Ebook Diploma in business management: Marketing policy, planning and communication – Part 2

Ebook Diploma in business management: Marketing policy, planning and communication – Part 2 presents the following content: Study unit 6 understanding consumers and consumer behaviour, study unit 7 product management and development, study unit 8 pricing policies and price setting, study unit 9 distribution policy and management, study unit 10 marketing communications, study unit 11 the international dimension to marketing, study unit 12... Đề tài Hoàn thiện công tác quản trị nhân sự tại Công ty TNHH Mộc Khải Tuyên được nghiên cứu nhằm giúp công ty TNHH Mộc Khải Tuyên làm rõ được thực trạng công tác quản trị nhân sự trong công ty như thế nào từ đó đề ra các giải pháp giúp công ty hoàn thiện công tác quản trị nhân sự tốt hơn trong thời gian tới.

Study Unit 6

Understanding Consumers and Consumer Behaviour

A THE BUYING PROCESS

The buying process is not just "the purchase" The process covers all the stages that a

buyer goes through when making a purchase

As marketers we need to understand the process fully so that we can help the buyer through

every stage If we can do this, we are more likely to get a successful sale and the buyer is

more likely to be satisfied at the eventual outcome

A Rational Decision Making Model

The process itself may involve the following stages:

 A need is felt which creates a problem to be solved.

 A solution is sought for that problem.

 Alternative solutions are analysed and assessed.

 A decision is made as to which is the best solution to the problem.

 The decision is implemented.

 A review is made of the decision.

At any stage it may be necessary to go back to a previous stage and review earlier thinking

This is known as a feedback loop.

This basic process can be shown as a very simple model as follows:

Figure 6.1: Rational Decision Making Model

Remember that review and feedback are also important in this process.

Never forget that we are talking about a process – which involves a sequence of stages As

marketers we need to be able to understand the processes our customers go through so that

we can overcome any barriers that may make them decide not to buy, or to buy from the

competition.

We want to establish ourselves as the preferred provider Not many companies are in the

enviable position of being the sole source of supply

To demonstrate the process, let us take a simple example of the buying process of an

individual consumer – YOU

Example

Imagine you have been kept late at the office and do not have an evening meal prepared

You are feeling really hungry and know that you need to eat pretty soon

 Stage 1

You have a problem – you are hungry You need to eat so you must find food You

move into Stage 2

ActDecide

Search/Evaluate

 Stage 2

You have no meal prepared at home Your first choice involves deciding on whether or

not you will cook when you get home

 Solution 1: You know that you have a nice steak in your refrigerator, so you

decide you will cook when you get home The search stops there – your

problem has been solved.

 Solution 2: You decide you are too tired to cook and want to have food provided

for you You remain at Stage 2 – your problem still exists but it has changed

slightly – it has added dimensions

The first added feature involves deciding where you want to eat:

 Solution 1: in a restaurant?

 Solution 2: at home?

You consider the alternatives and decide that a restaurant will be expensive and take

too long (You have assessed your resources of time and money.) You decide you will

eat at home

You remain in Stage 2 You now reconfirm your problem and assess your decisions to

date Yes, you are hungry and you need to eat Yes, you are too tired to cook for

yourself and yes, you don't want to go to a restaurant Your decision is "firm" – your

problem still exists but has moved into another decision phase.

You are still in Stage 2 You now have to decide what kind of fast food you want to eat.

You consider all solutions available to you, which may vary from fish and chips or

beefburger to Chinese or Indian meals You assess each option against various factors

– time, convenience, money and preference When you have finished your

assessment you will make your decision You decide on an Indian meal

You could move into Stage 3 immediately because there is only one outlet to buy from;

or you could have further decisions to make on where to buy from before you finally

choose

Your final decision might be based on the fact that there is an Indian take-away

restaurant near your home You've used it before and know the food is good You also

know that you can order by telephone and it will be ready for you to collect when you

arrive The end result will be that you can eat as soon as you arrive home You are

happy with your decision and you move into Stage 3

 Stage 3

You telephone in your order stating your requirements and giving the time when you

will be collecting You leave the office, collect your food, go home and eat it The

purchase is completed and the product has been "consumed" You now move into

Stage 4

 Stage 4

After you have eaten your meal, you feel a little ill You blame the food and think about

the other options which had been open to you Would they have been better? You

might not be feeling ill if you had bought fish and chips Maybe you should have gone

to a restaurant or tried a different outlet

You are now doubting the wisdom of the decisions you made earlier You are

experiencing dissonance – an interference with, or "jarring" of, your knowledge and

experiences

You think back over the process You compare the options you had available but still

think your decisions were right You wonder why you are feeling ill

Suddenly you realise that you are really only feeling ill because you have eaten too

much You feel reassured – it is you that is at fault, not your decisions, the food or the

outlet Your confidence in, or "loyalty" to, the outlet is restored and your preference for

Indian food is re-established – you did the right thing! You are likely to repeat the

process at another time in the future

Although the decision making in this example is on a very simple level, it clearly indicates the

stages in the buying process and the decision loops which will be taken

At each stage, whether consciously or not, all decisions are "checked and verified" before

moving into the next phase Resources are monitored to see if the decision is viable, etc

The process will be the same, whether it is for an expensive item or for something which

costs very little money

What can vary is:

 The strength of the initial problem

 The nature of the product being bought

 The value of the item being bought

 Who is involved in the buying process

 Who will use the item being bought

 The length of time that will be taken in the search process

 The ease of the actual decision making

 The convenience of the actual purchase

 The after sales confidence of the buyer and the user

If you consider these possible differences, you will see that some of them will be a direct

outcome of another For example, for a high value purchase it is likely that more time will be

spent in the searching stage The level of reassurance necessary after the sale will also be

greater It is also possible that more than one person will be involved in the process This

brings us, as marketers, to a very important question – who is buying?

Who Buys?

You will note that in the section above I have introduced the term "the user" This is because

we often sell things to people who are buying on behalf of others

The customer buys The user is the consumer A person can, of course, be both at the

same time, but we should never forget that we may be dealing with multiple levels in the

buying process and we have to cater for all needs To simply make it easy for an

intermediary to buy without thinking of the impact on the user is most unwise Conversely, to

concentrate on the needs of the user at the expense of the intermediary is equally unwise

We should be looking for a balance which most closely matches everyone's needs This

matching can be easy or it can create a number of problems Problems often increase in

direct ratio to the length and complexity of the distribution channel and the nature of the item

being bought

The Decision-making Unit

Buying can be done by an individual or by a group of people We call the individual(s),

involved in buying, the Decision-making Unit (DMU)

We have to accept that often purchasing is carried out to meet the requirements of more than

one person, which can mean that more than one person will be involved in the purchasing

decision processes This applies equally in consumer and industrial purchasing

When more than one person is involved, the individuals may have a definite "role" to play in

the process The roles have been identified as follows:

 The initiator: the person who comes up with the idea of buying an item

 The influencer: the person, or people, who will shape the outcome of the decision

 The decider: the person with the power or authority to make the decision

 The buyer: the person who makes the actual purchase

 The user: the person who will eventually use the product

And, of course, in many purchases there will also be:

 The gatekeeper: the person who can prevent the decision from being made or make it

more difficult, e.g a receptionist who prevents a salesperson from seeing a buyer, or a

friend who tells someone that a product is a waste of money – simply because they do

not see the need for it themselves

Although these descriptions are more often used to describe group purchases, the individual

purchaser can also be playing a lot of the "roles" For example:

 A father might think of the idea of buying some painting materials which would keep his

children occupied while he is busy (initiator)

 He allows his own tastes to influence his decision as he enjoys painting (influencer)

 He goes ahead and decides to buy a set of water-colour paints (decider)

 He goes to an outlet and buys (buyer)

 Of course, he may decide that his children don't deserve the present and not buy

(gatekeeper).

The only "role" not being covered in this example is that of the user.

Types of Purchasing

One way of considering the decisions which you, and most other consumers, take is to

classify them broadly as either "new buys" or "repeat buys" It is worthwhile looking at these

two categories in some detail, because many organisational decisions follow a similar

pattern

 New Buy Decisions

Your new buy decisions may be for items of small value, such as changing your

toothpaste or choosing a different food; they involve small amounts of money, so the

risk of being dissatisfied is there but the outcome is not disastrous You may throw

away an item you dislike and accept you have wasted a tiny part of your resources

Some new buys are more serious because they involve products which cost more

money and would not be thrown away so easily There are many grades of this type of

buying and you can easily put your buying into an order of importance You might think

of clothing, then kitchen equipment, furniture, a car, a holiday; and for some of us, a

house is the most expensive new buy item

 Repeat Buy Decisions

When you buy something you have used previously, you have the benefit of experience

to help you, so you have less difficulty in choosing the product There will still be

different levels of decision-making, because the products you buy may range from

low-value items such as toiletries or foodstuffs to a second car or another house In all

these categories, the experience of previous deals will make the decision to buy or not

to buy less difficult

This is, though, a rather simplistic analysis for marketing purposes, and more light is shed by

using a model which was originally introduced by Assael (1987)

This asserts that the type, or nature, of purchasing is affected by two variables:

(a) The involvement of the buyer with the product, and

(b) The differences available (between products/brands)

The following diagram demonstrates the interaction between these variables:

Degree of Buyer Involvement in the Purchase

Few

Habitual buyingbehavioure.g basic foods

Dissonance reducingbehavioure.g furniture

Complex buyingbehavioure.g computers

Figure 6.2: From Assael – Four Types of Buying Behaviour

 Habitual Buying

This is repetitive buying which takes little thinking about Few differences are apparent

between products and brands and the customer allocates little, or low, importance to

the purchase It may be that the customer has, in the past, considered alternatives and

has found "the ideal" The customer is happy to stick with their decision and has, in

fact, become "loyal"

