Management Consulting/Sir I need your help
These are not my homework questions, these are some of the questions belongs to my MBA practise test series and I am stuck up with these questions. Could you please help me out with these questions?
1) Explain the use of Demography in the study of consumer behavior
2) Explain various levels of consumer decision making
3) What is meant by perceived risk? What is the relevance of this concept?
4) Explain briefly the concept 'SIR VAL'
5) What is Target Market?
6) Critically explain the Alderfer's ERG Hierarchy of Needs
7) What is multi-attribute attitude? Explain its models
8) Explain the relationship between FLC and Consumer behavior.
9)Explain with examples how marketers can use group influences for Developing marketing and person selling strategies
10) Explain how the income is better predictor od consumer behavior then other measures.
11) What is innovation? How experts have classified the innovation?
12) Discuss the need and ways of consumerism
Explain the use of Demography in the study of consumer behavior
The benefits of studying consumer behavior have significant bearing on marketing and public relations decisions. Studies focusing on consumer behaviors yield important information and insight into what consumers are thinking. With these insights, marketing and public relations firms may enhance their particular marketing campaigns to successfully connect with consumers.
Businesses market products or services through targeted approaches to different segments of the population. Demographics are the statistical component of marketing used to identify population segments by specific characteristics. Whether small or large, businesses need a targeted approach to consumers. Demographics affects all the choices a business owner makes in developing a marketing plan. Using demographics gives you a head start in understanding your market.
Business owners often first gather demographic information to include in the business plans used to raise start-up funds and guide the launching of the business. Demographic information includes geographic area, age, income, race, gender and education level. It also includes shopping habits, marital status, number of children and other information about consumer characteristics. You might need local demographics about how many people own cars or homes, who attends college or what percentage of residents are Internet users. Whether the demographics describe national or local markets or small groups such as those within an age range, the information helps you avoid the hit-and-miss marketing method.
A small business owner needs demographics to identify the ideal consumer for his product or services and develop marketing strategies such as product packaging, advertisements, business location and pricing. A business owner who is trying to adjust her marketing plan to the country’s changing demographics might find it useful to know that, according to a 2010 Nielsen Company report, Hispanic consumers spend more on baby items, African-American shoppers buy more fragrances and ingredients for home cooking and Asian-Americans are more like to eat out and shop at club stores. Since businesses cannot target their marketing to each individual consumer, demographics are the most effective method for targeting marketing to groups of people with similar characteristics.
Demographics can help you avoid costly mistakes in your marketing plan. They can reveal that placing fliers on car windshields is not the best marketing plan for your errand business, which needs to target small and single-owner businesses. A survey can provide information about gym membership preferences that draws in more customers. You can use demographics to identify subscribers of your city’s largest newspaper as the ideal consumer market for your new magazine. A dry cleaning business owner might base her decisions on a chamber of commerce survey that shows residents of a specific moderate- to high-income community drive at least 10 miles to the nearest dry cleaner. A survey of carpet cleaning customers might reveal that most customers search the Internet first for local businesses. The number of homeowners in a community influences your decision about where to locate your hardware store.
Sources of Demographics
Demographic information is gathered by several sources, including the U.S. Census Bureau and the Bureau of Labor Statistics, which publishes its Consumer Expenditure Survey on its website. Your local chamber of commerce can provide demographic information about your city, county and state. The federal or state departments of commerce produce and collect demographics from many sources. Look to professional and trade associations for demographics related to specific industries or professions. Standard & Poor's publishes its Industry Surveys and Consumer Index. Your local librarian can point you to statistical and demographic collections.
Identifying Target Demographics
Marketing campaigns that appeal to specific demographics start by identifying a target market. Your product may be specifically designed with a particular demographic in mind, or you may learn from trial and error that it holds special appeal for a clearly defined age or ethnic group. Whether your product's demographic appeal is intentional or accidental, gathering detailed information about who is buying your products will help you to attract similar customers in the future; customers who will likely purchase your offerings for many of the same reasons.
Crafting Your Message
Different demographic groups respond to different types of messages. If your product appeals to a specific cultural or ethnic group, it is important to work with people who are familiar with the assumptions, language and preferences of that group. Avoid social and cultural stereotypes, and pay close attention to body language and idiomatic language quirks in order to prevent unwitting insults, missteps or mistranslations. Being sensitive and knowledgeable about your target demographic enables you to craft an effective and appealing marketing message.
