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Analyzing Consumer and Selecting Markets

Analyzing Consumer and Selecting Markets. Factors influencing Consumer Behaviour. Cultural factor divided into three sub factors (i) Culture (ii) Sub Culture (iii) Social Class

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Analyzing Consumer and Selecting Markets

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  1. WWW.PPTMART.COM Analyzing Consumer and Selecting Markets

  2. Factors influencing Consumer Behaviour Cultural factor divided into three sub factors (i) Culture (ii) Sub Culture (iii) Social Class Culture:- The set of basic values perceptions, wants, and behavior’s learned by a member of society from family and other important institutions. Culture is the most basic cause of a person’s wants and behavior. Every group or society has a culture, and cultural influences on buying behavior may vary greatly from country to country. WWW.PPTMART.COM

  3. Sub Culture :- • A group of people with shared value systems based on common life experiences and situations. • Each culture contains smaller sub cultures a group of people with shared value system based on common life experiences and situations. Sub culture includes nationalities, religions, racial group and geographic regions. Many sub culture make up important market segments and marketers often design products. Social Class:- • Almost every society has some form of social structure, social classes are society’s relatively permanent and ordered divisions whose members share similar values, interests and behaviour. WWW.PPTMART.COM

  4. Social Factors A consumer’s behaviour also is influenced by social factors, such as the (i) Groups (ii) Family (iii) Roles and status Groups :- • Two or more people who interact to accomplish individual or mutual goals. • A person’s behaviour is influenced by many small groups. Groups that have a direct influence and to which a person belongs are called membership groups. • Some are primary groups includes family, friends, neighbours and coworkers. Some are secondary groups, which are more formal and have less regular interaction. These includes organizations like religious groups, professional association and trade unions. WWW.PPTMART.COM

  5. Family:- • Family members can strongly influence buyer behaviour. The family is the most important consumer buying organization society and it has been researched extensively. Marketers are interested in the roles, and influence of the husband, wife and children on the purchase of different products and services. Roles and Status :- • A person belongs to many groups, family, clubs, organizations. • The person’s position in each group can be defined in terms of both role and status. • A Role consists of the activities people are expected to perform according to the persons around them. WWW.PPTMART.COM

  6. Personal Factors It includes • i) Age and life cycle stage (ii) Occupation (iii) Economic situation (iv) Life Style (v) Personality and self concept. WWW.PPTMART.COM

  7. Age and Life cycle Stage:- • People changes the goods and services they buy over their lifetimes. Tastes in food, clothes, furniture, and recreation are often age related. Buying is also shaped by the stage of the family life cycle. Occupation :- • A person’s occupation affects the goods and services bought. Blue collar workers tend to buy more rugged work clothes, whereas white-collar workers buy more business suits. A Co. can even specialize in making products needed by a given occupational group. Eg. lawyers, and doctors. WWW.PPTMART.COM

  8. Economic situation :- • A person’s economic situation will affect product choice Life Style :- • Life Style is a person’s Pattern of living, understanding these forces involves measuring consumer’s major AIO dimensions- i.e.activities (Work, hobbies, shopping, support etc)interest (Food, fashion, family recreation) and opinions (about themselves, Business, Products) Personality and Self concept :- • Each person’s distinct personality influence his or her buying behavior. Personality refers to the unique psychological characteristics that lead to relatively consistent and lasting responses to one’s own environment. WWW.PPTMART.COM

  9. Psychological Factors It includes these Factors. i) Motivation (ii) Perception (iii) Learning (iv) Beliefs and attitudes • Motivation :- • Motive (drive) a need that is sufficiently pressing to direct the person to seek satisfaction of the need • Perception :- • The process by which people select, Organize, and interpret information to form a meaningful picture of the world. • Learning:- • Changes in an individuals behaviour arising from experience. • Beliefs and attitudes :- • Belief is a descriptive thought that a person holds about something • Attitude, a Person’s consistently favourable or unfavourable evaluations, feelings, and tendencies towards an object or idea WWW.PPTMART.COM

  10. Five-Stage Model of the Consumer Buying Decision Process 1) Problem recognition- Identification of need 2) Information search- a) Personal Sources-Family, friends, relatives. b) Commercial Sources- Advertisements, Salespersons, Dealers, Displays. c) Public Sources- Media, Consumer-Rating Agencies. d) Experiential Sources- on handling, examining, using the product. 3) Evaluation of alternatives- Availability, Affordability, Accessibility. 4) Purchase Decision 5)Post purchase evaluation/ behavior- satisfaction/dissatisfaction Dissatisfaction- gap between expectations and performance. WWW.PPTMART.COM

