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Consumer Behavior

This paper is an analysis of the consumer market behavior of consumers towards different products and services in the market. It also exemplifies how market segmentation can be used to establish the right target customers. The target audience for particular products is not similar as different market consumers have developed different characteristics. The markets differ regarding demographics, attitudes, needs, location and the social affiliations.  Markets are also divided into segments depending on individuals and sub-markets. Market segmentation allows marketers to deliver products and services to particular consumer (Pickton 2015). This paper also explores the internal and external factors that affect and influence consumers’ decision making and buying behavior. Marketers have to establish the needs and values of their target consumers in the market segments as a way of successfully promoting their products.

Consumer behavior is also known as the buyer behavior. It the conduct displayed or portrayed by an individual during purchase, consumption or disposal of a product or service.  It is the process which consumers undergo when the buy goods and services (Sengupta, 2015). A consumer has to go through a series of the process before reaching a decision to either buy a good or not. Consumer behavior helps in understanding how the decision to buy is made and the perception that the customers have. Understanding this behavior helps marketers to understand the market/customer needs.  Diverse factors influence the consumer behavior (Kumar, 2014, p.55). The preference of individual consumers such as the attitudes, purchase power, consumption rate, and disposal makes the customer behavior diverse and complex. Understand consumer behavior helps marketers’ strong influence as they will understand the trends in fashion, living standards and technological change. Apart from analyzing the different factors that affect buying decisions of customers, it also helps to understand the consumers’ decision to dispose of a product or service (Shi, 2014).

The buyer decision process or the consumer choice process is a series of stages that consumers or purchasers go through before making a choice of what to purchase from the market. It describes the journey or phases that a customer has to go through before buying a good or seeking a service.  Understanding this process enables a marketer to align the sales strategies accordingly. This process can be influenced by factors such as the need, the cost of the commodity and presence of multiple related products (Sengupta, 2015). Consumers are also influenced by emotional and other non-rational considerations in their ability to make decisions. There are five basic frameworks that a customer adheres to reach the decision to either buy a product or forego the need. The five stages are:

The Buyer Decision Process

Problem and Need Recognition Stage recognize that there is a need for a certain product or service required by a consumer. A buyer only purchases when the need arises and internal or external factors can trigger the need.

The Research or Information Search Stage

After recognizing the need or problem, the consumer searches for information regarding the best solution to the problem or that can satisfy the need.  During this stage the consumers rely on available product information from the media, through observations and window shopping and other internal or external sources.

Evaluation of the Alternatives

After searching the available information, the consuming has to take a crucial step that identifies the effectiveness and satisfaction. Individuals have to evaluate the different products that will satisfy their needs.  The consumer also evaluates the different products and brands by product variation attributes and whether they can satisfy the desired the evaluation varies and relies on the cost and affordability, effectiveness and availability of the products and services. Personal attitudes and degree of involvement of the consumer also affects the evaluation stage.

Purchase Decision

After evaluating the options available, the consumer determines whether he or she has the intention to buy any product.  The final purchase decision making can be disrupted by lack of motivation from the consumer and negative feedback from other consumers. Purchase decision may also be disrupted by the unforeseen or unanticipated situations such as sudden cost hike, closure of the retail store or loss of jobs. A customer may also change the preference towards multiple products.

The Post Purchase Behavior

This is the final phase and it is crucial in consumer retention.  The customer makes comparisons of whether the product reached his/her expectation and determined if they are satisfied or dissatisfied. This process affects future decision making and especially during information search and evaluation stages. It also determines the information consumer shares with other potential buyers as the customer can spread either negative or positive feedback depending on the level of satisfaction.

Each step in the decision-making process is important as it affects the consumers, retailers and producers. The consumer's influence on a brand or commodity affects the long term survival of any organization

Definition

Segmentation is the identification of different sections or portions of the market that are distinct from each other, and it involves classifying the consumers based on subsets that comprise of the different needs and satisfaction, a similarity in taste, demand, and preferences. It is simply the process of dividing the consumer market into subgroups based on the shared characteristics. Market segmentation aims at identifying the segments that are likely to be most influential in a business environment (Shi, 2014).

