UNIT 2
6-1
Analyzing
Consumer Markets
6-2
What Influences Consumer Behavior?
• Cultural factors
• Social factors
• Personal factors
6-3
Culture
The fundamental determinant of
a person’s wants and behaviors
acquired through socialization
processes with family
and other key institutions.
6-4
Subcultures
Subcultures is the more specific identification
and socialization of its members
• Nationalities
• Religions
• Racial groups
• Geographic regions
• Special interests
6-5
Characteristics of Social Classes
• Within a class, people tend to behave
alike.
• Social class conveys perceptions of
inferior or superior position.
• Class may be indicated by a cluster of
variables (occupation, income, wealth).
• Class designation is mobile over time.
6-6
Social Factors
Reference
Family
groups
Social
Status
roles
6-7
Personal Factors
• Age & Stage in the life cycle
• Occupation & economic circumstances
• Personality & Self Concept
• Lifestyle & Values
6-8
Stimulus Response Model
6-9
5 Stages of the Buying
Decision Process
• Problem recognition
• Information search
• Personal sources
• Commercial sources
• Public sources
• Experiential sources
• Evaluation of Alternatives
• Purchase Decision
• Post Purchase Behaviour
6-10
Successive Sets Involved in Customer Decision Making
Analyzing
Business Markets
Organizational Buying
Decision-making process by which
formal organizations establish the
need for purchased products and
services, and identify
evaluate, and choose among
alternative brands and suppliers.
7-13
Characteristics of Business
Markets
• Fewer, larger buyers • Derived demand
• Close supplier- • Inelastic demand
customer • Fluctuating demand
relationships • Geographically
• Professional concentrated buyers
purchasing • Direct purchasing
• Many buying
influences
• Multiple sales calls
7-14
• Buying Situations
• Straight rebuy
• Modified rebuy
• New Task
• Systems Buying and Selling
• Systems buying
• Turnkey solution
• Systems selling
7-16
Identifying Market
Segments and Targets
Market Segments
• Specific groups of customers with similar
needs, purchasing behaviors, and
identifying characteristics
• Understanding customer needs is the first
step in successful market segmentation
8-18
Bases for segmenting consumer
markets
• Geographic
• Demographic
• Psychographic
• Behavioral
8-19
Geographic Segmentation
• Region
• South, North, East, West
• City
• Class I & II, Cities with population of 0.5 – 1million, cities with
population over a million, Metro
• Rural & Semi Urban areas
• Villages with population till 10,000, semi-urban areas, small
towns with population between 20,000-50,000
• Egs
• Air coolers in arid regions, freshly brewed coffee in TN, different
quality tea in south & north india, More consumption of Ready to
eat food in metros
8-20
Demographic Segmentation
• Age & Life cycle
• Life Stage
• Gender
• Income
• Occupation
• Education
8-21
Psychographic Segmentation
• Science of using psychology & demographics to
understand customer
• Division on the bases of lifestyle, personality traits or
values.
• Mcdonald’s changed its Menu in India, Halal meat for
consumption among muslims
• Titan has a lifestyle segmentation through its different
wrist watches like Edge, Regalia, nebula & Raga.
• Femina-woman of substance
8-22
Behavioral Segmentation
• Based on knowledge of, attitude toward,
use of, or response to a product
• Segmentation Variables
• Occasions
• Benefits : Quality, Speed, Economy, Service
• User Status: Non user, ex-user, potential user, first
time user, regular user
• Usage Rate: Light, medium & heavy product users
• Loyalty Status: Hard core loyals, Split loyals,
Shifting loyals, Switchers
8-23
Bases for segmenting business
markets
• Demographic: Industry, Company size, Location
• Operating Variables: Technology, User Status,
Customer capabilities
• Purchasing approaches: Purchasing function
organization, Power structure, Nature of existing
relationship, Purchasing criteria
• Situational factors: Urgency, Specific Application, Size
or order
• Personal characteristics: Buyer-Seller similarity, Attitude
towards risk, Loyalty
8-24
Effective Segmentation Criteria
• Measurable
• Substantial
• Accessible
• Differentiable
• Actionable
8-25
Market Targeting
• Evaluating and Selecting the Market
Segments
• Single-Segment Concentration
• Eg Rolex watches
M1 M2 M3
P1
P2
P3
8-26
Market Targeting
• Evaluating and Selecting the Market
Segments
• Selective Specialization
• Eg, Maruti
M1 M2 M3 M4
P1
P2
P3
8-27
Market Targeting
• Evaluating and Selecting the Market
Segments
• Product Specialization
• Eg colgate in toothpastes
M1 M2 M3
P1
P2
P3
8-28
Market Targeting
• Evaluating and Selecting the Market
Segments
• Market Specialization
• Eg Big Bazar,
M1 M2 M3
P1
P2
P3
8-29
Market Targeting
• Evaluating and Selecting the Market
Segments
• Full Market Coverage
• Undifferentiated marketing
• Differentiated marketing
M1 M2 M3
P1
P2
P3
8-30
Dealing with Competition
Competitive Forces
Five Forces Determining Segment
Structural Attractiveness
Threat of:
1.intense segment
rivalry
2.new entrants
3.substitute products
4.buyers’ growing
bargaining power
5.suppliers’ growing
bargaining power
9-32
Designing Competitive Strategies
Market-Leader Strategies
1. Expanding the Total Market
New Users
Market-penetration strategy
New-market segment strategy
Geographical-expansion strategy
More Usage
Increase amount of consumption
Increase frequency of usage
9-33
Designing Competitive Strategies
Market-Challenger Strategies
• Defining the Strategic Objective and
Opponent(s)
• It can attack the market leader
• It can attack firms of its own size that are not
doing the job and are underfinanced:
• It can attack small local and regional firms: eg
ICICI, HDFC
9-35
Designing Competitive Strategies
Choosing a General Attack Strategy
9-36
Designing Competitive Strategies
Market-Follower Strategies
•
Four Broad Strategies:
•
Counterfeiter : Duplicates the leader’s product and sells it in the black
market
•
Cloner: Emulates the leader products with slight variation
•
Imitator: Copies some things from the leader but maintains differentiation eg
Telepizza
•
Adapter : Adapts or improves the leader products eg japanese firms
Market Nicher Strategies
• Leader in small market
• Low shares of total market but highly profitable because of niching
• Offer high value, charge a premium price, achieve lower manufacturing
cost and shape a strong corporate culture and vision
9-37
Creating
Brand Equity
What is a Brand
AMA definition of a brand:
• Brand is a name, term, sign, symbol or design or a combination
of them intended to identify the goods or services of one seller
or group of sellers and to differentiate them from competitors
• A brand conveys meaning about attributes, benefits, values,
culture, personality, user. When the meaning is properly and
fully conveyed it is deep, else it is shallow.