  11. Factors affecting the buying decision • Attitude of others which in turn depends upon: a) the intensity of the other persons negative attitude towards the consumer’s preferred alternative. i.e. Good or bad word of mouth about a product or a service. b) the consumer’s motivation to comply with the other person’s wishes. i.e. strong like or dislike towards a particular product or service. 2) Unanticipated situational factors: for example due to loss of a job may delay the buying process for a particular product or any other heavy expenditure might occur unexpectedly which may delay the buying decision. WWW.PPTMART.COM

  12. Market Segmentation Market segmentation represents an effort to increase a company’s targeting precision. WWW.PPTMART.COM

  13. LEVELS OF MARKET SEGMENTATION • Mass Marketing • Segment Marketing • Niche Marketing • Local Marketing • Individual Marketing WWW.PPTMART.COM

  14. Mass Marketing • The seller engages in the mass production, mass distribution and mass promotion of one product for all buyers. • For example: Amul milk, butter, cheese. • salt, sugar. WWW.PPTMART.COM

  15. Segment Marketing • A market segment consists of large identifiable group within a market. • A company that practices segment marketing recognizes that buyers differ in their wants, purchasing power, buying attitude and habits. WWW.PPTMART.COM

  16. Niche Marketing • A Niche is a more narrowly defined group, typically a small market whose needs are not being well served. Marketers usually identify niches by dividing a segment into sub-segments or by defining a group with a distinctive set of traits who may seek a special combination of benefits. WWW.PPTMART.COM

  17. Local Marketing • Target marketing is increasingly taking on the character of regional and local marketing, with marketing programs being tailored to need and wants of a local customer group. WWW.PPTMART.COM

  18. Individual Marketing • The ultimate level of segmentation leads to “segments of one”, customized marketing, or one-to-one marketing. • For example-Boutiques, shoes, textbooks etc. WWW.PPTMART.COM

  19. Patterns of Market Segmentation • Homogeneous preference: where all consumers have roughly the same preference. • Diffused preference: Consumer preferences maybe scattered throughout the space indicating that consumers vary greatly in their preferences. • Clustered preference- The market might reveal distinct preference clusters. WWW.PPTMART.COM

  20. Market-Segmentation Procedure used by market research firms • Step One- Survey Stage- the researchers conduct exploratory interviews and focus groups to gain insight into consumer motivations, attitudes, brand awareness, product-usage patterns, demographics, etc. • Step Two- Analysis Stage. The researcher applies factor analysis to the data to remove highly co-related variables, then applies cluster analysis to create specified number of different segments. • Step Three- Profiling Stage: Each cluster is profiled in terms of its distinguishing attitudes, behaviour, demographics, and WWW.PPTMART.COM

  21. Bases for Market Segmentation 1. Demographic Segmentation- age, gender, income, occupation, education, religion, nationality. 2. Geographic Segmentation-location, region, city, density, climate. 3. Psychographic Segmentation- lifestyle, personality. 4. Behavioral Segmnetation- occasions, benefits, usage rate, loyalty status, buyer-readiness stage, attitude towards product. WWW.PPTMART.COM

  22. Requirements for Effective Segmentation • Measurable- size, purchasing power, characteristics of the segment can be measured. • Substantial- Should be large and profitable enough to serve • Accessible- i.e. effectively reached and served • Differentiable- segments should respond to the marketing mix which has been developed for them. • Actionable- Effective programs can be formulated and implemented successfully for attracting, serving and retaining the selected segments. WWW.PPTMART.COM

  23. TARGET MARKETS WWW.PPTMART.COM

  24. Evaluating the market segments In evaluating different market segments, the firms must look at the two main factors: 1. The overall attractiveness of the segment- size, growth, profitability, scale of economies, low risk etc. 2. Company’s objectives and resources- the selected segment should be aligned with the company’s overall vision and mission. Some attractive segments could be dismissed if the company lacks one or more necessary competencies or skills. WWW.PPTMART.COM