 Variety Seeking

This type of purchase will still involve relatively low importance in the mind of the

purchaser, but there will be lots of choice and variety, e.g biscuits, sweets,

newspapers, magazines If a product is tried and found to be lacking in some aspect,

the buyer will simply try another one the next time they buy, or they may actively decide

to keep trying different brands to see which is best, e.g people who drink beer often try

different types just as an experiment

 Dissonance Reducing

Dissonance reducing purchasing is the kind of purchasing which is designed to reduce

post-purchase "doubt" Because the degree of involvement is high, usually because of

value and the item being something which is only bought rarely (e.g an electric bed),

the buyer may have no previous experience to use as a base for comparison in the

search process

If you add this lack of experience to the fact that there are only minor differences

between the types of product available, it is easy to see why the buyer needs to ensure

that the item he/she buys is good The search process may therefore be extended

This type of purchasing can also mean that, because there are so few differences in

the models or brands available in the market, the actual purchase itself may be made

 Complex Buying

High product involvement and lots of choice make this an extremely hazardous type of

purchase for a buyer If we take buying a computer for home use as an example, you

can understand the problems You may have already had one make of computer and

been quite happy with it, but now you have outgrown your machine and need another

It is going to be expensive so you have to make sure you get good value for money

There is such a wide range of computers on the market that your choice will not be

easy You have to consider machine capabilities, software, compatibility with your

existing floppy discs and printer, etc This type of decision can take a lot of time in the

search for information and assessment of alternatives before a purchase is made

Impulse Buying

Although this type of buying is not mentioned in the Assael model, we must consider it as it

certainly happens

Producers are aware of the existence of impulse, or non-rational, purchasing which is why so

much money is spent on promotional literature and point of sale displays

There is really no accounting for this type of purchase and yet we all do it from time to time

We are attracted by an advertisement, or a point of sale display and we leap in and buy

without thinking about it Sometimes impulse buying works and sometimes it doesn't

If it works that is OK We acquire confidence in the manufacturer, or the outlet, and feel quite

happy If it doesn't we have all the time in the world to regret what we have done We may

think "Never again!" and blame the manufacturer, or the outlet, for our own error.

The effects of this "blame" can last for a considerable time and can actually influence our

more rational purchasing – with the organisation which was blamed losing custom

You may think that impulse purchasing does not meet the recognised stages in the buying

process In my opinion it does All that has happened is that the process has been gone

through very quickly or some stages have been more or less by-passed:

 When you buy something on impulse you will be thinking it is a good idea as it will be

useful for some purpose or another – you are solving a problem You may not have

been aware until then that the problem existed, but some factor makes you recognise

it

 Circumstances shorten the search phase – maybe it is because you know you can't

get back to the outlet, or there are only a few of the items available

 You still make the purchase decision and complete the purchase.

 You still carry out the post-purchase evaluation.

Therefore, you have still gone through the purchasing process

B INFLUENCES ON INDIVIDUAL BUYING BEHAVIOUR

Marketing managers are in the "people" business Even though they may be trying to make

profits, they must understand individual and group behaviour both from the internal (supply)

and external (demand) points of view

Behaviour stems from:

 Needs (requirements), and

 Wants (desires)

It has been said that today's wants are tomorrow's needs and a great deal of marketing effort

is put into trying to make this the case where buyers are concerned

 Needs can be basic (physical) or higher (psychological).

 Wants are "desires".

For example, I "need" to earn enough money to live – but I "want" to earn enough money to

buy a speedboat

Internally, within the organisation itself, managers need to ensure that basic needs are met

and that personnel are satisfied with pay, conditions of work, involvement, style of leadership,

etc and that the personnel are not demotivated by any activities taking place They should

also take into consideration the wants of the staff as a means of motivation Knowing the

aspirations of a member of staff, or what will motivate them, can be of considerable help

when trying to achieve their cooperation

It could be said that if behaviour is not understood, marketers are unlikely to be successful in

obtaining their objectives and in overcoming conflict

It would be every manufacturer's dream to produce products that every buyer in the world

wanted to buy, but we know that is impossible simply because buyers are people, and people

differ in many ways Marketers therefore have to understand what makes people different

from one another, if they want to help the customers to satisfy their needs

These differences are caused by various influencing factors, as the following model shows

The BuyingConsumer

Culture includes both abstract ideas and beliefs, as well as physical artefacts, which

are important to a society It summarises the learned values and attitudes of a society

as a whole It is while we are growing up that we acquire expectations and standards

that fit with the society in which we live, and these acquired values and expectations

stay with us throughout our lives For example, the different standards between the

Muslim and Christian religions impose different levels of acceptance on certain

behaviour and, therefore, on purchasing habits

As an individual grows, they will absorb and acquire behavioural norms which are

acceptable to their particular society; these inbred beliefs will be very strong It is an

accepted fact that the society in which a person lives and has been reared is one of the

greatest influences on the final character of that individual

It is relatively easy for any marketer to understand the culture in their own country as

they will be part of it, but understanding cultural influences in foreign markets takes a

little more care It is therefore particularly important that, when dealing with markets

different to the home market, time is taken to identify and understand the cultural norms

of acceptability in the foreign market, as these may vary dramatically from those in the

home country

 Sub-culture

Cultures of all kinds will contain smaller groups or sub-sections The differences may

be based on life style, religion or on belief in some ideal, e.g in Spain you will find the

Basque separatists, who are part of the overall culture of Spain but can be regarded in

their own right as a sub-culture

 Social Class

Despite the claims for "classless societies" which we hear from politicians, class

systems still exist around the world Social classes are the "divisions" which a society

accepts and they may be based on status, money or education In the UK the social

class system (A, B, C1, C2, D and E), which is still widely used, is defined on the job of

the head of the household but, because of the changes which have taken place in the

UK society, this method may not always be an appropriate measure

Social

Influences under this heading can come from family and friends or other reference groups,

such as clubs and interest societies The individual role and status of the buyer is also

another influence – how we want other people to see us!

For example, if your father has always bought Rover cars, you may be influenced into buying

a Rover when you make your first car purchase However, should you be part of a group that

has adopted another make of car, e.g university students who buy Yugo cars as a status

symbol or statement, you could be influenced by that attitude in your wish to conform to the

"norm" of the group Once you get your first major job as a manager, though, you may

realise that a BMW car would fit your status better than a Yugo and you will make another

change

Personal

Personal factors relate to the individual, e.g age, life style, occupation, wealth and character

For example, a young man of 21 who enjoys danger is more likely to be attracted to a motor

cycle, with flames painted on its side, than another wealthy young man, of the same age,

who enjoys the theatre A lady of 45 will want different clothes from a lady of 25 A company

director will have different purchasing expectations from those of a mechanic in a garage

As we move through our lives, we change our purchasing habits according to the prevailing

conditions

Psychological

Wilson, Gilligan and Pearson (in "Strategic Marketing Management", 1992) identify four

psychological characteristics as being important: motivation; perception; learning; and

beliefs and attitudes

 Motivation

This is what drives us to do or want something It stems from a range of human needs,

from basic to higher, as identified by Maslow in his "Hierarchy of Needs" model (see

later in study unit)

 Perception

This is how we "see" things We are conditioned to expect certain things and this

conditioning means that we take in images but convert them to what is acceptable to

our minds It is our own way of organising the information we take in each day Two

people, who are subjected to the same advertising message, at the same time, may

"see" the message in completely different ways For example, one person at a holiday

time-share demonstration may see the salesperson as being very good and

knowledgeable on the subject, but another person at the same demonstration may see

the same salesperson as being a "slick fast-talker", who is just interested in taking

money

 Learning

This comes from experience As we learn, we change our expectations to meet with

the newly acquired knowledge For example, if you enjoy working or playing with

computers, you gradually build up your knowledge until such time as your present

machine is not good enough for you You then move up into another category and

begin the cycle all over again

 Beliefs and Attitudes

The dictionary definition of "belief" is "principle, proposition or idea accepted as being

true without positive proof" From this you can see that "belief" will be personal to each

individual If we are convinced through our socialisation, learning, etc that one

particular brand is better than another, we will buy that brand until something happens

to change our belief

"Attitude" is defined as being "the way a person views something or behaves towards

it, often in an evaluative way" Therefore we will be influenced in our buying by how we

regard the item being purchased For example, you may see an item as being "good

value for money" or "cheap and nasty".

We shall examine these various factors in more detail in Section D below

Moving on from this simple model, there are other influences that the marketer must take into

consideration

Personality and Environmental Influences

People are influenced in their buying behaviour both by their own opinions and attitudes and

by the opinions and attitudes of various groups

It is these types of influences which give rise to the broad classifications of consumers which

are used extensively in marketing and are examined in the next section

Note that group attitudes may be acquired from formal (structured) or informal groups

The influence from peer groups and opinion leaders is very strong indeed – particularly so in

they can, ultimately, have an effect on the outcome of the entire marketing effort If opinion

leaders can be captured, the "followers" will also adopt the product on sale

C CLASSIFICATIONS OF CONSUMERS

Socio-economic Groupings (Class)

Perhaps one of the oldest and most recognised ways of splitting people into categories is

based on "class" Every country in the world has "upper" and "lower" classes The

differences may be based on the position of a person, or their family, in society or on wealth

but it is still a division recognised and accepted by all – even though some may fight against

it

In the UK, social classes are recognised as:

A Upper middle class: higher managerial or professional levels

B Middle class: middle to senior management, rising professionals

C1 Lower middle class: junior and supervisory managers, clerical grades

C2 Skilled working class: manual trades involving individual skills

D Working class: semi and unskilled workers

E Benefit takers: pensioners, widows, anyone using state benefits

"Class" has been, and still is, well used in the UK The whole premise, though, is based on

the job and income of the "head of the house" which is often taken to mean the "male"

Times are changing Many women now earn more than their partners which, in effect, could

mean that together the couple should really be categorised in a different class Time has

also eroded the perceived differences between those born to "upper" and "lower" classes

