Buyer Decision Making

8/7/2019 Buyer Decision Making

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1.

TERMS OF REFERENCETh e objective of t h is report is to outline t h e preliminary researc h in t h e following areas:

o

Th e consumer purc h ase decision making process

o

A n identification of t h e approac h es and t h eories of buyer be h aviour

o

A n evaluation of t h e relations h ip between brand loyalty, corporate image and

repeat purc h asing in relation to food retailing.o

A n explanation of t h e various factors t h at affect t h e buying be h aviour

2 .

FINDINGS2 .1

The Consumer Purchase Decision Making ProcessTesco s offers a wide range of products. Th is, combined wit h th e individuality of eac h customer can make it difficult to generalise t h e average Tesco consumer s decisionmaking process. For continuity purposes, we will use t h e example of a TV purc h ase inth is section and t h e general process outlined in Figure 1 below.

Figure 1: Th e Consumer Information Processing Model

2.1.1

N EED RECOGN ITION AND PROBLEM A WA RENESS A t t h is initial stage, t h e consumer becomes aware of t h e problem . Th ere is agap between h is desired position and reality. He believes t h at t h e purc h ase of aTV will eliminate t h e gap. Th is stage could be triggered in any one of severalways:

y

The need to replenish stock - in t h e event of a TV breakdown, t h ere may

be a need to purch

ase anoth

er (consumer may be time -constrained )y

An event an upcoming birt h day (t h is trigger may occur weeks beforeth e purc h ase is required and allow t h e consumer more time to engagein t h e purc h ase process)


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y

Psycho l og i ca l Pu r chas e c s e may f ee th a t th e c e t TV is notsty ish enou gh. Th e mark e ters ma y trigger th e process by using th e mark e tin g mix to b ring a probl em to th e con sum ers a tt ention 1

2.1.2

IN F ATION S A

Consum ers will ga th er info rma tion to h elp th em d ecide which p rodu ct/b ra ndwill bes t solve th eir probl em. In ou r TV exampl e th e con sum er may inves tiga te bra nd s f ea tu res warra nt y etc. Info rma tion ga th ering will genera lly increase with pu rchase va lue a lthou gh Hause r a t al emph asise th a t tim e con stra int m ay imp act thi s stage2 . S ou rces of info rma tion m ay be eith er int erna l (such as pastexperiences with p rodu cts/b ra nd s/f ea tu res or externa l (e.g. f riend s and f amily int ernet sites advertising). How eve r, Kellar and S taelin (1987 ) highlight a risk of info rma tion o verload, war nin g th a t con sum ers cannot cop e with too mu ch infoa t p rodu ct leve l3.

2.1.3

IN FORM ATION EVA UATION This is wh ere th e con sum er eva lua tes th e info rma tion h e has ga th ered. Th e custom er redu ces th e larg e numb er of option s down to a sho rtlist (o r evokedse t 4). To achieve thi s, th e con sum er diff erenti a tes be tw ee n p rodu cts by(eith er forma lly or info rma lly) crea tin g a list of a tt ribut es which will d eliver benefits tosa tisf y his nee d. Th ese a tt ribut es will have var ying degrees of impo rtance toeach bu yer. Babson 5 off ers a hierar chica l method to illu stra te th e rela tion shipbetw ee n a tt ribut es , benefits and n ee d. Thi s method h as bee n adapt ed in fi gure 2 below to illu stra te ou r TV exampl e. Advertising may cont ribut e to th e perce ption of a tt ribut es and guid e con sum e rs to a par ticular bra nd. For exampl e , in th e case of ou r TV pu rchase , Tesc o6 advertising header stresses

va lue

for th e Techni ka bra nd , innova tion for Toshib a and performance for Samsun g.