  25. Selecting the market segments The company can consider five patterns of the selected target markets: • Single-market concentration- Company selects single segment. Ex Volkswagon concentrates on single segment. • Selective Specialization: the firm selects a number of segments each objectively attractive given the firm’s objectives and resources. Even if one segment becomes unattractive, the firm can continue to earn money from other segments. • Product specialization- here the firm concentrates on making a certain product that it sells to several segments. Ex Laptops to universities, scientific instruments etc. WWW.PPTMART.COM

  26. 4. Market Specialization: Here the firm concentrates on serving many needs of a particular segment groups. 5. Full Market Coverage: the firm attempts to serve all customer groups with all the products that they might need. It can be further divided into: a) Un-differentiated Market- one product for all segments, or mass production, promotion, distribution. b) Differentiated Market- Firm operates in several market segments and designs different marketing mix for different segments. WWW.PPTMART.COM

  27. ADDITIONAL CONSIDERATION IN EVALUATING AND SELECTING SEGMENTS Following four more considerations must be taken into account in evaluating and selecting segments: • Ethical choice of market targets, • segment interrelationships and super segments, • segment-by-segment evasion plans, • intersegment cooperation.1 Ethical Choice of Market Targets: • Market targeting sometimes generates controversy like cigarette markets have generate much controversy. WWW.PPTMART.COM

  28. Segment Interrelationships and Super segments:- In selecting more than one segment, the company should pay close attention to segment interrelationships on the cost, performance and technology side. Companies should also identify and try to operate in super segments rather than in isolated segments. A super segment is a set of segments sharing some exploitable similarity. Segment By Segment Invasion Plans:- Even if the firm plans to target super segment, it is wise to enter one segment at a time and conceal its grand plan.The competitors must not know to what segment(s) the firm will move next. Intersegment Cooperation:- The best way to manage segments is to appoint segment managers with sufficient authority and responsibility for  building their segment's business. At the same time, segment managers should not be so segment-focused as toresist cooperation with other company personnel to improve overall company performance. WWW.PPTMART.COM

  29. Tools for competitive diffrentiationHow can a company differentiate its product form competitors? • . There are five dimensions • A)Product, • B)Service, • C) Personnel, • D)Channel, or • E)Image. WWW.PPTMART.COM

  30. A) Product Differentiation: Differentiating the physical products. The main product differentiation’s are • features, • performance, • durability, • reliability, • repairability, • style, • design. WWW.PPTMART.COM

  31. 1. FEATURES: Features are characteristics that supplement the product's basic function. 2. PERFORMANCE: Refers the level at which the product's primary characteristics operate. 3. CONFORMANCE QUALITY: Is the degree to which all the produced units are identical and meet the promised target specifications. 4. DURABILITY: Durability is the measure of the product's expected operating life under natural and / or stressful conditions WWW.PPTMART.COM

  32. 5. RELIABILITY: It is the measure of the probability that a product will not malfunction or fail within a specifiedtime period. Buyers normally will pay a premium for product with more reliability. 6. REPARABILITY: Buyers prefer products that are easy to repair, 7. STYLE: Buyers are normally willing to pay a premium for products that are attractively styled. Style describes the product's looks and feel to the buyer. 8. DESIGN: A most patent way to differentiate and position a company's products and services. It is the totality of features that affect, how a product looks and functions in terms of customer requirements. WWW.PPTMART.COM

  33. Service Differentiation: • In addition to differentiating its physical product a firm can also differentiate its services. • When the physical product cannot easily be differentiated, the dye to competitive success often lies in adding more value-addingservices and improving their quality. • The main service differentiation’s are • 1) ordering ease, • 2)delivery, • 3)installation, • 4) customer training, • 5) customer consulting, • 6) maintenance and repair, WWW.PPTMART.COM

  34. ORDERING EASE: It refers to how easy it is for the customer to place an order with the company. • DELIVERY: Refers to how well the product or service is delivered to the customer, It includes the speed,accuracy and care attending the delivery process. • INSTALLATION: Installation is the work done to make a product operational in its planned location. Buyers of heavy equipment expect good installation service from the vendor. • CUSTOMER CONSULTING: It refers to data, information system and advising service that the seller offers free or for a price to buyer. • MAINTENANCE AND REPAIR: It describes the company's service program for helping customers keep their  purchased products in good working order. • MISCELLANEOUS SERVICES: Companies find many other ways to add value by differentiating their customer services. They can offer a better product warranty or maintenance contract than their competitors. They can establish patronage awards. Virtually there are unlimited number of specific services and benefits that companies can offer to differentiate themselves from their competitors WWW.PPTMART.COM