Using Appropriate Media
Developing a marketing plan that appeals to your core demographic enables you to spend your marketing budget most effectively, purchasing advertising through the types of media that your target market uses. Teens and young adults get most of their information online, so Internet advertising is a smart way to reach them. If you offer a product that appeals to an intellectual audience, you are more likely to reach them by sponsoring public radio than by advertising on a pop music station.
Although using demographics to focus your marketing efforts offers the advantage of understanding and appealing to your target customers, demographic marketing has limitations. If you sell a product with a potentially broad appeal but limit your marketing message to attract a single demographic, you may alienate other potential customers. A car company that uses rap music to sell cars to young adults may risk losing the business of older customers who stereotype rap music as violent and angry.
o Studying consumer behavior helps marketers understand consumer perceptions about a particular product or range of products. Uncovering and correcting erroneous perceptions about a particular product may give marketers an additional competitive advantage over competitors.
o Consumer attitudes very often determine consumer beliefs about certain products. Discovering consumer attitudes allows marketers to fine tune their campaigns to resonate with a particular consumer niche and deepen marketing reach.
o Changing population demographics around the world affect the way marketing campaigns are designed. Understanding cultural nuances and subtleties may allow marketers to help further define their particular target market.
o Consumer lifestyles also determine what products appeal to certain consumer markets. Understanding consumer lifestyles is also a key component of consumer behavior that lets marketers make the appropriate appeals in promoting lifestyle products and further consumption of lifestyle products.
o Like consumer attitudes, experience also colors consumer responses to certain products. By studying consumer behavior, marketing professionals can tap into consumer experiences with similar products to promote consumption and gain competitive advantage over competitors.
2) Explain various levels of consumer decision making
Consumer Decision Making
Decision making is the process of choosing between two or more alternatives;
Consumer decision making may be defined as a process of gathering and processing
information, evaluating it and selecting the best possible option so as to solve a problem or
make a buying choice.
- Consumer Decision Making pertains to making decisions regarding product and service
Various levels of Consumer Decision Making
- The consumer is not informed of the product or service offering.
- The consumer is not aware about the various decision criteria used to evaluate the product
or service offering, and he is also not aware of the various brands that are available and
from which to evaluate.
- The purchase process involves significant effort on part of the consumer.
Jewellery, electronic goods, Real estate and property etc.
- The consumer is familiar of the product or service offering; but he is unaware of the various
- The consumer is aware of some brands and also of the various criteria used to evaluate
the product or service offering; he is unaware of the new brands that have been introduced.
- He has not evaluated the brands amongst the awareness set and has not established
preferences amongst the group of brands.
- The purchase process is more of a recurring purchase and it involves only a moderate
effort on part of the consumer.
A laptop replacing a desktop
- The consumer is well informed and experienced with the product or service offering.
- The consumer is aware of both the decision criteria as well as the various brands
- The purchase process involves no effort on part of the consumer.
- It is simple and the process is completed quickly; purchases made out of habit.
These are routine purchases.
Staples, Cold drinks, Stationery etc.
EPS-------- LPS------------- RPS
Consumer Involvement High-------- Medium-------- Low
Complexity of decision making High-- Medium --------Low
Time taken to make decisions High ---Low to High-- Low
Information gathering Yes ----Yes -------------No
Information sources Many -----Few--- Few or none
a) Decision criteria No--------yes ----------NO
b) Alternative brands available No--------somewhat ----Yes
Evaluative criteria Complex--- Moderate---- Simple (if at all)
Brands considered Many ------Few ----------One (Repeat
Cognitive dissonance High------ Rare--------- None
3) What is meant by perceived risk? What is the relevance of this concept?
Consumer's level of uncertainty regarding the outcome of a purchase decision, specially in case of high priced item such as a car, or a complex item like a computer. Consumers attempt to reduce their anxiety by collecting more information and by seeking the recommendations of a peer group or an entity (person or consumer advocacy group) considered an expert on the subject matter. Manufacturers and marketers try to reduce this risk with reassuring guaranties, by obtaining the backing or recognized groups or opinion leaders, or by hiring a well known and respected spokesperson.