1 Bra ssington & Pe ttitt ( 200 6), Pr inciples of M ark e tin g 4 th Edition , P10 32 Ha use r e t a l (199 3), How Consum e rs Alloca te th e ir Time Wh e n S ear chin g fo r Info rma tion , Journal of Marketing Research , N ovemb e r P45 2-663 Kellar a nd S ta elin (1987 ), Eff ec ts of Qu a lity a nd Qu a ntit y of Info rm a tion on D ec ision Eff ec tive ness , Journal of Consumer Research , S ept emb e r P200 -134 How ar d and S eth ( 19 69), The Theo ry of Buye r Beha viou r , Wiley 5 Ba bson Coll ege , N ot e on Con sum e r Dec ision M ak ing Pr ocesses by Ke n M a tsumo6 TES CO Direc t Ca ta logue , S pr ing/ S umm e r 2010 , P646 -656


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Figure 2 Hie rar chica l View of N ee ds, Benefits and Att ribut es (adapt e d f rom Ken M a tsumo , Ba bson Coll ege N ot es )

2.1.4 PUR

CHAS

E The con sum e r impl ement s th e aspec ts of th eir fina l choice. How eve r, a suppli er mu st m ak e it easy for custom ers to m ake a pu rchase. A cumb ersom e int erne tsite , lon g telephon e qu eues or lack of sto re assistant s can stra in a custom er s pa tience , perhaps promptin g th em to t ak e th eir bu siness elsewh ere. In th e case of ou r TV pu rchase , Tesc o a tt empt s to ensure th e fina l sa le by off ering:

2.1.5

PO ST PURCHASE EVA UATION The con sum er assesses th e produ ct du ring con sumption. G ene ra lly, th e mo re involved th e con sum er has bee n in th e pu rchase , th e mo re elabo ra te th e eva lua tion. If he is dissa tisfied , th e con sum er will expe rience cogniti ve disson ance8 (f ee lings of p sycholo gica l anxiety). He will loo k for ways to redu ce thi s discomfo rt b y filtering out und erminin g mess ag es and acceptin g suppo rtive info rma tion.Tesc o can help to ensure sa tisf action b y, firstly, se ttin g rea listic expecta tion s prior to pu rchase . In ou r TV exampl e, an achievable delivery da te should b e

promi se d as any exagg era ted cla ims will increase th e likelihood of futu re disappointm ent. Secondl y, advant ag e should b e tak en of th e con sum ers nee dfor reassura nce th rou gh th e use of surveys , e-ma ils and advertising.It is impo rtant th a t Tesc o m anag e thi s stag e eff ectively as a sa tisfied custom er can lead to repea t bu sinesses and di ssa tisfied custom e rs may not onl y take th eir

7 Tesc o Direc t Ca ta logue , Spr ing/ S umm e r 2010 .8 Fes tin ge r (19 57), A Theo ry of Co gniti ve Disson a nce , S ta nfo rd Unive rsity Pr ess

y

Ability to pu rchase onlin e , in-sto re or by telephon e

y

Technica l Suppo rt

y

TV insta lla tion se rvice

y

Doubl e point s for a ll pu rchases ove r 2507 (wh en p a id with a Tesc o Credit Car d)


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bu siness elsewh ere but can influ ence oth ers. S mith 9 war ns th a t wh en th e custom er is disappoint ed , th ey will info rm two to th ree times mo re peopl e about th eir experience th an if th ey were sa tisfied.

2.2 Appr o ! " h # s ! nd $ h # o ri # s of

%

rga nis at ion al Be hav iou r

We will now tu rn ou r a tt ention away f rom consumer beha viou r and tow ar ds businessbeha viou r. Business bu ying is wh ere on e bu siness bu ys directly f rom anoth er. It var ies grea tly f rom con sum er activity. S om e of th e reason s for thi s ar e discusse d b elow:

2.2.1

DERI VED DEM AN D Businesses bu y good s with th e a im of addin g va lue so th ey can mo ve th e produ cts furth er down th e cha in, to sa tisf y a con sum e r nee d. Thi s is known as d erive d d eman d . For exampl e , if th e current downtu rn in th e econom y were toincrease th e demand fo r econom y good s, th e con ce pt of d erived d emand willresult in T esc o a lloca tin g mo re shelf space to econom y bra nd s.

2.2.2

S CA& E O F DEM AN D Business mark ets ar e mu ch bi gge r th an con sum er mark ets as th ere is a limit toth e amount an indi vidu a l or hou se hold can pu rchase of any given p rodu ct. Thu s, th e rela tion ship b etw ee n suppli er and custom er is par ticular ly impo rtant inorga nisa tion a l bu ying.

2.2.3

GEO GRAPHICA& CON CEN TR ATION The manuf a ctu re of p rodu cts can b e con ce nt ra ted in geogra phi ca l loca tion s. For exampl e , th e produ ction of d a iry food s may be cent ra l to f ar min g ar eas.

