Chapter 53- customers and consumers and anticipating consumers needs Flashcards
Why is it important for businesses to take account of customer behaviour when marketing?
In many cases, Customers go shopping with a predefined shopping list of what they want to buy
- This is definitely the case when shopping for food online
- In many cases, customers also make impulse buys
- Businesses need to encourage this using marketing techniques
Example:
- Placing items at the entrance to the shop
- Using pop-up screens on the computer
Niche marketing
- Targeting a clear and identifiable segment of the market
- an option for firms in markets where segmentation allows them to break down a large market into smaller characteristic groups that can be targeted separately
Advantages of niche marketing
- Fewer competitors- this lack of competition allows firms to charge a higher price
- The limited demand may suit a small firm that would lack the resources to produce on a large scale
- easier for firms to target consumers and promote their products effectively when they are only selling to a certain type of customer
- Can adapt its product to meet the specific needs of the niche market rather than compromise between the needs of many different consumers- allows the firm to charge a higher price
Disadvantages of niche marketing
- The small scale can limit the opportunities of making a high profit- even if a high price can be charged, the lack of customers may limit the amount of profit
- over reliance on a single small market
- success in a niche market may encourage others to enter it which can limit the company success in the future
- Small firms can be vulnerable to changes in demand and changes in tastes
- some firms in niche market may only make profits in the short term as larger firms spot the opportunity for profit
Mass marketing
- When you aim a product at all most of the market e.g. Coca-Cola.
Advantages of mass marketing
- Large scale production is possible which will help to lower costs per unit. This should increase profit margins.
- The sheer volume of customers enables companies to earn huge revenues
- allows firms to use the most expensive marketing and can prevent small companies from competing by creating these barriers
- increase brand awareness
Disadvantages of mass marketing
- high fixed costs are incurred; this will prevent some firms from operating
- They are vulnerable to changes in demand- a fall in demand will lead to spare capacity which still has to be financed by the firm- this increases the average cost of making the product
- Can be difficult to appeal directly to each individual customer as the products are not designed that way
What has also increased as the impact of the media has grown?
- promotion
What are the objectives of promotion?
- Persuade the consumer to buy the goods or services of an individual business
- Inform the individual so that they can make a choice
What will increase when promotion is successful?
- It will increase demand and encourage brand loyalty
- This is made by altering the elasticity of demand through the use of advertising
DAGMAR
- this is a marketing model targeted at promotion
- The aim of this model is to make consumers aware of the characteristics of the product/service and how it differs from those rivals
What does the acronym Dagmar stand for?
- defining
- Advertising
- Goals
- Measuring
- Advertising
- Results
Dagmar
- by using Dagmar, the business can come up with a promotional campaign
- in the first instance the business should make decisions about what is to be achieved through the promotion in terms of customer awareness, explanation of the product and image
- Having done this the business then needs to measure the success in terms of some previously agreed criterion
- Example: increased sales/market share
AIDA
- it is also a promotional model Applied specifically to advertising
- It is to see if the advertisement will succeed
AIDA acronym
Attention- get the attention of the customer (music- consumers begins to associate its use with the product)
Interest- Keep the customer interested in the product/service so that the information about the product and its qualities can be delivered. The hope is that they want to purchase the product
desire- There must be a desire on the part of the consumer to buy the product resulting in demand for the good/service
Action- actually go out and purchase it
AIDA model (description)
- If the AIDA psycho is broken at any stage, the advertisement will not result in a successful purchase (no purchase will take place)
- I consumer may watch the advertisement and be interested that have no desire to buy it
- The consumer may be unable to act on the desire to buy because of lack of availability of the product
- go through each stage and then buy a rival product or it is too expensive
Awareness trial repurchase (ATR) marketing model
- This model is useful for a business because it goes through the steps that are consumer will follow from start to finish
Awareness stage
- Advertising
- Word of mouth
- A potential consumer will find out about a new product through advertising or by hearing about the product from other consumers
Trial stage
- Value
- Function
- Distribution
- The consumer will then try to find out if the attributes of the product match the requirements that they have for the product
- if the product does not match up in terms of price and performance or if the consumer experiences difficulty in finding it, the process will end at this point
Repurchased stage
- Validation of value function
- having bought the product the consumer may find that it doesn’t meet their expectations so in this case repurchase is unlikely
When making a decision about its future strategy, what must a business carry out?
A SWOT analysis
Market orientation
- right product targeted at the right market sector
- It will put satisfying the needs of the customer first
- Market research is vital for this type of business
- Generally how UK businesses work
Product orientation
- Concerned with the product and its specification for us
- this type of business is most often found in technology companies where it’s important to make sure that the product is as up-to-date as possible
- make sure the business is cutting edge (Apple and Samsung)
What can the economy be split into?
Sectors:
- producing industries
- Service producing industries
What does the service producing sectors include?
- The retail trade
- wholesailing
- Information and culture
- Transport
- Information technology
- Education
- Health
- hotel and catering
- Finance and insurance
- Property services
Importance of customer service
- The personal contact that is part of providing a service makes it vitally important in this sector
- Customer service has become an increasingly important part of the buying experience
- receiving poor customer service means people will tell others which affects the reputation of a company
- It is vitally important that a business in the service sector invest money into staff training
- This training needs to be provided through the entire workforce, regardless of how much contact they have with customers
- staff need to know how to respond to customers even if they do not know the answer
Service marketing
- marketing a service is different to marketing a product
- This is because there is no tangible product
- The way in which service marketing is different from product marketing are:
- Quality of service is important- good service will result in good customer, repeat purchases, and high quality word-of-mouth reviews
- Use satisfied customers to promote your service- can be done by using their accreditation Or by social media. Satisfied customers can be asked to promote your business to others by word-of-mouth or by the use of advertising boards outside of property.
- Service providers also benefit from promotion through publicity- might be a sponsorship
- ensure employees are honest
- make sure campaigns are up-to-date use whatever method you can
People, process and physical evidence in services
Process: attention to this helps companies to focus on an improving performance so that custom needs are met in the provision of the service
People: personal input in the buying process is vitally important in the delivery of the service. Customer will remember the attentive waiter. This will enhance the name of the business and is likely to lead to repeat business or new business for recommendation.
Physical evidence: The space that surrounds the delivery of a service is important. Example: rooms, furniture, packaging, branding
Difference between customers and consumers
- Customers are people that actually buy the product/service and they may not use the product/service that they have bought
- consumers use product/service and they don’t have to have been the purchaser
Business to business marketing
- If a business sells its products to other businesses then its methods of marketing may be limited
- May have to use trade publications
- More likely to use personal selling