Segmentation

Different methods can be used to segment markets. The basis may be on gender, age, behavior, marital status, income, occupation and geographical location. Basically, there are three types of market segmentation; psychographic segmentation which bases on individual lifestyles, geographic segmentation, which classifies markets depending on their geography and behavioralistic segmentation which relies on difference in customer behavior and brand loyalty (Lamb, Hair & Mcdaniel, 2013).

The table below shows a typical segmentation

Table 1 market segmentation based on geography and demography

Segment base

Brief explanation

Typical segment

 geographic

The regional and physical location

Continent and the country

demographic

Quantifiable human characteristics

 Social economic status, age and education

behavioral

Purchase, consumption and usage

Purchase frequency

psychological

Lifestyle and personality characteristics

Adventures/explorers

 Explanation of the table

From the above table, segments based on geography, psychology, behavior and demography are developed. In geographic segmentation, the markets are divided according to their geography or physical location. The consumption of a product can be defined by the continent or individual country characteristics. A developed country such as Australia has different preferences compared to most developing countries in Africa. The consumption behavior in a country can be used in segmentation (Outland, 2014).  For instance, Australia consumes higher end technological products from Apple compared to Somalia, which consumes second hand or cheap products (Khan, 2014).

In demographic segmentation, variable and quantifiable characteristics that are always unique to human beings are used. They include age, gender, social, economic status, and income. It is easy to identify segments since this classification assumes that the consumer with similar traits exhibits same consumption patterns, lifestyles, and interests. Male and females have different purchasing characteristics and preferences. People in a different occupation, s social, economic statuses and are either employed or unemployed, seniors, casual workers, student, retired among others also exhibit different behavior in consumption (Outland, 2014). 

Geographic segmentation can be combined with the demographic approach to form geodemographic segmentation which combines both geographic data and demographic information.

Psychographic segmentation and the lifestyles of individuals vary. Some people are explosive while others are conservatives who rarely buy certain products. Other people appear to have loyalty to certain product brands. Behavioral segmentation in this case depends on the frequency that consumers have developed to purchasing products. Some people have the tendency to buy products seasonally even if the need is less significant (Khan, 2014).

The reason for choosing geodemographic and behavioral segmentation.

Our company has narrowed to considering other sub-segments by combining the geographic segment and demographic segment. For the consumption of smart watches, we realize that most college students are tech savvy (psychographic segmentation). Besides, this group is mostly between the age of 18 and 26. The students’ residing in urban-based colleges in Australia and North America (geographic segmentation based on region and country) have the tendency to try out innovations more frequently and after product launches (another behavioral segmentation on frequency). The common language of these regions is English which the product is programmed to work making it more relevant to the English speaking consumers only. This segment consists of regular users of technology and also has a high usage rate and frequency (Cant, 2016).

The target market for the product is the college going students between the age of 18 and 26 In Australia, North America and Urban South Africa, and English speaking European Nations. These group of the market posses all the characteristics that the product is meant to satisfy and there is a high affinity to this product. (Sandhusen, 2013). 

All the Segment of the market all depend on different factors that were put into consideration. The market segment is substantial to be profitable for our company. These segments have high numbers consumers, and it is continually growing. English speaking is constantly growing across the globe hence this segment has perspective for future growth and market expandability. The segment also has a promising performance and loyalty to products that satisfy their needs, something that our product has proved to have (Sandhusen, 2013).  There are no substitute products available for this commodity, and this market segment is reachable and accessible

The new segmentation is also in line with the companies objectives.  The company’s mission is promoting quality education, research and time management through technological innovation and this new segmentation provides the right avenue for the promotion of the operations philosophy. There are sufficient resources for the promotion, distribution, and marketing of the product to the new segments since they are a prototype of our other products that exist in the market (Wedel & Kamakura, 2014).

What is positioning

Positioning is the final process in market segmentation that is concerned with how consumers perceive the products and how they define the product. It is the place that a product occupies and how consumers distinguish it from other brands that exist in the market. Successful brand/product positioning occurs when the target consumers can find products or services that satisfy their need. Positioning includes Efforts to influence customer perceptions towards a brand and the competitive brands or products.

Importance of positioning

  1. Positioning satisfies the consumer needs as the producers and marketers can understand their consumer behavior.
  2. It also improves Competitive positive pressures
  3. Serves as communication channels and careful communication. Effective positioning conveys the required information and value addition to the products and services to the target markets. Companies can understand the perceptions of the market towards a brand and improve on the products.
  4. It is the foundation of effective marketing as it has a direct influence on the consumer decision-making

Perceptual map

A perceptual map also known as market maps is a technique that uses diagrams used by asset marketers to visualize perceptions of customers and potential consumers. These maps are used to identify gaps in the market and clarify the perceptual problems of the product. 