Perceived risk is that level of risk a consumer believes exists regarding the purchase of a specific product from a specific retailer, whether or not that belief is factually correct.
In order to make a sale, you must overcome the customer's perceived risk. The more important the purchase is to the customer, the greater the perceived risk. Therefore, if a customer is considering buying sweet corn for dinner tonight, the perceived risk is relatively low. If he or she is buying corn because the boss is coming over for dinner, the perceived risk goes up. Perceived risks are also greater if the customer has not dealt with you as a retailer before. New or unbranded items, like produce, also raise perceived risk.
As the cost of an item goes up, so does the perceived risk. Being on a tight budget, having little experience in purchasing the item and having many alternatives to chose from all raise perceived risk.
There are six types of perceived risk:
Functional - Will the product perform as I expect? If the customer is buying sweet corn, this means, "Will this corn be as good as what I remember from last year or what I had last week?" If the customer is buying petunias, the risk is, "Will they make my garden look the way I want it to look?"
Physical - Can the product hurt me, my children or my pets? The use of pesticides in the production of food crops is frequently the concern here, but ornamentals that bear poisonous fruit can also be a concern.
Social - What will my peers think? If customers are buying sweet corn to eat in the privacy of their home, the risk here is low. If they buy petunias and plant them in the front yard and petunias are socially out this year, it's like having a big sign in your yard for five months saying, "geek lives here".
Psychological - Am I doing the right thing? This can be a strong motivator in plant sales for the environ-mentally concerned or an impossible obstacle for the truly paranoid.
Financial - Can I afford the purchase? This is not a major problem for most people buying sweet corn or petunias. It is a major obstacle for customers consider-ing a specimen plant or flowering trees that may cost $60 to $100.
Time - How much time and effort may I expend to make this purchase? This may be
the greatest perceived risk for the plant and produce retailer to overcome. Picture your potential customer in their car thinking, "Do I want to pull into that crowded parking lot? Do I want to stand in that line for a dozen ears of corn?" This is scary! Many of the stands I visit fail to overcome this perceived risk. Their potential customers drive by.
What do you do to overcome perceived risk? You encounter examples every day. Why is a new car guaranteed for three years or 36,000 miles? This guarantee helps overcome the customer's functional perceived risk. Why does the MacDonald's sign say billions and billions sold? It reassures the customers that the food will taste like they expect it to, it won't hurt them and it's socially acceptable. The customer feels that he or she must be doing the right thing, because everyone else is doing it, too. Why do super-markets have express check outs? These special facilities make the customer think that the time risk is low.
In our roadside stands and garden centers, we can guarantee produce quality or the survival of costly perennials. We can reassure the customer our produce is fresh and pesticide free (if it is) or picked today. We can give personal endorsements, like a sign that says "Sweet Corn-Best of the Season" or "Beefsteak Tomatoes-Bill's Favorite". We can display information about the nutritional value of fruits and vegetables or the environmental value of planting a tree or flowers. Most of all, we can watch for the hesitant customers and give them an encouraging word. After all, they are only concerned about perceived risks.
4) Explain briefly the concept 'SIR VAL'
Concept of using usability and user experience
The services of the user experience team include testing and consulting in order to optimise products and digital touch points (e.g., websites, software and hardware) in the development process or prior to market launch.
User experience implies more than usability testing alone since it considers the user interaction in a broader context – from the first contact up to the utilization.
Based on a set of qualitative and quantitative methods SirVal concept provides pragmatic recommendations which enhance the acceptance and success of products, thereby contributing to the success of the brand or company.
5) What is Target Market?
A Target Market is a specific group of potential customers which you have identified who have needs or problems which your products or services can fulfill. The characteristics of this group include:
• The area this group inhabits, the area from which you can reasonably draw people into your business. For example, your target market might be on the Internet, or it might be within 2-5 miles of your business, or it might be the entire population of the city where your business is located.
• The Demographics (characteristics) of the people within this area who could be potential customers. This includes their age, sex, race, income levels, family status, education, occupation, home ownership, and other characteristics.
Understanding the location and demographics of your target market helpf you to focus your advertising and promotion efforts to reach these individuals.