2.2.4 BUYIN G PRO CESS COM PLEXITY

Consum ers pu rchase for th eir own con sumption whi ch m eans th a t th ey can pu rchase on impul se. In cont ra st , bu siness bu yers ar e requi red to justif y th eir decision s to m anag ers and oth er stak ehold ers. This result s in a compl ex andhighly ra tion a l buying activity. Element s includ e :

y

F o rm a l P r oc e ' u re s - Typica lly orga nisa tion s tra in bu yers in th e comp any way of doing thin gs. Businesses loo k for economi c benefits

and so th eir app roach will b e based on a logica l and ra tion a l decisionmak ing process . There ma y be guid elines on p ref e rr ed suppli e rs or assess ment criteria .

y

Sp ec ifi c Req u ireme(

t s orga nisa tion s bu y a produ ct to sa tisf y a specific nee d and so oft en requi re a customi se d p rodu ct p ackag e. Thu s, th ey ar e less likely to accept modifi ca tion s impo sed b y th e suppli er. Any changes may trigger an app rova l process which could in volve seve ralfun ction s. In cont ra st, con sum ers tend to se ttl e for stand ar d produ cts.

9 S mith ( 199 3), M ark e tin g Communi ca tion s, An Int e gra te d App roa ch , Koga n Pag e.


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y

Pu r chas e Si gn ifi canc e th e type of pu rchase may add to th e compl exity of th e bu ying process . We can group th ese types into on e of th ree ca tegories : Routine Re-buy. This is th e least compl ex type of bu y as th e orga nisa tion will h ave experience of th e produ ct and es tablished

suppli ers.Mo d ified Re-b y . There ma y be som e compl exity in thi s pu rchase as th ere ar e som e changes. Som e negoti a tion s will be requi red.New Task. This is th e mo st compl ex type of bu y. The orga nisa tionrequi res a grea t d ea l of info rma tion and th ere ma y be num erou s peopl e involved to ensure th a t th e corr ec t suppli er is cho sen , especia lly wh ere th ere is a high risk or cost associa ted with th e pu rchase .

Anoth er element of pu rchase significance is th e po sitionin g of th e commodit y. The ma trix in Figure 3 show s th a t bu ye rs ar e mo re likely topu rsue a stra tegic rela tion ship with a suppli er in th e case of hi gh risk

pu rchase. If th e pu rchase is low risk, price is mo re likely to b e a dete rminin g f acto r in th e pu rchase decision.

Figure 3 Commodit y Positionin g M a t r ix

2.2.5 GRO UP DECIS ION M AKIN G

In o rga nisa tion s, group s, not indi vidu a ls ar e res pon sible for decision m ak ing10 .The memb ers of th e bu ying group m a y have conflictin g ob jectives . For exampl e , end u se rs ma y be focuse d on qu a lity while a bud get hold er will be mo re

10 John son and Bonom a (1981 ), The Buying Ce nt e r : S t ructu re and Int e ra ction Pa tt e rns , Journal of Marketing , S umm e r p143 -156


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interested in price. S ix roles h ave been identified in t h e organisational businessdecision unit, as h igh ligh ted in figure 4 below:

Figure 4 Roles in t h e Organisational Business D ecision Making ) nit.

y

I nitiators Th is is t h e people w h o identify t h e need.

y

U sers th ese are t h e people w h o will use t h e product and will h avepreferences regarding t h e specifications and ease of use.

y

D eciders Th is may be t h e buyer (more likely in low risk purc h ases) ormanagement.

y

I nfluencers Th e prime role of influencers is information gat h ering andadvising (typically R &D and engineering). Key players in creatingspecifications.

y

Buyers buyers assess suppliers proposals in line wit h selection criteria

and will h ave varying degrees of responsibility to decide on t h epurc h ase

y

G atekeepers th ese people can h inder t h e process as t h ey h ave somecontrol over t h e flow of information. Tec h nical advisors can presentfacts to exclude some information. Likewise, secretaries can alsoprevent access to members of t h e unit.