The Family Life Cycle

The "family" is arguably the most important purchasing unit in any particular country because

of the total value of sales which are generated in the domestic markets The theory of the

Family Life Cycle (FLC) is meant to show that purchasing motivations can be predicted and

that they will change over time The basic concept makes an assumption that every adult, as

they age, will move through various stages of life, demonstrating certain purchasing

preferences at each stage These are illustrated in Figure 6.4

Bachelor Single young people not living at

home At start of career Lowincome – main aim to findhouse/have good time

Leisure interests/clothing/alcohol/

eatingout/holidays/stereos/cars/cheapaccommodation

Full nest 1 Mother at home with one child

while father works Reduction inincome

Children's clothes and toys – few,

if any, holidays Home purchasingmay be limited to durable goods

Stage Description Purchase Preference

Full nest 2 Now with two children under

five Father improved salary butcosts of family higher

More expensive children's toys

Still little money spent on theparents Maybe short,inexpensive holidaysFull nest 3 Family growing up Mother

returns to work Increasedincome but also increased costsfor household

Replacing worn-out furniture anddurables Better class of holiday –more purchasing for the parents

Wider interest in food andentertainment

Empty nest 1 Some of family have moved

away from home Parents now

"help out" on living costs forchildren living away

Luxury purchasing Maybe improvements

home-Empty nest 2 All children left home Parents

back to "new married" stage

Home will be fully furnished andgroup interests formed

"Reckless" purchasing onunnecessary items Interestholidays, cruises, etc

Solitary survivor 1 One partner dies but other is still

active and working House isnow paid for

"Insurance" purchases to securefuture Buying for grandchildren

Little, if any, home purchasesSolitary survivor 2 Last one living – not working Medicinal and health aids

Security purchasing for safety inthe home Most spending done onchildren and grandchildren

Figure 6.4: The Family Life Cycle

Problems with using the FLC

In many areas of the world it is accepted that it is usually the woman of the house who will

make the purchase decision in low cost/often repeated purchases For more expensive

items (e.g consumer durables) it will be either a joint decision or a decision made by the

controller of the finances within the family – often still the woman! For major purchases it is

likely to be the male in the family who will be the ultimate decider (e.g new car)

However, this attitude is changing, particularly in industrialised nations, as more and more

women either remain in, or return to, work after having children Not only are women more

likely to have money of their own, but they also have more self-assurance and power to

influence family buying decisions

This, and other changes that have taken place in society, has led to the opinion that the

"accepted" version of the family does not cover everything in the modern world For

example, many young people choose not to marry at all, or to wait until such time as they

have amassed enough money to be secure Their purchasing behaviour will be changed

because of these decisions

There are also many young people who take a conscious decision not to have children,

which means that as they become more established and have more disposable income they

may retain their initial purchasing characteristics or be in the market for high status

purchases

The increase in the divorce rate, world-wide, as well as in the number of non-married people

living together as couples has meant that there can be "double families" with two sets of

parents, and grandparents, buying for children

Despite this changing aspect, the "reasons for buying" are unlikely to change in the normal

type of nuclear family of parents and children, and the marketer is still largely able to design

campaigns accordingly But you should remember that, as with Maslow's model, although

this model can be used as a guideline it does not give a perfect picture

SAGACITY

The inadequacies of the FLC and social classifications led to the introduction of this model of

influences on behaviour

The model uses life cycle as its main base and suggests four stages of life: Dependent,

Pre-family, Family and Late

It then splits up each stage in accordance with income and then income is split up according

to white collar (managerial/higher) or blue collar (skilled/lower) occupations.

The underlying suggestion of this model is that people will have different hopes and buying

behaviour as they move through their lives and will be influenced by their current situation

This is, in fact, a very similar concept to the Family Life Cycle

Research work has taken the viewpoint of SAGACITY further and suggests that it is not

necessarily true that age and progression through the accepted life cycle are the most

important influences on buying behaviour The suggestion is that influences on behaviour

will be psychological, and that it is attitudes and expectations which will be more significant.

Geographic/Residential Groups

There are several types of classification based on geographic or residential factors –for

example, MOSAIC or PINPOINT However, ACORN is the most quoted of these systems

and is widely used in the UK by analysts and planners ACORN stands for "A Classification

of Residential Neighbourhoods" Similar types of systems are used in other parts of the

world

In the UK, the ACORN system uses categories of housing, i.e

A Modern family housing for manual workers

B Modern family housing for higher incomes

C Older housing of intermediate status

D Very poor quality older terraced housing

E Rural areas

F Urban local authority housing

G Housing with most overcrowding

H Low-income areas with immigrants

I Student and high-status non-family areas

J Traditional high-status suburbia

K Areas of elderly people

The premise of this type of classification is based on the assumption that people who live in

similar areas will portray similar buying preferences, allowing marketers to target on a

geographical basis.

The problem with this model is that although, in general, residential areas will house people

earning similar salaries, etc this will not always be true:

 There may be a family living in urban local authority housing that has quite a lot of

money – which puts them in the market for high status purchases – but they choose to

stay living where they are because they like the area or the neighbours

 There may be a young couple who have extended themselves to buy a really

expensive house in a high status area – but they may have no money with which to buy

furniture and carpets and may be struggling to survive

Again, we have a model which can be useful in general terms, but is not perfect

Life-style Groupings

The changes which have taken place in levels of affluence and consumer awareness overall,

coupled with increased competition for markets, has led to an increasing interest in analysing

and understanding individual life styles These include:

 AIO – Activities, Interests and Opinions

Customers are tested by questionnaires which are analysed and the customer is then

"categorised"

 VALS – Value and Life Style

Arnold Mitchell produced this model of understanding individual behaviour He

suggested that people can be classified as one of four types:

 Need-driven: "survivors" and "sustainers"

 Outer-directed people: "belongers", "emulators" and "achievers"

 Inner-driven people: "I am me", "experientials", "societally conscious"

 Combined (outer/inner): "integrated"

In much the same way as Maslow suggested people move through a hierarchy,

Mitchell suggested that people move through the four stages, from being a "survivor"

until they become "integrated" However, Mitchell added the possibility that people can

achieve "integrated status" by two possible routes

All people are survivors, then sustainers, and then become belongers.

At this point Mitchell suggested that, depending on the basic nature of the person, one

of two routes could be taken:

 Outer-directed people will become either emulators, or achievers

 Inner-directed people will become I am me, experientials, or societally

conscious.

Following from this each individual will become "integrated"

The "emulators and achievers" route is more akin to the traditional path through

Maslow's hierarchy, but the greater awareness of individual rights and choices,

together with increased awareness of environmental issues has, in fact, meant much

more "individualism" on the part of the buying public Marketers can capitalise on this

and target very precisely

 Cross-cultural Consumer Characteristics (4Cs)

This classification was devised by the Young and Rubican advertising agency and

classified people into one of three overall groups which could then be sub-divided:

The Constrained The Middle Majority The Innovators

Resigned poorStruggling poor

MainstreamersAspirersSucceeders

TransitionalistsReformers

 Other life style groups

Following the universal acceptance of the identification of the "YUPPIE" (young

upwardly mobile professional), there have been various other attempts to place

consumers into groupings in accordance with their life styles The following list

adapted from an article "Goodbye Yuppies, Hello Yaks" written after a customer

research project carried out for a major credit card company in the UK:

(a) YAKS (young, adventurous, keen and single): 18-24; living at home or in rented

accommodation; fashion followers; live well; high entertainment expenditure;

often little regard for savings; often high credit card users

(b) EWES (experts with expensive styles): 24-35; trained/skilled in highly paid job;

often married but usually two incomes; some in rented, some in mortgaged

accommodation; ability to meet payments; fashion-conscious; disposable income

to keep up with latest trends; 2-3 holidays per year (Mediterranean in

summer/USA skiing in winter); high credit card users

(c) BATS (babies add the sparkle): 24-35; married or living together,

rented/mortgaged; previous (or latent) fashion-consciousness suppressed by

other priorities and loss of second income; 1-2 holidays per year often with

friends or camping in UK or France

(d) CLAMS (close check against money spent): 34-44; married but children growing;

mortgage commitments at their peak; often paying school fees; some in mid-life

crises – divorcing or re-marrying; 1-2 holidays per year either package or visiting

friends and relatives in UK; budget carefully; pay credit cards on time or leave

very small outstanding balance

(e) MICE (money is coming easier): 44-54; children grown – some left home; often

inherited property giving financial security and ability to purchase luxury items;

1-2 holidays per year – often now without children – usually in UK but often

"special" places they have always wanted to see or visiting old friends who have

moved abroad

(f) OWLS (older with less stress): 55+; children grown and left home; financial

security; 2-3 holidays per year – maybe visiting friends abroad in similar life

situations; still conscious of money but determined to enjoy themselves; major

expenditure is on holidays and presents for children and grandchildren; use credit

cards but often sparingly and always pay in full and on time

These classifications were pertinent to the company which undertook the research, and

demonstrated the life styles of their customers at that given time Other companies

may devise their own classifications in accordance with their specific needs, and

categories will change because of environmental aspects – there will always be the

"latest method" which will outdate previous categories

Ultimately, though, it makes little difference how consumer groups are identified or

categorised; the various methods are really a way of understanding why people buy, and

what influences the buying decisions

D THE SOCIAL PSYCHOLOGY OF CONSUMER

BEHAVIOUR

It is difficult, if not impossible, to plan marketing activities without some understanding of how

ordinary people behave when they are in the marketplace as consumers and as customers

In this section, then, we shall look at some simple models of human behaviour, in the hope

that this will help us to understand it better, and help us plan more effective activities

An Initial Model

Engel, Kollatt and Blackwell (1978) proposed a development of the systems approach to

apply to the decision-making process as a framework for highlighting aspects of the

influences which bear on the process This can be shown in a simple diagram (Figure 6.5)

Figure 6.5: Simplified Version of the Engel, Kollat and Blackwell Model

As you can see there are many inputs into the central control unit and only one output, the

decision This is a simplified version of the model and the full version has much more detail