• A brand is a perceptual entity that is rooted in reality that reflects
the perceptions and perhaps even the idiosyncrasies of
consumers
• Branding is all about creating differences. Brand differences can
be often related to attributes or benefits of the product (Gillette).
It can also arise creating relevant and appealing images around
the product by understanding consumer motivations and desires
(Coca-Cola).
Branding
Endowing products and services
with the power of a brand.
It creates mental structures that help consumers
organize their knowledge about products and
services in a way that clarifies their decision making
and in the process provide value to the firm
10-40
Marketing advantages of strong brands
• Improved Perception of Product Performance
• Greater Loyalty
• Less vulnerability to competitor marketing actions.
• Less vulnerability to marketing crisis.
• Larger margins
• More inelastic response to price increases.
• More elastic response to price decreases.
• Greater trade cooperation and support
• Increase marketing communication effectiveness
• Possible licensing opportunities
• Additional brand extension opportunities
10-41
Brand Equity
Brand equity is the added value endowed on products and
Services. It may be reflected in a way a consumer thinks, feels and
acts with respect to the brand.
A customer based brand equity is the differential effect that brand knowledge
has on consumer response to the marketing of that brand.
A brand has a positive customer based brand equity
when consumers react more favourably to a product
and the way it is marketed when the brand is identified
than when it is not identified
10-42
Drivers of Brand Equity
• The initial choices for the brand elements or
identities making up the brand.
• The product and service and all accompanying
marketing activities and supporting marketing
programs
• Other associations indirectly transferred to the
brand by linking it to some other entity
10-43
Brand Elements
• Brand names
• Slogans
• Characters
• URLs
• Logos
• Symbols
10-44
Brand Element Choice Criteria
• Memorable
• Meaningful
• Likable
• Transferable
• Adaptable
• Protectible
10-45
Building Brand equity
- Experience with the product or service
- Sum total of all brand contacts put together. In a long term time
frame this could mean reputation
- Personalization of marketing efforts e.g. High end banks
- Integration of marketing efforts to the customer, especially
integrating communications
- Internalization – everyone in the company lives the brand – good
internal marketing as it would reflect in brand contacts
- Leveraging secondary associations German Cars, Voltas: from
the house of TATAs, Femina Miss India etc
Brand Equity Models
Brand Asset Valuator (BAV)
Brandz
Brand Resonance
BAV Model
Universe of Brand Performance
An overview of Branding
Decisions
Brand
Repositi
Branding Brand-Sponsor Brand-Name Brand-Strategy oning
Decision Decision Decision Decision Decision
Manufacturer *Individual Brand Repositi
brand names extensions – oning
*Blanket family Line or
Brand Distributor name category No
(Private) Brand *separate family Co brands repositio
No brand names ning
*Licensed brand * Company –
individual names
Brand Sponsor Decision
Manufacturer Brand – NIRMA;
Distributor brand – Reliance Value, Reliance Select, More Selecta, Nilgiris
Licensed brand – AMCO-YUASA, Pierre Cardin and Christian Dior
– licensed names for clothes of Hart Schaffner and Marx.
Brand Name Decision
Individual Names – Lexus; Blanket Family Name – TATA, GE;
Separate Family Names – Colgate Toothpaste, Palmolive Shave Cream;
Company Individual Names – Kellog’s Rice Krispies, Kellog’s Raisin
Bran
Brand Strategy Decision
Line Extension – Colgate Dental Cream, Colgate Gel;
Category Extension – WIPRO consumer products, WIPRO Computers;
Multi-brands – HUL in soaps such as – Lux, Dove, Hamam..
New Brands – new brand in new product category – GoodKnight
CoBrands – WIPRO-GE, ICICI-HP credit cards
Brand Roles in a Brand Portfolio
• Flankers
• Cash cows
• Low-end entry-level
• High-end prestige
10-52