2.2. 6

ORGAN ISA TIONA LB0 1 IN G PROCESS Th e business to business purc h asing process is similar to t h e consumer processin figure 1 buy may be longer and depending on w h et h er t h e purc h ase is low or

h igh risk (see figure 5 below). It is vital t h at marketers understand t h e process inorder to develop t h e best marketing strategy. Th e process applicable in eac h of th e t h ree types of buy is s h own in Figure 5.

D ecisionMaking 2 nit

Influencers

2 sers

Initiators

Buyers

D eciders

Gatekeepers


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Figure 5 Business to Business Buying Process.

y

P roblem Recognition S imilar to t h e consumer process. Trigger can beeit h er internal or external.

y

G eneral Need D escription Identifies t h e general needs to be satisfiedby t h e product. Th ese criteria may be ranked and t h e met h od of assessing suppliers establis h ed.

y

P roduct Specification - Influencers h elp to establis h th e detailedtec h nical specifications t h at bot h th e product and t h e supplier must

satisfy.y

Supplier Search Potential suppliers identified. Sources are existingknowledge, trade s h ows, and internet searc h es.

y

P roposal Solution Suppliers present proposals. To do t h is effectively,suppliers must understand w h ere t h eir product sits in t h e CommodityPositioning Matrix (Figure 4)

y

Supplier Selection Proposals assessed in line wit h th e criteria set in t h especification stage.

y

O rder Routine Specification Order placed. If applicable, commercialagreement signed.

y

P erformance Review S upplier is reviewed to determine if all needs aresatisfied on an ongoing basis. Positive reviews can result in customerloyalty.

2 .3 The Re la t ionshi p be tw een Brand Loya lt y, Cor p ora t e Image and Re p ea t Purchasing in Food Re tai ling Food retailing is a h igh ly competitive and price sensitive sector. It is important t h atmarketers understand t h e relations h ip between brand loyalty, corporate image and

Problem Recognition

General N eed D escription

Product S pecification

S upplier S earc h

Proposal Soliciation

S upplier S election

Order Routine Specification

Performance Review

N ewTask

3

ES

YES

YES

YES

YES

YES

YES

YES

ModifiedRebuy

MAY BE

MAY BE

YES

MAY BE

MAY BE

MAY BE

MAY BE

YES

S traig h tBuy

N O

N O

YES

N O

N O

N O

N O

YES


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repea t pu rchasing in o rder ga in comp etiti ve advant ag e , drive up p rofit and ensure lon g term success .

2.3. 1

TYPES O F BR AN D LO YALTY The mo st b asic ana lysis would d etermin e th a t b ra nd lo ya lty is demon stra ted b y repea t pu rchases . This, in it se lf , would sa tisf y many mark eters. How eve r, if th e pu rchases ar e made out of con venience or lack of a lterna tives , it is not trueloyalty . It is merely custom ers mak ing a sho rt t erm d ec ision b ased on se lf int eres t. Th ere ar e two ca tegories of lo ya lty tra nsaction a l and rela tion a l.

y

Tra ns act ion al Lo4 alty is based on mon etar y (or tangible) benefits.Som e of th e method s use d b y th e re ta iling sec to r to crea te tra nsaction a lloya lty ar e listed in Figure 6 b elow. Such m ethod s ar e preva lent in foodreta iling as sto res hop e th a t h abit will fo rm and l ead to repea tpu rchases . The disadvant ag e is th a t t ra nsaction a l loya lty it can b e quit e sha llow. For exampl e , th e current recess ion h as see n con sum ers abandon b ra nd s th a t th ey previou sly see med lo ya l to11 . Int ernet sites

such as mysup ermark e t.com can easily guid e con sum e rs to th e reta iler which off ers th e bes t p rice in any given w ee k.

y

R elat ion al Loyalty result s f rom int angible benefits. The benefits may be sta tu s, socia l or principle base d, and cannot b e und ermin ed by simpl y cuttin g prices . For thi s reason , rela tion a l loya lty is mu ch stron ge r th antra nsaction a l. If a comp any deve lops rela tion a l loya lty with it s custom ers, th e advant ag es ar e hu ge (see 2.3.2 below ).