The block shown here, as the "perceptual system", can include such items as past

experience, advertising, recommendations, perceived need, funds available and even

"wishful thinking"

MOTIVATINGSYSTEM

CENTRAL CONTROL

UNITDECISION PROCESS

CHOICE

OUTCOMES

Similarly, the block shown as "evaluative system" could include such items as attitudes,

hereditary beliefs, knowledge, advice, information search, motives, life-style, group

compliance

Note that the outcome can be satisfaction or dissonance; you do not know how good a

product is until you try it and you may be pleased or not Your knowledge will feed through a

loop into the evaluative system, ready for the next buying decision Such feedback loops can

be added to all the items in the model, making it much more complicated

Fulfilment of Needs

The two classic theoretical models on the nature of needs as an influence on behaviour are:

 Maslow's Hierarchy of Needs, and

 Hertzberg's Two Factor Theory

These provide the underpinning for our first area of study

Maslow's model can be very useful in demonstrating the changes which take place in the

individual over time (see Figure 6.6)

Figure 6.6: Maslow's Hierarchy of Needs

Maslow suggested that each individual has certain needs, basic and higher, and that only

when one level of need has been satisfied will the individual move up into the next level

This model can be very useful for marketing purposes as marketers can target activities at

people who are seen to be at one "level" and help them to reach the next "level"

The problem with this model is that it is very difficult to know exactly which level someone is

at at any given time People may be at several levels at the same time for different reasons

For example, someone who has a high powered car, to impress people, may not have a

permanent and secure home base; someone who is held in high esteem as being an expert

in a certain topic or skill may not have enough money to go on the holiday he/she wants to

All that marketers can do is to accept the overall meaning of the model and use Maslow as a

guideline for general targeting purposes

Maslow's Hierarchy of Needs is a fascinating and useful theory for all kinds of people, but

particularly for marketers since it explains to us why people want different things at different

Self-actualisationEsteem needsSocial – affiliation – loveSafety and security needs

Physiological needs

Ultimatesatisfaction

Basic need

times In particular, we gain from it an understanding of the strictly hierarchical order of

human desires So there would be no point, for us as marketers, talking to people about the

satisfaction of aesthetic (level five) needs, when our potential customers are still feeling their

physiological (level one) needs have not been met

The reverse is also true, however, that once a particular level of need has been satisfied, a

new level comes to the fore and it is a waste of effort to dwell to any great extent on those

below So, for instance, if you are in the fashion business, it would be folly to try to appeal to

your customers on the basis of warmth and comfort

It has also long been recognised that the way people move from awareness of a need to the

point where they act to satisfy it is by no means necessarily simple For instance, we can

say with some certainty that everyone who goes without food for a day or two will begin to

feel hungry (at least, under normal conditions) What we cannot say with the same degree of

certainty is that the person will act to satisfy that hunger A religious ascetic, for instance,

may deliberately induce hunger because he believes it is a good thing to deny his own

appetites in the interest of strengthening his spiritual discipline

Psychologists have for most of the twentieth century tried to discern a relationship between

felt needs and actions intended to satisfy them There has been no great agreement on the

subject However, most writers on the subject have recognised certain mental states or

movements that may be components of the process

Herzberg's work indicates that satisfaction of needs is not always of the same kind In his

research about what motivated people to work for a particular employer, he discovered that

there were several factors that needed satisfying (like good wages and pleasant conditions)

but which of themselves did not motivate In contrast, other factors were powerful

motivators, causing people to put themselves out, sometimes greatly, for the opportunity to

work These were things like job satisfaction, responsibility and a sense that one's work

made a difference to the world

Herzberg proposed what he called his Two-Factor Theory, in which he stated that factors of

the first kind were hygiene or maintenance factors (they needed satisfying, but they did not,

of themselves, motivate) and those of the second kind were satisfiers So a worker who

was badly paid but had a job where he felt he was making an important social contribution,

might well stay despite being offered the opportunity to work elsewhere, for better wages, but

in a job which seemed pointless or unimportant

This theory translates well into the world of marketing It seems that consumers have certain

needs (hygiene factors) that require satisfying, whose absence will cause dissatisfaction,

but which are not so strongly felt as to attract a buyer from another product to this one; there

are others (satisfiers) that are so important that their absence will cause the consumer to

engage in a search for an alternative product In the context of work, Herzberg summed up

this theory by saying that hygiene factors affected the decision to work here, whereas

satisfiers affected the decision whether to work at all.

In a marketing context, we can imagine a washing-up liquid that smells strongly of carbolic

but which cuts through grease like a knife, and another that is perceived to be less

efficacious in cleaning but which smells sweetly of pine-needles If the consumer is really

keen to keep his pots and pans sparkling, he will stay with the unpleasant-smelling brand

because, although he would prefer a sweeter smell, it is not the main benefit he is seeking

The smell is (in this case) the "hygiene factor"; the powerful de-greaser is the "satisfier" If he

is not already a user of the strong product, he may well switch to it from the nicer-smelling

one but if he is a current user, he will not switch away from it

We shall now consider three aspects of behaviour designed to fulfil needs and their impact

on consumer actions

(a) Personal Roles and Self-image

When we examine people's attempts to satisfy their needs, it is all too tempting to

assume that all people are alike and that any given individual is always the same

person Unfortunately, neither supposition is true and people vary widely in their

behaviour What is important to me may be sublimely unimportant to you, so the

purchase decision I agonise over for days may be accomplished by you in less than

half a minute

Less easily recognised is the idea that within each individual there are several

"persons", one of which will be dominant and the others hidden, at any given time,

depending on what you are doing, with whom, and who is watching This multiplicity of

personality has two sources; one social and the other psychological Socially, we may

be said to be "more than one person" because adult people are required to adopt more

than one role from time to time For instance, I am a writer, a teacher and an

administrator in my job and I am a husband, a father, a son and a brother in my family

life; I am also a friend, a fellow-member of a voluntary society and a neighbour among

my social contacts; and I am a ratepayer, a taxpayer, a voter and a householder within

civic life

The "me" who takes seriously his responsibilities when voting, who believes that we

should all share equally the burden of bringing up the community's children, may well

behave much more selfishly when my neighbour's children run over my carefully mown

lawn and break down my flowers with their ball The "me" that seriously counsels

commonsense and gravity when lecturing the children on their choice of career is the

same "me" that once threw up a good, well-paid job to go off and work as a

self-employed gardener, for the sheer joy of being out-of-doors among living things

Psychologically, we are "more than one person" because our perception of ourselves

is a source of considerable anxiety Malhotra has postulated three different

"self-concepts" or self-images:

 The actual self-concept (my picture of myself as I really am)

 The ideal self-concept (the "me" I would like to be, were it not for my faults and

flaws), and

 The social self-concept (the "me" as I believe others see me)

(There is, of course, the possibility that the "real" person is different from all three of

these, since all three depend upon the biased self-perception by an individual of

himself.)

For the marketer, this idea is important, since different purchase decisions will be made

on the basis of different motivations arising from these pictures of the self If I am

buying a small pack of peanuts in a shop miles from home, where there is no chance of

my being recognised and if the person serving in the shop is someone I feel no desire

to impress, then I may well choose the cheap packet of salt roasted peanuts On the

other hand, if I am buying in a bar, when my friends are present, I may well choose the

expensive, foil-wrapped, dry-roasted product, either because I want to be seen as

generous (the ideal self-image) or because I believe that is what a health-conscious,

"green" consumer should buy, this being my social self-image (although I may be

completely wrong about how others see this aspect of me)

Ever since Veblen floated the idea of "the symbolic value of possessions" at the end of

the nineteenth century, marketers have been fascinated by the evidence that seems to

show that people buy things not just because of what the things are or what the things

can deliver as material benefits, but because of what the purchase says about the

purchaser; what is often referred to as "conspicuous consumption" We buy to

conform with, or to enhance, our self-image And since, as we have mentioned, there

is a degree of anxiety associated with self-image, the notion of risk is inextricably tied

up with the act of purchasing If we buy the wrong thing, it may damage our image or

our lifestyle

(b) Purchase Risk

The idea of purchase risk needs disentangling from objective (or "real") risk

Undoubtedly, when I make a purchase, there may be a physical, tangible, objective

danger of the purchase being unsatisfactory When I open the box, there may be a

piece missing; if I am unlucky, I may have bought the loaf upon which the baker

sneezed That is actual risk; the chances of the bad thing happening can to some

degree be estimated and quality control procedures can in some measure prevent it

happening

What we are talking about here, however, is perceived risk – the risk that the

purchaser feels is attendant upon his own act of choosing This has two sources: lack

of information (the less information is given about the produce, the more the

purchaser feels he is taking a risk in buying it), and the possible consequences of the

purchase The consumer may feel little anxiety and that he is running only a very

small, acceptable risk, when buying certain products

If the product is one on which he does not feel the need for much information (buying a

new handkerchief does not require an extensive information search) or one where the

consequences of making a mistake are not severe (the handkerchief, if it turns out to

be faulty, can be thrown away without much loss in money or time), then the perceived

risk will be low If, on the other hand, the purchaser feels that the purchase is a

complex one, demanding a great deal of information in order to avoid the wrong

decision, and if the consequences of a mistake are likely to be severe (buying a house,

for instance) then he will perceive the purchase as involving a high risk Marketers

characterise their products as low-risk or high-risk products and obviously certain

strategies are necessary for high-risk products which are not needed for low-risk ones