6) Critically explain the Alderfer's ERG Hierarchy of Needs
Alderfer redefined it in his own terms. His rework is called as ERG theory of motivation. He re categorized Maslow’s hierarchy of needs into three simpler and broader classes of needs:
• Existence needs- These include need for basic material necessities. In short, it includes an individual’s physiological and physical safety needs.
• Relatedness needs- These include the aspiration individual’s have for maintaining significant interpersonal relationships (be it with family, peers or superiors), getting public fame and recognition. Maslow’s social needs and external component of esteem needs fall under this class of need.
• Growth needs- These include need for self-development and personal growth and advancement. Maslow’s self-actualization needs and intrinsic component of esteem needs fall under this category of need.
The significance of the three classes of needs may vary for each individual.
Difference between Maslow Need Hierarchy Theory and Alderfer’s ERG Theory
ERG Theory states that at a given point of time, more than one need may be operational.
ERG Theory also shows that if the fulfillment of a higher-level need is subdued, there is an increase in desire for satisfying a lower-level need.
According to Maslow, an individual remains at a particular need level until that need is satisfied. While according to ERG theory, if a higher- level need aggravates, an individual may revert to increase the satisfaction of a lower- level need. This is called frustration- regression aspect of ERG theory. For instance- when growth need aggravates, then an individual might be motivated to accomplish the relatedness need and if there are issues in accomplishing relatedness needs, then he might be motivated by the existence needs. Thus, frustration/aggravation can result in regression to a lower-level need.
While Maslow’s need hierarchy theory is rigid as it assumes that the needs follow a specific and orderly hierarchy and unless a lower-level need is satisfied, an individual cannot proceed to the higher-level need; ERG Theory of motivation is very flexible as he perceived the needs as a range/variety rather than perceiving them as a hierarchy. According to Alderfer, an individual can work on growth needs even if his existence or relatedness needs remain unsatisfied. Thus, he gives explanation to the issue of “starving artist” who can struggle for growth even if he is hungry.
Implications of the ERG Theory
Managers must understand that an employee has various needs that must be satisfied at the same time. According to the ERG theory, if the manager concentrates solely on one need at a time, this will not effectively motivate the employee. Also, the frustration- regression aspect of ERG Theory has an added effect on workplace motivation. For instance- if an employee is not provided with growth and advancement opportunities in an organization, he might revert to the relatedness need such as socializing needs and to meet those socializing needs, if the environment or circumstances do not permit, he might revert to the need for money to fulfill those socializing needs. The sooner the manager realizes and discovers this, the more immediate steps they will take to fulfill those needs which are frustrated until such time that the employee can again pursue growth.
7) What is multi-attribute attitude? Explain its models
A model of attitudes that views an individual’s evaluation of an object (product, brand, service, etc.) as being a function of the beliefs that he or she has toward the object on various attributes and the importance of these attributes.
Multi-attribute models are used to understand and measure attitudes. The basic multi-attribute model has three elements—attributes, beliefs, and weights. Attributes are the characteristics of the attitude object. Beliefs are a measurement of a particular attribute. Weights are the indications of importance or priority of a particular attribute. A multi-attribute model can be used to measure a consumer’s overall attitude.
The most influential multi-attribute model—the Fishbein model—also uses three components of attitude. The first, salient beliefs, is a reference to the beliefs a person might gain during the evaluation of a product or service. Second, object-attribute linkages, is an indicator of the probability of importance for a particular attribute associated with an attitude object. Evaluation, the third component, is a measurement of importance for the attribute. The goal of the Fishbein model is to reduce overall attitudes into a score. Past and predicted consumer behavior can be used to enhance the Fishbein model .
According to the Fishbein model, a consumer's overall attitude toward an object (o) is determined by:
E = the evaluation of the goodness of a particular attribute an object may have
B = the strength of belief that a particular object has that attribute
Examples of the above:
If a particular consumer believes that trans fats are really, really bad for his health and is going out of his way to avoid them
And that same consumer believes that Grease-ian Formula Potato Chips are very high in trans fats
Then that particular consumers attitude about Grease-ian Formula Chips is very negative.
Let's use numbers: Suppose (for the sake of simplicity) that both the goodness and belief scales rank from -10 to 10. Let's further suppose that our consumer (above) ranks the attribute "contains trans fat" as having a goodness score of -9. Let's also assume that this same consumer HIGHLY believes (+9) that our client's chips contains trans fats. For this particular consumer, his overall attitude toward our object (the chips) is -81 (-9 times 9).
