, preferences as well as common behaviors to their own culture. For a brand, it is important to understand and take into account the culture factors inherent to each market or to each situation in order to adapt its product and its marketing strategy. As these will play a role in the perception, habits, behavior, or expectations of consumers. Sub-cultures: A social is composed of several sub-cultures in which people can identify. Subculture are group of people who are share the same values based on a common or a similar lifestyle in general. Subcultures are nationalities, religions, ethnic group, age group, gender of the individual etc. The sub-culture are often considered by the brands for the segmentation of a market in order to adapt a product or a communication strategy to the values or the specific of this segment. II. Social factors Social factors are among the factors influencing consumer behavior significantly. They fall into three categories reference group, family and social roles and status. Reference groups and membership groups: The membership group of an individual are social groups to which he belong and which will influence him. The membership groups are usually related to its social origin, age, place of residence, work, hobbies, leisure etc. the influence level may vary depending on individual and group but is generally observed common consumption trends to its among the members of a same group. The understanding of the specific features of each group allows brand to better target their advertising message. Within a reference group that influences the consumer buying behavior, several roles have been identified. The initiator: the person who suggests buying a product or service The influence: The whose point of view or advice will influence the buying decision. It may be a person outside the group. But on which group members rely on. The decision –maker: The person who will choose which product to buy. In general, Ii’s the consumer but in some cases its maybe another person. For example, the “leader of” a soccer supporters’ group that will define, for the whole group, which supporter’s acarf buy and bear during the next game. The buyer: The person who will buy the product. Generally, this will be the final consumer. III. Personal factor: Decisions and buying behavior are obviously also influenced by the characteristics of each consumer. Age and way of life: A consume does not buy the product. Generally, this will be the final consumer. Age and way of life: A consumer does not buy the some products or services at 20 or 70 years. His lifestyle, values, environment, activities, hobbies and consumer habits evolve throughout his life. For example, during his life, a consumer could change his diet from unhealthy product to a healthier diet, during mid-life with family before needing to follow a little later a low cholesterol diet to avoid health problems. Purchasing power and revenue: The purchasing power of an individual will have, of couse, a decisive influence on his behavior and purchasing decisions on his income and his capital.