For most marketing managers, strategies are needed that reduce the perceived risks

associated with purchase (We say "for most managers" because there may be a

category of products where risk is actually a desirable state, such as some forms of

investment products, gambling products, "adventure" holidays and personal services

such as dating agencies.) Such strategies to reduce risk may be functional or

psychological

 Functional strategies would include mechanisms that reduced the down-side

consequences of the "wrong" decision, such as money-off promotions,

guarantees and warranties, free samples, offers of a test drive of a new motor

car, detailed instructions and manuals, and promises of free after-sales service,

help and advice

 Psychological means of reducing perceived risk would include advertisements

that showed how easy the product was to use or how socially acceptable it was

or endorsements by people who are seen to be opinion-leaders among the group

being targeted A stair-lift manufacturer, aware that many of the old people for

whom their product is designed are very resistant to purchase because they fear

the physical risk associated with being carried upstairs, has used the actress

Thora Hird in its advertisements She is seen as an "ordinary woman" who can

be relied upon to speak truthfully about fears She is seen in the advert saying

how easy the product is to use and how safe it is

(c) Problem-solving Behaviour

Mental discomfort associated with risk or lack of information is not, apparently, a steady

state in consumers There is quite a lot of work that seems to show that people move

through a cycle of purchase behaviour and that different people have different levels of

 Extended Problem-solving (EPS)

When a person is faced for the first time with a new product (new to him, not

necessarily new on the market) it seems that he may exhibit a particular kind of

behaviour This involves:

(i) Searching for information (perhaps talking to other consumers, reading

articles in newspapers or magazines or searching for reports by consumerassociations)

(ii) Processing that information in order to categorise the product, i.e to fit it

mentally into a grouping of similar products(iii) Considering his own attitudes and preferences ("am I the sort of person

who would want want/need/use this?")(iv) Consulting the social and fashionable pressures that are evident ("everyone

else I've met this week seems to be buying one of these")(v) Assessing such factors as price, availability and all the risks associated

with the purchase

As a result of this, an intention may be formed, either to buy the product now, to

defer purchase until later, not to buy it at all or to re-engage in the information

search

 Limited Problem-solving (LPS)

Once the product has been purchased and tried out, it may be that the

consumer's experience leads him to feel much more comfortable with the product

than he was before (or at least with the product category – he may not

necessarily stay with the brand he first purchased); so much so that the mental

factors needed for subsequent purchases are fewer The information search is

much more limited, the sources consulted fewer, the sense of risk may be

reduced and the consumer may feel that he now "knows his way around" when

looking for the product – he knows what to look for, what kind of outlet stocks the

product and how to use it and gain full enjoyment from it Now, therefore,

subsequent purchases might involve consideration only of the price of this brand

against that, the social cachet associated with this shop over another or whether

to change the colour or specification of the article

 Routine Problem-solving

After a while, the consumer may become habituated to buying the product and

knowledgeable about where and for how much it may be had He may even

have established a firm and unshakeable preference for one particular brand or

conversely may have decided that there is really no difference between any of

the competing brands In this state, he picks up the product hardly thinking about

it at all

There is some evidence that consumers may become so bored with their RPS

state that they actually engage in brand-switching behaviour, simply to alleviate

the tedium of repeatedly buying the same product time after time

The Influence of Groups

The interactive way that some groups of people influence others is of great importance to

marketers A good deal of research has been done in this area and we shall examine three

of the key concepts here

(a) Diffusion of Innovation

The cycle of behaviour from EPS to LPS to RPS is fairly well-documented in most, if

not all, consumers But it does seem as if different people move at different speeds

through it and that there is some interaction between different types of people in their

movements through it

It seems that there are people who greatly enjoy consuming new things (here, as

elsewhere, when we talk about products we mean all kinds of products, including

intangible ones and services) They are the kind of people who readily discount the

risks associated with newness (will it come down in price? will it soon be obsolete? will

I quickly become tired of it?) for the pleasure they feel in being seen as leaders among

their friends and associates They are usually also quite prepared to pay a premium

price for something that is new, where other people might be more cautious and wait

until price competition has brought the price down to a level they are more comfortable

with These people are referred to commonly as innovators and people like this are

thought to constitute only about 2.5% of the population

Innovators are also important, not just as initial buyers of a new product, but as

opinion-leaders for people of other psychological types Whilst they themselves may

move quickly through the EPS-LPS-RPS cycle, there are lots of other people who

move less quickly For these slower types, innovators often become one of the

sources of information to be consulted during the information search phase of EPS

The model of the "diffusion of innovation" – developed by Rogers – continues with the

idea that people move through the decision-making process at different speeds

 Following the innovators in taking up products are the early adopters These

(perhaps 13.5% of the population) are people who are not temperamentally

inclined to take the risks associated with discovering and trying out new things for

themselves, but who are keen "followers of fashion" Early adopters are often

readers of magazines like Vogue They watch television programmes about

design, the home and garden and new cars and they are more likely to be

watchers of commercial TV than public-service (non-advertising) TV All of this

behaviour is so that they can feed their need to be up there with the leaders It

matters to them to be "in fashion", though as we have seen, they are not

themselves leaders of fashion Instead, these people watch closely what the

innovators are doing, and tend to follow them They too are quite likely to pay

fairly high prices for articles that are seen as new and fashionable Their EPS is

likely to be heavily influenced by their observation of the innovators They move

quite quickly, as a result, through the EPS-LPS-RPS cycle, though not as quickly

as innovators

 The next group is the early majority These (34% of the population) will

generally not try a product until it has been well tried by others before them

They are not inclined to search hard for a product so if it is not on the shelves of

their regular shops and stores, they will not go to the trouble of seeking it out, as

innovators or early adopters would These are people in whom the EPS is

short-lived as they rely quite heavily on others having done it for them, as it were They

are also unlikely to come into the market until the prospect of large-scale sales

has prompted a reduction from the original premium price

 Another 34% of the population are the late majority, who do not feel comfortable

with a new product unless there is clearly little risk associated with its newness

They prefer to choose between several competing brands and they need the low

prices associated with fierce competition to tempt them into the market They

exhibit practically no EPS behaviour at all

 Finally, there is a group of some 16% who are known as laggards These people

are distrustful of anything that is not seen as traditional, well-tried and tested,

familiar, even old-fashioned Curiously, although these come very late to market

for products, they are among the most loyal of consumers Once a product has

established itself in their minds as having some measure of tradition, they will buy

it and continue to buy it for as long as it is available, often going out of their way

to discover remaining sources when mainstream outlets have de-listed it and

moved on to newer products

We can represent Rogers' theory of Diffusion of Innovation diagrammatically as follows

(Figure 6.7)

Figure 6.7: Rogers' Model of Diffusion of Innovation

(b) Reference Groups

People often see themselves as members, potential members or aspirant members, of

particular groups When we make every day decisions about how we should and will

behave in various situations, we seem to do so by reference to what people would

expect in the groups that matter to us Psychologists call these groups reference

groups

One of the most common reference groups in early life is the family We learn a good

deal of behaviour from the expectations of the people to whom we are closely related

We are also subjected to a good deal of socialising in environments such as schools

and colleges and it is here that we learn to value certain character traits and to

depreciate others As adults, we are more mature and able to think for ourselves, but it

seems that our wish to belong to reference groups and our willingness to be influenced

by them remains strong throughout life

Three broad types (or functions) of reference group have been identified

 Normative groups

These are groups to which we would like to think we belong and so we behave in

ways which we think appropriate to membership So, for instance, if I like to think

of myself as middle-class, I will read a broadsheet newspaper, wear a collar and

tie, encourage my children to think of going to university, work in a professional or

near-professional occupation and so on The family is the first normative group

for most of us but regional, class and occupational groupings are common

normative groups in later life

Normative groups reward us when we behave as they do, by accepting us into

membership, and punish unacceptable behaviour by denying membership or

ostracising us Marketers use this tendency, for instance, by showing

advertisements that suggest that failure to buy or use the product will lead to

ostracism by a particular group ("good" mothers, "good" cooks or fashionable

youngsters) while buying the product allows membership of the desired group

 The comparative function

Here the members of the group we now belong to influence our behaviour by

approving of certain choices we make and making clear their disapproval of

others So if I feel that the group I find most attractive is more likely to drink filter

coffee than instant, I too will be powerfully influenced to do the same A marketer

will work on this tendency by using some channel that is appropriate to those

who feel they belong to a particular group Thus, if the marketer has discovered

through research that there is a sub-group of the middle class that aspires to "the

good life", in which high-quality products with a high degree of "naturalness" are

valued, and that many of this group are readers of the Guardian newspaper, then

the marketer will use advertisements in the Guardian showing typical members of

the group choosing and using filter coffee This influences my choice accordingly

("People like me choose this rather than that")

 Expert groups

This third group are seen as, either by virtue of their own natural, inherited or

acquired knowledge, or because by having already bought and used the product

they have become expert in choice and use So, for instance, if we were

wondering about how effective a particular mouthwash was in killing bacteria, the

opinion of a dentist would carry a good deal of weight Equally, if we want to

choose the "right" washing liquid, the opinion of an experienced housewife who

has been washing clothes for years would be seen as highly influential We have

all seen advertising that makes use of this kind of reference group

(c) Credibility

Marketing activities aim to change people's feelings and attitudes towards various

products and often to persuade people that a product fits well with a particular

reference group or lifestyle However, an important consideration in this respect is the

credibility of the person (or other source) from whom the message is received

One of the reasons for the growing use of public relations, where a decade ago

advertising would have unquestioningly been chosen, is the belief that most consumers

nowadays distrust advertising It is thought that they tend to discount the message of

an advertisement, whereas an article in a newspaper written by an independent

journalist is seen to be a credible message source – the reliable opinion of an

apparently disinterested opinion former

The same principle is being increasingly applied in advertising itself Here, great

emphasis is placed on using trusted personalities to provide credibility to the messages

– the use of Thora Hird in stair-lift adverts is a good example of an actress chosen for

vaguely by most people to be in science) advertises many "scientific" products, from

hair conditioners to technology magazines, on the basis that, if a scientist says so, the

products can be relied upon to work

The reverse effect, of course, can happen when a figure used as an "advocate" falls

out of public favour Pepsi-Cola are still trying to recover from the embarrassing

publicity arising out of the fall from grace of the rock musician Michael Jackson

This raises the question (or should do, in marketers' minds) how credible a spokesman

is and what benefits this kind of association with a well-known figure can provide

In the field of consumer psychology, the work of Osgood and Tannenbaum has been

valuable In the formation of their Congruity Theory, they examined the relationship

between an idea (such as a brand value) and the person who advocates it They

concluded that where the audience's feelings about the idea and the advocate start out

at different points on a scale of approval, those feelings will move toward each other,

arriving at a point where they are equal – the point of congruity So, if I disapprove of

bungee-jumping but I approve of Fred, then when I hear Fred speak approvingly of

bungee-jumping, both my feelings about Fred and my feelings about bungee-jumping

move towards each other until they are at the same point of my scale of approval – the

point of congruity The question is, how far and how fast do those feelings move? And

where do they end up?