2.3. 2

BEN EFITS O F LO YALTY y

P rofi ta bi lity - Loya lty a llows premium p ricing and so is a key ob jective of bu sinesses . Reta ilers who t ake meanin gful steps to d rive loya lty ar e 88% mo re profit able th an tho se who do not 12

y

Co 5 pet it ive Strategy Belen d el R io et Al13 found th a t custom ers ob se rved grea te r diff erences be tw ee n b ra nd ed good s th an w as me ritedby actu a l produ ct diff erences , showin g th a t b ra nd n ame can b e a key f acto r in comp etiti ve stra tegy.

y

P ro tect ion Bra nd s with lo ya l con sum ers will mak e it diffi cult fo r newcomp etito rs to ent er th e mark et (o r existin g on es to t ak e mark et shar e).

y

Fac ilitate s b ra nd exte nsion the prob ability of se lling som ethin g to a prospec t is onl y 5-20%, while th e prob ability of se lling som ethin g to anexistin g custom er is 60-70%14

2.3.3

S TR ATEGIES O F DEVELO PIN G LO YALTY Type of Met hods Use d by R eta iler s

11 Pr omi se N ovemb e r 2009 12 Pr omi se - 2009 13 Belen d e l R io e t Al (2001 ), The R ole of th e Bra nd N a me in O bt a inin g Diff e renti a l Advant ag es , Journal of Pro d uct an d Bran d Management , 10 (7) pp45 2-6514 Pr omi se -2009


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LoyaltyTra ns act ion al y

S to re car d Point s

y

M on ey Vou chers

y

In-sto re Discount s

y

Int ernet Vou che rs

y

Buy 1, get 1 f ree

y

2 for 3

R elat ion al y

S to re car d off ers whichar e pe rson a lised

y

Promotin g th e use of loca l suppli ers

y

Vou chers for School s

y

S uppo rt lo ca l char ities

y

Sa insbu ry s only f a ir tra de bananas

y

O rga nic/G ree n Policies

y

S to re Clubs (Baby, Spo rt)

y

Figure 6. M e thod s use d b y food reta ile rs to d eve lop t ra nsa ction a l and re la tion a l loya lty.

2.3.4

DIS ADVAN TAGES O F LO YALTY y

R eta iler s P osi t ion th ere can b e a disadvant ag e to th e reta iler wh enth e re is stron g loya lty to a par ticular bra nd. If th e bra nd i s un ava ilable ina sup ermark e t, th e custom er ma y go else wh ere. This means th a t th e

con sum er is mo re loya l to th e bra nd th an th e sup ermark et. O ne way th a t th e sup ermark ets have tried to count era ct thi s is th e deve lopm entof own l abel bra nd s. Both a basic and a luxu ry version of a produ ct ar e off ered to app ea l to diff e rent custom ers15. O wn label produ cts ar e comp etiti vely priced as th ey ar e not m ark eted in th e way manuf actu re bra nd ed p rodu cts ar e.

y

Too Ma ny Bra nds as th e numb e rs of b ra nd s increase , sup e rmark ets f ace th e difficult d ecision of how to a lloca te shelf ar ea and wh eth er torefuse to sto ck som e bra nd s.

y

P rodu ct F a ilure If on e produ ct f a ils or obt a ins a bad reput a tion , it may

aff ect oth er produ cts in th e ra nge.

2.3.5

COR POR ATE IDEN TITY A corpo ra tion s identit y desc ribes th e mann er in whi ch it choo ses to p rese ntitse lf to th e wo rld. It is impo rtant th a t th e identit y is manag ed ra th er th ana llowed to evolve, as con sistency will give confid ence to custom ers, shar ehold ers and th e publi c. The corpo ra te identit y should reinfo rce lon g te rmstra tegic goa ls. For exampl e , Tesc o s mission sta tement i s to crea te va lue for custom ers to ear n th eir lif e time loya lty which is suppo rted b y th e impl ement a tion of th e tag line eve ry littl e helps . Tesc o s ma in tool fo r achieving thi s is th e club car d. It h as bee n in va luable as th e info rma tion yieldedhas guid ed a lmo st a ll of th e key bu siness decision s in rece nt tim es16 . Tesc o nowknow s its custom ers bett er and h as cho sen wise ly in extendin g th e bu siness . Itnow op era tes success fully in non -food p rodu cts, int ernet shoppin g and fin ancia lse rvices .

15 Sainsbury s Basics R a nge a nd Taste the Difference R a nge ar e exa mpl es of thi s.16 Humb y, Hunt a nd Phillips (200 6), S co ring Point s: How Tesc o Continu es to Win Cu stom e r Loya lty , S ec ondEdition.