Now imagine trying to determine the overall attitude toward our object measured across many consumers. This would simply involve calculating the overall attitude of each consumer, one by one, and adding the (E x B)s for each and every one.
8) Explain the relationship between FLC and Consumer behavior.
The Family Life Cycle = FLC
Family Decision Making
The Family Life Cycle. Individuals and families tend to go through a "life cycle." The simple life cycle goes from
child/teenager ---> young single ---> young couple* ---> full nest
---> empty nest ---> widow(er).
*For purposes of this discussion, a "couple" may either be married or merely involve living together. The breakup of a non-marital relationship involving cohabitation is similarly considered equivalent to a divorce.
In real life, this situation is, of course, a bit more complicated. For example, many couples undergo divorce. Then we have the scenario:
full nest ---> single parent
This situation can result either from divorce or from the death of one parent. Divorce usually entails a significant change in the relative wealth of spouses. In some cases, the non-custodial parent (usually the father) will not pay the required child support, and even if he or she does, that still may not leave the custodial parent and children as well off as they were during the marriage. On the other hand, in some cases, some non-custodial parents will be called on to pay a large part of their income in child support. This is particularly a problem when the non-custodial parent remarries and has additional children in the second (or subsequent marriages). In any event, divorce often results in a large demand for:
o low cost furniture and household items
o time-saving goods and services
Divorced parents frequently remarry, or become involved in other non-marital relationships; thus, we may see
full nest ---> single parent ---> blended family
Another variation involves
young single ---> single parent
Here, the single parent who assumes responsibility for one or more children may not form a relationship with the other parent of the child.
Generally, there are two main themes in the Family Life Cycle, subject to significant exceptions:
o As a person gets older, he or she tends to advance in his or her career and tends to get greater income (exceptions: maternity leave, divorce, retirement).
o Unfortunately, obligations also tend to increase with time (at least until one’s mortgage has been paid off). Children and paying for one’s house are two of the greatest expenses.
Note that although a single person may have a lower income than a married couple, the single may be able to buy more discretionary items.
Family Decision Making: Individual members of families often serve different roles in decisions that ultimately draw on shared family resources. Some individuals are information gatherers/holders, who seek out information about products of relevance. These individuals often have a great deal of power because they may selectively pass on information that favors their chosen alternatives. Influencers do not ultimately have the power decide between alternatives, but they may make their wishes known by asking for specific products or causing embarrassing situations if their demands are not met. The decision maker(s) have the power to determine issues such as:
o whether to buy;
o which product to buy (pick-up or passenger car?);
o which brand to buy;
o where to buy it; and
o when to buy.
Note, however, that the role of the decision maker is separate from that of the purchaser. From the point of view of the marketer, this introduces some problems since the purchaser can be targeted by point-of-purchase (POP) marketing efforts that cannot be aimed at the decision maker. Also note that the distinction between the purchaser and decision maker may be somewhat blurred:
o the decision maker may specify what kind of product to buy, but not which brand;
o the purchaser may have to make a substitution if the desired brand is not in stock;
o the purchaser may disregard instructions (by error or deliberately).
It should be noted that family decisions are often subject to a great deal of conflict. The reality is that few families are wealthy enough to avoid a strong tension between demands on the family’s resources. Conflicting pressures are especially likely in families with children and/or when only one spouse works outside the home. Note that many decisions inherently come down to values, and that there is frequently no "objective" way to arbitrate differences. One spouse may believe that it is important to save for the children’s future; the other may value spending now (on private schools and computer equipment) to help prepare the children for the future. Who is right? There is no clear answer here. The situation becomes even more complex when more parties—such as children or other relatives—are involved.