Osgood and Tannenbaum concluded that in such situations, strong feelings in either

direction (i.e either towards favourability or unfavourability) move less readily than

weak feelings So if I begin strongly approving of Fred, but only mildly disapproving of

bungee-jumping, then my feeling about bungee-jumping will move more readily (since it

is the weaker feeling) The point of congruity will be found at a position of mild

approval However, if my approval of Fred is only weak, but I strongly disapprove of

bungee-jumping, then the point of congruity will be on the disapproval side of the scale;

I shall finish up still disapproving of bungee-jumping, but less vehemently, while my

opinion of Fred will have moved from mild approval to slight disapproval Only when

feelings start out equally strongly-held, said Osgood and Tannenbaum, will they move

equally readily and meet at a point midway between their starting points

(stronger feeling) distance

moved: 1.5 distance moved: 2.5

(weaker feeling)Point of congruity

Figure 6.8: Osgood and Tannenbaum Congruity Theory

For the marketer, it is clear from this that the credibility of the source of any message is

of great importance and careful research is needed before use is made of reference

figures (or "advocates" to use Osgood and Tannenbaum's term)

Cognitive Dissonance

All the foregoing makes it evident that our actions as purchasers and consumers in society

(either individually or as part of a decision-making group, such as a family or a work-group)

are fraught with all kinds of anxieties It is therefore worth spending a minute or two in

considering what people do when, despite all the attempts and strategems to make the

"right" decision, anxiety persists after the decision has been made It seems that it often

does The psychologist Leon Festinger did extensive work on this question and, although his

model is by no means uncritically accepted, it is another of those landmark ideas that has

helped to shape marketers' thinking – or at least to raise worthwhile questions in their minds

when strategy is being planned

Festinger formulated the theory of Cognitive Dissonance "Dissonance" is a musical term

that signifies the unpleasant effect of two or more conflicting sounds being produced

together, as when you strike two neighbouring keys on the piano The resulting discord is

painful and requires resolution by moving one finger to play a note further away from the

other (at a greater interval apart) This creates harmony Festinger recognised that people

are happiest when they have to deal either with only one, unchallenged idea (like playing a

single note on the piano) or with ideas that do not conflict and are widely separated (like

playing an interval of a third or a fourth on the piano) What makes us uncomfortable is

having to cope simultaneously with two ideas, or sets of ideas, that are so close to each

other as to seem to conflict Once again, an example may be useful

I buy a new car I am moved to make my choice principally by the sexy red colour, the

reasonable price and the car's great comfort I leave the showroom a happy man I return

home and get out of the car The man next door looks over the fence and compliments me

on my new possession He asks what it is like for speed He asks what its consumption of

fuel is like He asks how often it has to be serviced and how much parts cost Having gone

indoors with the manual, I look up information on the points he has raised Within ten

minutes I am downcast The car seems to be built for comfort, not for speed; its greater

weight and lack of aerodynamics means that it uses a lot of fuel; being a foreign make, parts

are difficult and costly to get hold of; and it requires a routine service every four thousand

miles, where six thousand is the more usual requirement

Festinger suggests that when a person makes a decision (any kind of decision, not just a

purchase) the mind is rather like a weighing-scale or balance On one side of the scale are

the positive factors that make one tend towards a particular decision and the negative factors

that make one tend away from the alternatives On the other side of the scale are the

negative ideas about the chosen option plus all the positive things about the alternatives

So in our example, my mental weighing-scale contains, on one side, the colour of the car and

its comfort (positive factors about the choice I made) and the high price of other cars I could

have chosen but didn't (negative factors about the alternatives) On the other side are the

negative factors about the chosen option (I've now discovered the expense of the fuel and

servicing) plus the positive factors about the alternative options (other cars are speedier and

more stylish) What will happen to the scales, loaded with these factors on each side?

There are three main possibilities, with infinite gradations in between Either the scale will tip

sharply this way, or it will tip sharply that way, or it will be in perfect balance

This is illustrated in Figure 6.9

Figure 6.9: Festinger's Theory of Cognitive Dissonance

Festinger demonstrated that when the scale tips sharply in either direction, we are mentally

comfortable (we experience "assonance" or harmony) and we feel that the evidence shows

we made the right decision or that we definitely made the wrong decision and so we act

quickly to reverse it (I take the car back to the dealer's and swap it for another one) What

makes us uncomfortable is perfect balance or near-balance, as this means the evidence is

inconclusive so we are unable to decide whether we did the right thing or the wrong thing

A decision too close to the point of balance is like those two neighbouring notes on the piano;

it produces dissonance – an unpleasant conflict of closely-related ideas

In the modern commercial world, many purchase decisions are difficult because, as a

manufacturer becomes more knowledgeable about people's needs and wants, he works hard

to make his product suit us but so too do all his competitors It becomes harder and harder

to make a product that is genuinely different from all its rivals This means that when we

make a purchase decision we are very likely to experience cognitive dissonance because, as

sophisticated, knowledgeable consumers, we are unlikely to make very obviously "wrong"

decisions and, as we have said, there are very few incontrovertibly "right" ones, so closely

similar are the goods on offer The scale, in other words, is unlikely to tip sharply one way

and, unless we have been uncharacteristically careless, it will not tip the other way

Most decisions will be at or near the point of balance

Marketers value Festinger's ideas for two reasons One, it reminds them that in a world

where competing goods are so closely similar physically, they need to build brand values that

make the consumer, before the act of purchase, recognise their brand as positively different

from the near competitors Two, it reminds them that the mental state of the consumer after

purchase is equally important

Someone who experiences cognitive dissonance is unlikely to be a repeat purchaser and

that, after all, is the goal of every serious marketer Much of the advertising you will see,

especially for high-risk, high-involvement goods, is aimed less at persuasion to purchase

than at reducing or eliminating post-purchase dissonance

Positive aspects of the chosen option

Negative aspects of the chosen option

Positive aspects of the rejected option

Negative aspects of the rejected option

Cognitive dissonance; in balance, or nearly so

Dissatisfied; attempts

to change or rationalise Satisfied with the

decision

Decision-Making Sets

Some people may disagree with what we have just been discussing, on the grounds that

goods do vary widely in all kinds of ways and therefore there is ample opportunity for us to

make very wrong decisions For instance, a BMW sports saloon is a very different purchase

from a Reliant Robin three-wheeler This is, of course, true but it does not invalidate

Festinger's theory The reason lies in the idea of "decision-making sets" Most consumers,

in a sophisticated market, mentally separate products or brands into discrete sets Rather

like Russian dolls, each set is smaller than its predecessor and they fit inside each other

When a consumer is in the market for a particular kind of product, there are several

competing brands she could buy Some she knows, others she has never heard of and

probably never will Put them all together and you have the total set of brands from which

she might choose Out of the total set can be distinguished this particular consumer's

awareness set; she does not, as we've said, know all the brands on offer and she will not

therefore choose something she does not encounter (An extensive information search, if

she embarks upon it, may enlarge her awareness set, but it is still unlikely that she will ever

know absolutely every brand of computer, car or instant coffee that exists.) So, within the

total set lies the awareness set

Among the awareness set are those brands she is prepared to think about buying – the

consideration set; the rest are brands that for some reason or another she excludes from

her choice-making process For instance, she may decide that some are just too expensive

for her budget, not sufficiently stylish or not easily available Among her consideration set

there may be one or two brands she quickly decides against, again for a variety of reasons

Perhaps one is a foreign make which, though she admires it as a product, she is not

prepared to buy because she is going through a period of intense patriotic fervour The ones

that are left, after these casualties have been removed, constitute the choice set It is from

these few that she will make her final decision

Figure 6.10: Decision-making Sets

You can see fairly easily that a sophisticated consumer who has this mental landscape about

a product is unlikely to make drastically wrong decisions The brands that would cause

Festinger's scales to tip sharply in the negative direction may be in her awareness set but

MarsBountySnickersTwix

MarsSnickersTwix DECISION

Total set Awareness

set

Consideration set Choice set DECISION

and designed that the final "choice set" is likely to include brands that are very similar indeed

so there will probably be no single brand that would tip the scales sharply in the positive

direction

The idea that people choose to purchase from "sets" is also confirmed in work by Andrew

Ehrenberg, who looked at the evidence of brand loyalty among supermarket grocery

shoppers He discovered that, in the main, shoppers do not fix on one single brand and

remain faithful to it Perhaps because of the boredom of consistent repetition that we

mentioned earlier or perhaps because they like to convince themselves that they have some

control over their choices and actions, it seems that consumers establish a "repertoire" of

brands in each category So if I am buying floor cleaner, I will sometimes buy Flash,

sometimes Jif and sometimes the supermarket's own brand I move cyclically between these

three (perhaps more)

What is even more interesting in Ehrenberg's work is his finding that when a new brand

comes onto the market where there are already several established brands in the same

category, the new brand must be tried and accepted into the consumer's repertoire within

twelve months from launch If it fails to do this, it will probably never be accepted by that

shopper

"Hierarchy of Effects" Theories

Generations of marketing students have been presented with various models of the route by

which the consumer comes to an act of purchase; each purporting to guide the executive in

how the process of marketing – particularly marketing communications – can be used to

assist the process Strong's model, dating from a book in 1925 and universally known as the