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In conclusion, we can see t h at successfully creating a h ealt h y relations h ipbetween a company and t h e public will contribute to its ability to be a marketleader 17 . Th us, a strong corporate image is t h e starting point for loyalty buildingand lays t h e groundwork for t h e development of brand loyalty and t h emaximization of repeat purc h ases.

2 . 4 Fac tors tha t Affec t t he Buying Behaviour of Tesco s Cus tomers Th ere are many factors w h ich impact t h e decision to purc h ase. It is important to noteth at t h ese influences are interconnected and weave a complex web of, sometimesconflicting, feelings wit h in t h e consumer. Figure 8 groups t h ese factors into fourcategories w h ich are discussed below.

Figure 7. Factors W h ich Influence Consumer Be h aviour

2.4.1

GRO 6 P IN FL6 EN CES Th ese groups can be cultural or social as discussed:

Cult ura l Ch isnall 18 defines culture as is a way of life passed on fromgeneration to generation. W h ile an understanding of culture offers

guidance to marketers, sub -culture (w h ich exists wit h in culture) gives muc h more detail. Th is detail may be based on et h nic, religious, geograp h ical or

17 Brown & D acin (1997), Th e Company and t h e Product : Corporate A ssociations and Consumer ProductResponses, Jou 7 na 8 o

9

@ a 7 A B C D ng, 61 (1) pp98 -84 18 Ch isnall (198 5), Marketing, A Beh aviour A nalysis , McGraw-Hill

Consu mer s Deci s ion Maki n g

Pr o ce ss

INTERNAL FACTORSP ersonal :

A ge/Life Cycle, E conomic S ituation, Lifestyle, Personality

P sychological:Perception, Motivation, Knowledge, A ttitude

EE VIRO E ME E TSoc ioc ultural

E co no mi cTe c h no lo gic al

Re gulat o r F

M ARKETIE G MIXP roduct

P riceP lace

P romotion

GROUP INFLUENCESCultural:

S ocial Class, CultureSocial :

Reference Groups, Family


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ag e f acto rs. For exampl e Rafiq19 identifi ed a stron g imp act in reta iling inBirmin gha m b ecause of th e larg e Asian communit y.

Social Class socia l standin g base d on in com e, edu ca tion and o ccup a tion.Inskip20 arg ues th a t class will imp act a custom ers produ ct choi ce.

R e f ere nce Grou ps any group ( eg. hobbi es , prof ess ion a l, etc) imp act a

person s behaviou r. For exampl e , a memb er of a loca l kee p fit club m ay pu rchase f ewer processe d food s because of an awar eness ra ised b y f ellowmemb ers.

F am ily - is a key f acto r in influ encing a pu rchase r as th e nee ds of th e f amily dicta te wh ere spendin g priorities lie. The f amily lif ecyc le is mo re compl ex inrece nt tim es as socia lly accept ed no rms wid en (e.g. increase d di vorce , single par ent f amilies ). As f amilies dynamics change and child ren grow up , th e produ cts requi red b y th e f amily will change.

2.4. 2

IN TERN AL FACTOR S P er son al

P er son al ity - We a ll have a vision of ou r own id entit y or se lf -con ceptand will choo se to pu rchase products whi ch reflect th a t vision.

Age a nd Lif e Cycle - th e good s peopl e bu y change ove r a lif e time. For exampl e , child ren m ay choo se a sugar filled ce rea l with car toonchara cters on th e packag ing but adult s may opt fo r mu es li.

Lif e style - Peopl e can b e in th e same cultu re , occup a tion and social class but h ave ve ry diff erent lif es tyles and thu s will choo se to spend th eir mon ey in very diff erent w ays. Wo rk, hobbi es and int e res ts andopinion s imp act wh a t w e va lue .

E cono m ic Situat ion person s choi ce of p rodu cts is oft en reflected b y

wh a t th ey can afford to bu y. For exampl e , som e may bu y ec onom y simpl y because th a t is th e onl y ra nge affordable to th em.

P sycho logical

Mo t ivat ion M aslow s Hierar chy of N ee ds provides a f ra mewo rk for classif ying moti va tion s and i s depicted in Figure 8 below. O nce sa tisf action i s achieve d a t th e low es t leve l, an indi vidua l can p rogress upth e pyra mid.