Some family members may resort to various strategies to get their way. One is bargaining—one member will give up something in return for someone else. For example, the wife says that her husband can take an expensive course in gourmet cooking if she can buy a new pickup truck. Alternatively, a child may promise to walk it every day if he or she can have a hippopotamus. Another strategy is reasoning—trying to get the other person(s) to accept one’s view through logical argumentation. Note that even when this is done with a sincere intent, its potential is limited by legitimate differences in values illustrated above. Also note that individuals may simply try to "wear down" the other party by endless talking in the guise of reasoning (this is a case of negative reinforcement as we will see subsequently). Various manipulative strategies may also be used. One is impression management, where one tries to make one’s side look good (e.g., argue that a new TV will help the children see educational TV when it is really mostly wanted to see sports programming, or argue that all "decent families make a contribution to the church"). Authority involves asserting one’s "right" to make a decision (as the "man of the house," the mother of the children, or the one who makes the most money). Emotion involves making an emotional display to get one’s way (e.g., a man cries if his wife will not let him buy a new rap album).
Various stages in family life resulting in different buying patterns. It takes into account changes in family structure and behavior accompanying progression from birth to death. Some stages are single, newly married without children, and married with children. At each stage, the person plays a different social role and buys symbols of that particular role at the time. For example, the buying pattern with little children is to buy toys.
FAMILY ROLE STRUCTURE AND BUYING BEHAVIOUR
In order to function as a cohesive unit, purchase roles or tasks are assigned and carried out by one or more family members. When trying to reach families, therefore, marketers need to realise that a set of purchase roles exist and come into play within the family. These roles can be identified and they determine how families make decisions.
The important buying roles include:
The Instigator (Initiator): This is the person who first suggests the idea of a product or service and initiates the purchase process, to begin with. The Initiator can even be a stranger. For example, you may see someone walking down the street, wearing a new style of sweater or shirt, and decide tilt you would like a similar one. Or, you may go over to a friend's house and notice a new stereo. Your friend (the instigator), turns it on to demonstrate the sound quality. The matter is then discussed at home with your family members (co-decision makers) and you decide whether the brand suits your requirements.
The Influencer: This is someone whose opinion is valued in the decision-making process. An influencer may b e a friend, brother, sister, spouse, doctor or other influential person. All these persons have a direct or indirect influence on the final purchase decision.
The Decider: This is the person who makes the final decision on what brand or make to buy, after all aspects such as price, quality, servicing, have been thought over.
The Purchaser (Buyer): This is the individual who actually purchases the product, pays for it, takes it home or arranges for delivery. Very often, the purchaser and the decider are the same person, particularly for big value items.
Evaluation of alternatives
The role of husband, wife and children will differ across the stages. There can thus be shifts in the husband-wife decision-making from stage one of problem recognition, to stage two of search for information and finally, to the decision. Marketers should therefore examine husband-wife decision-making in terms of specific purchase factors.
The assignment of roles to specific members of the family, that you saw in the previous section, has an impact on the overall buying behaviour. There is a sensitive interplay of roles and the different roles are reflected in the relative influence of husband and wife.
The extend and nature of husband-wife influence is an interesting factor to consider in family decisions, because it is likely to shift, depending on the specific stage of the decision-making process and the specific product features under consideration.
When a single person decides to eat out, the decision is based on only his or her own needs. But when that person gets married, the situation changes. A household forms and its members are confronted with various decisions that reflect the needs of the family unit. Who will pay the bills? Who will do the grocery shopping: Who will wash the clothes? Who will cook the dinner?
It has consistently been found that, most husband-wife influence studies classify consumer decisions as husband-dominated, wife-dominated, joint or syncratic and, autonomic or unilateral. This gives us four main decision type categories, namely:
Wife-dominant decisions: Wives have been found to dominate decisions on food purchase, groceries, household furniture and appliances.
Husband-dominant decisions: Husbands have been found to dominate the decisions on purchases such as automobiles and life insurance.
Syncratic decisions (Joint decisions): These are decisions in which husbands and wives share influence. Vacations, choice of schools for children, for example, are jointly decided.
Autonomic decisions (Unilateral decisions): Decisions of lesser importance that either the husband or wife make independently.
In a joint decision, several persons will be involved in performing a particular role in deciding what to buy (or not buy). Shared consumption and joint decision-making are characteristic of family living. As children grow older, their opinions about products also become important.
An interesting aspect of the role specialisation in the purchase decision process is that, in several families, particularly in traditional households, the husband takes on the roles that are external to the home such as arranging finances, buying the product and so on. The wife performs tasks internal to the home, as in grocery shopping, decorating and cleaning.
However, as women become more active, these distinctions decrease, even though they continue to hold for the majority of the Indian households.