AIDA model, is one of the earliest (and still influential today)

Strong suggested that the person who may become a customer must be moved through

successive stages:

 Attention You cannot get a message to someone until you have arrested his

attention; hence, for example, the need for advertisements to have largeand striking headlines and involve illustrations

 Interest Once you have got the attention, you must convince him that the message

is actually relevant to him Your message might be beautifully crafted, but

if I cannot see what it has to do with me, I shall ignore it and pass on tosomething of more relevance

 Desire Having persuaded me that the message is about something that concerns

me, for instance, my health, you must now awaken a desire in me; perhapsthe desire to be less likely to catch cold Only when you have aroused mydesire for something am I likely to feel the need to assuage it

 Action Now that I know what you are offering and that it is something I have a

need for, you must show me how I can go about getting it Hence, thepopularity of cut-out coupons or reader-response mechanisms in pressadvertisements Alternatively, you might tell me who stocks your product

so that I can go and enquire for it myself

This model has spawned many others, as various scholars sought to improve upon it The

generic name for all these models is "hierarchy of effects" models, since they all postulate an

ordered process of successive mental stages

Here are just a few:

 Colley (1961)

Unawareness Awareness  Comprehension  Conviction  Action

 Lavidge and Stainer (1961)

Awareness Knowledge  Liking  Preference  Conviction  Purchase

 Rogers (1962)

Awareness Interest  Evaluation  Trial  Adoption

 Howard and Sheth (1969)

Attention Brand comprehension  Attitude  Intention  Purchase

 Engel, Blackwell and Kollat (1978)

Perceived information Problem recognition  Search  Evaluation of alternatives

 Belief  Attitude  Intention  Choice

From our discussions in this section, you will by now be extremely wary of any model that

seems to offer a comprehensive understanding of how people behave in markets or of what

is happening in their minds at any given time None of these, of course, can be entirely

satisfactory But they are commendable attempts to model a complicated process so that

marketers can at least think about what is going on and perhaps avoid some elementary

errors of practice

In particular, their usefulness lies in perhaps two simple but important observations Firstly,

that the link between making someone aware that you have something to sell and their

buying it, is by no means a simple one Several things have to happen on the way and at

any one of those stages the process can break down Secondly, that there is an order in

which communications should be managed Trying to arouse interest before awareness

exists or desire before interest has been kindled, is almost certainly not going to work We

may quarrel with the stages that must be gone through and over what we call them, but we

should none of us doubt that the process should follow a logical order

One last observation should be made Throughout this section, we have spoken of the

process of marketing communications being directed at the individual consumer as a

purchaser This is not, however, the only situation in which these ideas are applicable They

are equally applicable to group decision-making (as in a family planning where to go on

holiday or a commercial firm planning to buy a new production line) as to individuals They

are equally applicable to the marketing of services, as to that of tangible products They are

also equally applicable to the marketing of non-profit-making organisations, such as

Government departments or charities, as they are to commercial companies It is to these

organisational purchasers which we turn to in the last section of the unit

E ORGANISATIONAL PURCHASING

So far we have been looking at general factors in the purchasing process The process

applies equally in both consumer and industrial markets, but we have to accept that there are

differences between the two markets Organisations buy differently from individual

consumers for a number of reasons:

 Purchases tend to be of higher value

 Purchasing tends to be for higher quantities

 Purchasing will tend to be better documented

 Buying will tend to be done in a logical manner, etc

The main difference between industrial purchasing and consumer purchasing is that

industrial purchasing is predominantly done by people on behalf of others and that, apart

from the one-man business, there is nearly always more than one person involved in the

Types of Industrial Purchases

Industrial purchases have been well documented as being one of three types:

 Straight re-buy: simply repeat purchasing without changes of any kind

 Modified re-buy: where some aspect is changed, e.g specification or supplier

 New buy: involving new specifications, new supplier, etc.

As the degree of change increases, so does the complexity of the buying process and the

time taken

More people may need to be involved in a new buy than for a modified re-buy, e.g it may be

a purchase of new plant for an entirely new production purpose which will involve a great

deal of technical input from design engineers

On the other hand, a modified re-buy may simply involve a change of supplier which the

Purchasing Department can deal with quite effectively on their own

Needless to say, straight re-buys are the easiest of all and need no specialist input; all they

need is a repeat order to be raised

There are three broad categories of organisations making buying decisions – industrial,

wholesaler/retailer, and non-profit organisation (NPO) – and different considerations apply to

each

 Industrial Buying Decisions

The buyer in a factory will purchase three kinds of things:

(a) "Housekeeping" supplies such as cleaning materials, brushes, dusters and so on

(b) Machinery with which to make the products which the company markets for profit

(c) Raw material which will be made into products

The "housekeeping" supplies will often be repeat buys and similar in many respects to

the repeat buys of the consumer The difference will be in the suppliers, terms of trade

and quantities involved None of them will make the repeat buy decision significantly

different from that of the consumer for similar products

The decision to buy machinery may involve past experience of similar machinery, or at

least of the suppliers of previous machinery However, it is likely to be a much more

serious decision than for housekeeping supplies A decision to buy machinery will

often involve several people, as well as the buyer; the group of people will often be

called a decision-making unit (DMU).

Because buying machinery is an important decision, it is likely that the production

manager may be asked to comment on the suitability of various machines The finance

manager will probably be asked to arrange a loan or other scheme to make sure that

cash flow in the company is not badly affected by the scheme The personnel manager

may have to arrange for training, extra insurance, shift working and a whole range of

matters concerned with worker safety, if the machine is bought The managing director

may have the final word on important decisions

Similar ideas can be applied to buying services such as advertising and other publicity

matters, all of which decisions are complicated by the fact that, in the long run,

industrial purchases are due to derived demand, which is more difficult to anticipate

 Wholesaler/Retailer Buying Decisions

The wholesaler and retailer share the same purpose – to make profit by buying

products from manufacturers then selling the same products to other people It renders

their decision-making process quite different from that of the industrial buyers Usually,

the wholesaler buys in bulk from the manufacturer and sells smaller quantities to the

retailer, who then sells individual items to the consumer

There are long-term and short-term aspects to the supply business which must be

considered Short-term aspects are fairly straightforward; the purpose is clearly to get

goods to the places where consumers will buy them and to make a profit by doing so

The products concerned may be anything consumers buy and also many of the

repeat-buy items which industrial repeat-buyers have to get in, so as to keep their factories running

In the long term, wholesalers have the obvious function of supplying retailers, thus

saving manufacturers the job of delivering to thousands of shops and then dealing with

numerous accounts

However, wholesalers have another function – they disconnect the production line from

the consumers By taking goods into stock, wholesalers enable factory managers to

run their production lines at the best speeds for efficiency Production lines depend on

continuity – they are set up to produce identical items for long periods The products

have to be moved away from the end of the line so as to keep the line going

Consumer demand is very variable and it would be difficult to make most of the

products just when they were about to be bought

So the wholesaler sometimes provides a useful buffer between the demand and supply

aspects of business

The decision-making process will have short and long-term considerations, which for

the retailer will be concerned with potential demand for a product in the immediate

future In his operation, demand can be turned into profit; he has to judge what to buy

so as to maximise the profit level

For the wholesaler, there are other considerations – he is providing a service to the

manufacturer as well as to the retailer, so he must expect to be paid for that service

His decision-making is complicated by the service aspect of the business

 Non-profit-making Buying Decisions

There are many organisations which do not fall into any of the above classifications

and they are generally called non-profit-making organisations (NPOs) Such

organisations need supplies just like others, but they do not buy them with the purpose

of consuming for their own benefit in the same way as domestic consumers, nor do

they buy products with the intention of selling them for profit

The most obvious examples are the many local services, such as the police force,

refuse disposal people, hospitals, ambulance and fire services Then further afield

there are the armed forces, mountain rescue services, lifeboats and coastguards

Less obvious are the charities, who usually buy products to use for someone else's

benefit, or to send on to people who are disadvantaged for some reason Some

charities, of course, work for the welfare of animals or the countryside, and they all

have the characteristic of being non-profit-making

Influences on Organisational Buying

Organisations buy differently from individual consumers, for a number of reasons

(a) They have multiple objectives/needs

 Profits

 Reduced costs

 Meeting needs of employees

 Legal and social restraints

(b) A lot of people may be involved in the purchasing decision

The "roles" of the DMU may be fragmented around the organisation, which adds to the

time taken to reach any decision Some people may think they have power when, in

reality, the power lies with someone else

(c) Buying patterns may be formally set by the organisation

The buyer may have to buy in bulk, or buy from only one source, or buy at the lowest

price, etc

(d) The value of the purchase is often high

The buyer is spending money on behalf of the organisation They need to be sure that

they do not waste it or their job could be in danger

Add to this the stress of internal organisational politics and you can appreciate just how

difficult industrial purchasing can be

The influencing factors on buying will vary from organisation to organisation and it would be

an impossible task to produce a comprehensive list of all of the variables that might influence

industrial purchasing However, factors might include:

The attitude to risk

The availability of resources

The policies regarding trading/not trading with other parties

The nature of the DMU (few or many people)

 Personal

Status and power

Internal conflicts and politics

Individual morality and ethics

Knowledge or lack of it

If we say that influences on organisational buying behaviour are a combination of influences

from both the internal and external environments, you will realise just how difficult it can be to

understand organisational buyers Add to this the fact that these buyers are also "people"

who are subject to all the individual consumer influences, and it gets even more complex

It is often said that industrial buyers are difficult to approach because they are very loyal to

their suppliers Marketers or, to be more specific, salesmen, should always be aware that

this "loyalty" may simply be because the buyer is complacent and has not investigated other

sources of supply, or even that salesmen have not tried an approach because they have

been put off by the response

" we are happy with our present suppliers ".