P ercept ion N o two p eopl e will int erpre t a produ ct (p ackag ing, taste or smell) in exactly th e same way. This is known as th e perception filt er.How a custom er perce ives a produ ct is influenced by th e previou s

f acto rs discusse d. Age , person a lity etc. will imp act both int eres t in andretention of info rma tion. For exampl e , childless individua ls may filter out info rma tion on a new n app y bra nd whil e th e moth er of a newbo rnwill be op en to l ear nin g (see below ).

19 R a fiq(1990 ), Are Asians Tak ing O ve r British R e ta iling? , Pa pe r 1990 :12 , Lou ghbo rou gh Unive rsity M anag em e nt R ese ar ch S e r ies 20 Inskip (199 5), M ark ete rs Deve lop a Cla ss Con sciou sness , Marketing Week , 13 Ja nu ar y, P13


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Kno wl edge th e information known by a person. Th is is closely linkedto perception as h ow an individual makes sense of information willimpact t h eir learning. (nappy example above)

Att itude is wh at a person feels about somet h ing. Once formed,attitudes are very difficult to c h ange. If a consumer believes branded

foods are better th

an own brand, it will be very difficult to ch

angeh

isopinion.

Figure 8. Maslow s Hiearc h y of N eeds

2.4.3

EN VIRON MEN T

Th e below factors take into consideration, t h e wider environment in w h ich th e

consumer lives and t h e impact t h is will h ave on t h eir c h oices.y

Sociocu lt ura l people will tend to follow trends in order to be accepted.For example, in t h e past processed foods were seen as a convient wayto feed a family but recent campaigns h ave s h own many processedfoods to be lacking in nutrition. Because of t h is, sc h ool lunc h boxes maycontain very different foods today t h an five years ago. Retailers in tunewit h th ese trends will be seen as satisfying t h eir consumers needs.

y

Techno logica l tec h nology advances, particularly in databasemanagement, h ave c h anged retailers relations h ip wit h customers. Forexample, Tesco Clubcard members h ip allows Tesco to tailor t h epromotional material and offers to t h at individual.

y

Economic Th e state of t h e economy will impact consumers. In goodtimes , consumers may be willing to buy from more up market/expensive retailers but recession brings wit h it uncertainty of incomeand an unwillingness to pay over t h e odds. Retailers must react quicklyto t h is sh ift in order to ensure t h at t h ey are stocking t h e righ t products .

y

Regu la t ory rules are set eit h er by law or by regulatory bodies. Th esereduce t h e burden on t h e consumer to researc h th e purc h ase. For

S elf A ctualisation

Esteem

Social

Safety

Ph ysiological


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example, a product advertised as Fairtrade will h ave already beenapproved by a regulatory body and so a consumer wis h ing to purc h aseonly Fairtrade coffee can readily c h oose from t h e brands w h ich comply.

2.4.4 MA

RKE T

IN

G MIX G nderstanding t h e needs and wants of a consumer is only t h e first step. A strategy of HO W th e organisation intends to satisfy t h ese consumers must bedeveloped. Th e tool for doing t h is is t h e marketing mix w h ich is also commonlyknown as t h e 4P s.Th e 4P s and th eir elements are illustrated in Figure 9 below.

Figure 9. Th e Marketing Mix 21

Even a marketing novice will accept t h at a great product wit h poorcommunication may not succeed and likewise a bad product wit h fabulousadvertising will fail. Th us, management of t h e 4P s will greatly impact t h edecision of consumers. Essentially t h e 4 elements of t h e mix must balance. Th ebrands w h ich ac h ieve t h is are muc h more likely to make it into t h e cupboards of th e consumers.

21 Brassington & Pettitt (200 6), Principles of Marketing 4th Edition , P29

PRICE

Costs

ProfitabilityValue for Money

Competitiveness

Incentives

PRODUCTN ew Product

D evelopmet

ProductManagement

Product Features

Branding

PackagingA fter -sales

Service

PROMOTION

Communications

A dvertisingS ales Promotin

Sales Management

PR ManagementD irect Marketing

PLACEAccess to Target

Market

Ch annel S tructure

Retailler Image

Logistics

Buyer Decision Making

Documents

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