  35. PERSONNEL DIFFERENTIATION: • Companies can gain a strong competitive advantage through hiring and training better people than their competitors. Better trained personnel’s exhibit six characteristics • Competence: The employee possess the required skill and knowledge, • Courtesy: The employees are friendly, respectful and considerate. • Credibility: The employees are trustworthy. •  Reliability: The employees perform the service consistently and accurately. •  Responsiveness: The employees respond quickly to customers' requests and problems. • Communication: The employees make an effort to understand the customer and communicate clearly WWW.PPTMART.COM

  36. Channel Differentiation Companies can achieve differentiation through the way they shape their distribution channels, particularly thesechannels are 1)coverage: Coverage means its dealers are found in more locations than competitors' dealers. 2)expertise- Expertise: means its dealers are typically better trained and perform more reliably. 3) performance- Performance: refers to developing and managing direct marketing channels of high quality. Image Differentiation: Even when the offers of two competitors look same, buyers may respond differently to the company or brand image. Identity Versus Image: It is important to distinguish between identity and image. Identity comprises the ways that a company aims to identify itself or position its product. Image is the way the public perceives the company or its products. WWW.PPTMART.COM

  37. Symbols: A strong image consists of one or more symbols that trigger company or brand recognition. The company brands and logos should be designed to instant recognition. • Written and Audo-visual Media: The chosen symbols must be worked into advertisements that convey the company or brand personality. • Atmosphere: Distinctive physical condition in which the origination produces or delivers its products andservices is another powerful image generator. • Events: A company can build an identity through the type of events it sponsors. WWW.PPTMART.COM

  38. POSITIONING WWW.PPTMART.COM Developing a Positioning Strategy

  39. Positioning • Positioning is the act of designing the company’s offering and image so that they occupy a meaningful and distinct competitive position in the target customer’s minds. • USP- best quality, best price, advanced technology, fastest service. WWW.PPTMART.COM

  40. DEVELOPING A POSITIONING STRATEGY: • A company must carefully select the ways in which it will distinguish itself from competitors. • A difference is worth establishing to the extent that it satisfies the following criteria: • Important: The difference delivers a high valued benefit to a sufficient number of buyers. • Distinctive: The difference either is not offered by other or is offered in a more distinctive way by the company. WWW.PPTMART.COM

  41. Superior: The difference is superior to other ways of obtaining the same benefit. • Communicable: The difference is communicable and visible to buyers. • Preemptive: The difference cannot be easily copied by the competitors. • Affordable: The buyer can afford to pay for the difference. • Profitable: The company will fine it profitable to introduce the difference. • Positioning: is the act of designing the company's offering and image so that they occupy a meaningful and distinct competitive position in the target customers' minds.  WWW.PPTMART.COM

  42. How Many Differences to Promote Many marketers advocate promoting only one benefit to the target market. Each brand should back an attribute and itself as number one on that attribute. The most commonly promoted number-one positioning are "best quality, best service, lowest price, best value, safest, fastest, most customized, most convenient and most advanced technology."  WWW.PPTMART.COM

  43. In general, a company must avoid four major positioning errors • Under Positioning: Some companies discover that buyers have only a vague idea of the brand. Buyers don't really sense anything special about it. The brand is seen just as just an other entry in a crowded marketplace. • Over Positioning: Buyers may have too narrow an image of the brand. That he deems it as high standardthan his capabilities. • Confused Positioning: Buyers might have a confused image of the brand resulting to many claims or changing the brand's positioning too frequently. • Doubtful Positioning:: Buyer may found it hard to believe the brand claims in view of the product's features, price, or in a certain product category. WWW.PPTMART.COM

  44. Different Positioning Strategies • Attribute positioning: This occurs when a company positions itself on an attribute, such as size, number or years in existence, • Benefit positioning: Here the product is positioned as the leader in a certain benefit. • Use / application positioning: This involve positioning the product as best for some use or application. • User positioning This involves positioning the product as best for some user group, • Competitors Positioning: Here the product positions itself as better in some way than a named or implied competitor. • Product category positioning: Here the product is positioned as the leader in a category. • Quality / Price positioning: Here the product is positioned as offering the best value for the price WWW.PPTMART.COM

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