Good industrial marketers or salesmen will know that industrial buyers are prey to the same

human pressures and motivating factors as the individual consumer, in addition to the

constraints and motivating factors imposed upon them by the organisation (availability,

quality, time, price, storage costs, etc.)

An understanding of behavioural patterns will result in more successful marketing

communications – and therefore more successful marketing Clever use of communications

can overcome the difficulty in getting to any buyer – whether it is a consumer, or an industrial

purchaser buying for a transnational organisation

Recent technological advances in the internet, mobile technologies and databases have

aided the marketers understanding of buyer behaviour

Databases have been used to store information about consumers and website analytical

software has allowed marketers to track customer behaviour on-line The fusion of these two

sources of data means that marketers can understand not only who is purchasing their

products but when they purchase, the decisions they are making by looking at the web pages

they visit

Being able to manipulate data in this way means organisations know much more about their

customers and their buying behaviour

Study Unit 7

Product Management and Development

A NATURE OF PRODUCTS AND SERVICES

Some Introductory Definitions

Skinner defines a product as "anything that satisfies a need or want and can be offered in an

exchange" He goes on to say that a good is a tangible object (one you can touch), a

service is not tangible but provides a benefit, and an idea is a philosophy or concept All

can be included in the word "product"

Kotler also offers the following definition:

A product is anything that can be offered to a market for attention, acquisition,

use or consumption: it includes physical objects, services, personalities, places,

organisations and ideas.

Theodore Levitt, in his text Differentiation of Anything, puts forward four concepts which go to

make up his idea of the total product:

 The physical product or service

 The expected product, which includes price, packaging, availability, after-sales service

and so on

 The augmented product, in which augmentation is the way in which the manufacturer

differentiates his products from others by adding some extra benefit

 The potential product, which is the ultimate combination of product and service which it

is possible to achieve

This introduces the idea that products and services have depth – or different dimensions – to

them which consumers find attractive and contribute to the decision to buy

We can say that a product has three main dimensions:

 Physical

This refers to the materials from which a product is made, e.g cotton for bed linen,

metal for shelving units, etc The actual raw material may have no real value until it is

formed into a "product" of some kind, which is there for a purpose

 Functional

Functionality refers to the use of the product What is it for? What does it do? It may

be that it plays music, or it keeps out the cold, or whatever The fact is that the raw

materials have been turned into something which has a purpose The "function" of a

product may change at times because someone has found another purpose for it, e.g

house bricks can be used as supports for beds, seats or shelving units

 Symbolic

The symbolic attributes of products are also sometimes known as "psychological"

attributes This is because the symbolic attributes refer to the "value" which a user

gives to a product Value is intangible and will vary from person to person, e.g the

value ascribed to a pair of Nike training shoes by a style-conscious teenager is much

higher than that given to a similar pair of shoes by a middle-aged keep fit enthusiast

It is the "symbolic" attributes that play on the "esteem" and "belonging" needs of the

buyer and, consequently, help in the marketing of branded and high value goods

Another explanation is that a product has three "layers":

 Core or generic product

What the product does – its function For a refrigerator, for example, this could be that

 Tangible product

What is offered – the features, style, quality, packaging, etc For the refrigerator, this

could be that it fits under worktop, is self-cleaning and is offered in a range of colours

 Augmented product

The add-on benefits provided along with the product – after-sales service, guarantees

and warranties, credit facilities, availability in the market, delivery, etc For our fridge,

this might include image, guarantee, free credit and the particulars of the after-sales

service

In addition to these two methods of explanation we could describe a product as a "solution to

a problem" or a "bundle of benefits" Using these last two descriptions also allows us to take

into consideration the supply of a service

Services and Products

When you buy the product you automatically get the benefit of a lot of service which you may

or may not know about – after-sales, guarantees, etc However, when we talk of "services" in

the marketing sense, we do not mean the backup behind the products you buy, but rather

those services which are marketed in their own right Examples include airline, train and bus

travel; hotel accommodation; doctors, dentists, hairdressers and so on, where the result of

the "service" is what you are buying The most important difference between products and

services is that services cannot be stored; if a hotel bedroom is not occupied tonight, a profit

opportunity is lost for ever

Is a service any different to a physical product? Well, of course it is, in some ways Services

differ from physical products, in terms of their:

 Intangibility – they cannot be seen, touched or tried before purchase.

 Inseparability – they are used or "consumed" at the time of purchase and, as such,

cannot be separated from the provider

 Perishability – they cannot be stored for use at a later time.

 Variability – they are dependent on the person who is providing the service and, as

such, will vary from time to time in accordance with when they are being provided and

the circumstances surrounding the provision

The characteristics of a service can add difficulties for marketers but, at the end of the day, it

is still "the item that is being exchanged" – it is the product The product of an accountant is

the expertise which is being sold, and the product of a hairdresser is the skill in cutting and

styling that he/she provides

Thus, "products" and "services" are not really any different A product is a service and a

service is a product For the rest of this study unit, when we refer to "product" please

remember that we are also referring to "service"

Classifications of Products

If you recall we have basically two types of markets: consumer and industrial It follows,

then, that we have basically the same two types of product and service

(a) Consumer Products

Consumer products are classified in three ways:

 Convenience

The minimum of effort is needed because the customer knows about the product

before they shop

Brand substitutions are easily accepted as these products have low "value".

They are the products which are bought automatically and repetitively, e.g butter

in a supermarket

The marketing implications of this are that:

(i) The product must be easily accessible to the buyer

(ii) Advertising is needed to strengthen branding and gain loyalty

(iii) Differentiation is achieved by using other mix elements

 Shopping

Those products where customers do not have full knowledge and where they can

be influenced to accept an alternative product (during their "search" phase) by

the benefits being offered They are higher in "value" than the convenience type

of product and therefore involve more risk in purchase

The marketing implications of this are that:

(i) Benefits offered are critical – sometimes more than price

(ii) Persuasion may be involved, (e.g by the retailer or salesperson)

(iii) Distribution will not be as widespread as for convenience goods

 Specialty

This type of purchase is where customers have hard and fast ideas of which

product, outlet, brand, provider, etc they wish to use The customer will go to

great lengths to ensure that they obtain the actual product they require and will

not be easily converted to a substitute These purchases are high in "value" and

therefore carry the greatest element of risk to the buyer

The marketing implications of this are that:

(i) Promotion needs to be targeted very carefully

(ii) Image and reputation are critical

(iii) Price is secondary to other features

(iv) Distribution will be very limited/exclusive

(b) Industrial Products

Industrial products can also be classified into three categories:

 Raw Materials and Components

The actual fabric, etc from which an end product is made Manufacturers buy

these items from suppliers and buying tends to be on a regular, repetitive basis

once a production line is established

The marketing implications of this are that:

(i) Supply and price will be major factors

(ii) Promotion tends to be in business publications and catalogues

(iii) The level of quality required will depend on the quality of the end product

(iv) Relationships can influence the buying processes

 Equipment/Plant

Computer systems, production plant and other types of equipment needed in the

operation of a business fall into this category The nature of the purchases often

involves high prices and, as such, a great deal of research and deliberation will

go into the purchasing decisions

The marketing implications of this are that:

(i) Product features and performance are critical

(ii) Price may not be highly important

(iii) Support services take on extra importance

(iv) Promotion, highly targeted, may be direct or in business publications

(v) Personal selling may be required

(vi) Decision processes will be complex and take time

(vii) Distribution is likely to be limited to direct or distributors

 Supplies

The "consumable" items that are needed for day-to-day operations These

products are similar in nature to convenience goods in the consumer sector

Purchasing can be habitual and may carry little psychological "value" to the

buyer

The marketing implications of this are that:

(i) Delivery is not normally direct from the manufacturer

(ii) Price lists and any catalogues need to be comprehensive

(iii) Promotion will be more general than for other industrial purchasing

It makes little difference how we describe the product, or even how it is classified The

product is what is being sold and what is being bought In other words, it is the item that is

being used in the exchange process that is taking place between buyer and seller

However, the more qualities there are to the product, the more valuable it becomes to the

person who is acquiring it and the more likely the chances of success for the marketer

Hence the emphasis on the augmented aspects of image, after sales, delivery, etc and it

cannot be denied that the best products for a buyer are those which give an "added value" of

some kind: they give something more than the basic function For example, designer

clothes cover the body but they also give esteem and status; personal computers now give

the benefits of built-in modems which can be used to communicate with people around the

world

B PRODUCT MANAGEMENT

The level of responsibility and autonomy given to managers of products will vary in

accordance with the size of the organisation as well as with the style of management which

is currently being used Some product managers will have wide-reaching responsibilities and

freedom for decision making; others will be limited in their scope

Main concerns of Product Management

Product management is concerned with both existing and potential products

(a) Maintenance of existing products

Products need support in terms of other marketing activities – promotion, pricing

exercises, distribution management, etc Product managers must constantly monitor

product performance

Information on how a product is faring in the market will help a manager to decide if it is

time to make any changes to the range, or part of it In cases of poor revenue

generation, it may be that a product needs to be dropped or extra promotional activity

is called for Decisions such as these are made on a regular basis in the process of

product management

(b) Development and introduction of new products

We know that not every product is blessed with a never-ending life and, if only because

of changing customer requirements, new products will be needed We will cover new

product development in more detail later, but at this point we must remember that it is a

vital part of product management

Part of both these concerns is how the product is placed in the market in terms of customer

perceptions, e.g high quality, value for money, etc This is product positioning

(c) Product positioning

Product management is concerned with getting the positioning right, keeping it right, or

changing it until it is right

Perceptual maps are used to show positioning These maps can be used by a

manager to compare positioning with the competition or to show the overall picture of a

company's product range, as in the following Figures

Figure 7.1: Competitive Positioning (Leisure Activities)

 Golf Club Theatre 

 Squash Club

 Swimming Club Cinema 

Bingo Hall 

 Council Sports Centre

HIGH PRICE

LOW PRICE