The perceptual map below shows consumer perceptions on the smart watch based on the dimension of affordability and technological innovation. From this sample, the affordability and technological innovativeness shoes the relationship between the affordability of smartwatches and the price of the products to consumers to the scope of the technology being used in the smartwatches (Hoyer, Macinnis, & Pieters, 2013).

Diagram explanations

The watches that are in green are different brands and positioned close to each other meaning that the watches have similar characteristics and are of almost same relevance to the consumers.  Consumers see watch X and Y as almost similar,  these watches are close competitors hence form a competitive group,  all located at the bottom left and top left sides.  A company that seeks a new venture will seek distance from this group by introducing the new model away in a group probably at the bottom right corner where there is no competition. The smart watch holds the top right corner meaning, there is less competition for this product (Fleisher & Bensoussan, 2015).

Competitive advantages of perceptual maps.

  • The diagram enables companies to understand the consumer’s behavior and how to deal with each.
  • Mapping helps to define the market segments and business can identify the potential competitors, partners to merge with by identifying the similarities.
  • Mapping also helps to identify the gaps in the market where new product or services can be launched.
  • They can be used to keep track on the progress of products in specific market segments.
  • They allow companies to see consumer perceptions of brands in comparison to competitors. They also track the consumer preference and monitor change in consumer behavior.
  • Perceptual maps also help in aligning businesses to adhere to the objectives and goal for positioning. They help in eliciting the extent of damage to a product or business.

I recommend the company to use of the geodemographic segmentation; this segmentation combines both factors from the geographic and from the demographic segments.  This segmentation is identifiable and unique. It combines both geographical and demographical aspects which are measurable in identifying the market. Using geodemographic also allows a compilation of the physical location information such as country and demographical information such as the age group in the effective segmentation of the target market even where the other factors are not constant (Mcdonald & Dunbar, 2013). The use of geo-demographic will also ensure that the distribution of the product to its market selects the best approach to the market and promote these products to the consumers in their specified region. The products are custom made depending on the geographical location and the demographics characterizations of the consumers. Focusing on this segmentation will effectively develop the product across the demographics and beyond the geographical location it reaches (Roberts & Berger, 2014).

List of References

Sandhusen, R. (2013). Marketing. Hauppauge, N.Y., Barron's, pp.1-9.

Roberts, M. L., & Berger, P. D. (2014). Direct marketing management. Upper Saddle River, N.J. [u.a.], Prentice Hall. Pp. 61-70

Fleisher, C. S., & Bensoussan, B. E. (2015). Business and competitive analysis effective application of new and classic methods. Upper Saddle River, New Jersey, Pearson Education.

Sengupta, S. (2015). Brand positioning: strategies for competitive advantage. New Delhi [u.a.], McGraw-Hill. pp. 11-29.

Cant, M. C. (2016). Marketing management. Cape Town, South Africa, Juta. pp.54-63.

Outland, J. C. (2014). Examining the market positioning of massive open online courses to maximize employer acceptance. pp.10

Lamb, C. W., Hair, J. F., & Mcdaniel, C. D. (2013). Essentials of marketing. Mason, Ohio, South-Western Cengage Learning. pp.17-26.

Hoyer, W. D., Macinnis, D. J., & Pieters, R. (2013). Consumer behavior. Australia, South-Western Cengage Learning. pp.5-19.

Shi, W. (2014). Dynamic consumer decision making process in e-commerce. College Park, Md, University of Maryland. https://hdl.handle.net/1903/11944.

Khan, M. (2014). Consumer behavior. New Delhi, NAI Pub. pp.153

Wedel, M., & Kamakura, W. A. (2014). Market Segmentation: Conceptual and Methodological Foundations. Boston, MA, Springer US. From: https://public.eblib.com/choice/publicfullrecord.aspx?p=3081511.

Mcdonald, M., & Dunbar, I. (2013). Market segmentation how to do it, how to profit from it. Chichester, John Wiley & Sons. From: https://public.eblib.com/choice/publicfullrecord.aspx?p=1040905

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