Different family members assume the leadership role under different situations. Particularly for low cost items, decisions tend to be autonomic and each partner tends to take responsibility for particular types of purchases. More expensive items involve more joint decision-making. And compromises often have to be made on how a family's limited resources will be spent, since family members value different items differently.
All families face the problem of determining who gets what he or she wants, even when resisted by others. T6oy/be/efore get involved in power relationships and in dealing with the resolution of conflicts. When family members disagree about the goals, then decisions become more difficult to make. Decisions may thus be either consensual or accommodative. In the case of consensual decisions, everyone in the family may agree with the desired outcome. However, accommodative decisions become necessary in other cases, and conflict resolution may then need to be accomplished.
There are two ways that families generally use to resolve conflict. One is persuasion, where a family member is persuaded to make a decision. When persuasion is not used then bargaining is often resorted to. Bargaining involves creating conditions of give and take in which a family member is induced to make a decision that is favourable to other family members.
The element of power within the family is obtained from a variety of sources such as the following:
1) Economic resources: Here, the person making the greater economic contribution tends to have the most power.
2) Cultural norms: The prevailing culture may decide which partner has the most power. In many cultures the male is the dominant partner and decisions for several product purchases may be husband-dominant.
3) Expert power: One partner has more knowledge and more detailed information concerning the products purchase under consideration.
4) Legitimate power: This is the influence that results naturally from role expectations in the family.
5) Bargaining power: This involves inducing one member to make a decision favourable to another on the basis of give and take.
6) Reward/referent power: One spouse may reward the other by doing something the other will like.
7) Emotional power: The direction of the purchase decision maybe influenced by one partner by making use of non-verbal emotional pressure on the other.
THE INFLUENCE OF CHILDREN
Another influence operating on family purchase behaviour is the influence of children on the budget allocation and purchases and consumption. The birth of a child creates a demand for a wide variety of products a couple never needed or considered purchasing previously. In addition, children influence the purchase of many products both directly and indirectly. Thus in a child-centred culture such as exists in Indian society, children tend to dramatically affect family expenditures. When children are part of a family, their influence may or may not be felt. However, it is found that the child centredness of mothers may increase their receptivity to the child.
As soon as children develop the basic skills to communicate they start attempting to influence the family decisions. Older children participate more directly in the decision processes. While children generally have no say in how much to spend (which essentially remains a parental prerogative) they influence virtually all major dimensions of the decision-making exercise. They may take up buying roles of initiators and influencers in case of products the use of which they share with others in the family. Examples could be the choice of breakfast cereal, brand of toothpaste and other toiletries. As they grow older, they may take a far greater degree of leadership for particular purchases, for example choice of amusement, and restaurants, and sometimes even vacations. In products which are for their exclusive use, the influence is obviously much greater. The role of children, however, varies across product categories and even across family environments. As families differ in their internal culture,, the discretion that is allowed to children may differ across families and would affect the degree of influence children can exert on purchase decision. In addition, children are also influenced by their families through the socialization process. In the context of consumer behaviour the parent-child relationship can be seen as an influence versus yield situation. Children, acting as initiators or influencers seek to influence parents make a particular product/brand decision (to yield). The response of the parent may be modified by enabling condition, or a differing order of expenditure priorities. It has been found that attempts on the part of children to influence purchase decisions of parents tend to decline as they grow up.
The family Life Cycle Stages
The life cycle of families has been conceptualised as a progression involving several stages:
1) The Bachelor Stage (Young and single)
In the bachelor stage of the life cycle, income is low relative to future earnings, since most bachelors are just beginning their careers. However, there are few financial burdens. They therefore have relatively high discretionary incomes. They tend to spend substantial amounts on personal consumption items, food, clothing, transportation, certain luxury goods entertainment, vacations, and possibly even a car. A few basic furniture items may be acquired, as well as some kitchen equipment. However these purchases tend to be on a non-systematic basis and also minimal, because possessions restrict their freedom of movement.
This market segment also offers marketers opportunities in terms of single serving packaging for a wide variety of foods. Overall, there is more individuality in purchasing at this stage.
2) 3) 4) 5) 6)
The Newly Married Couples (Young, no children)
With marriage, the requirements and resources change. Household requirements increase. In addition, in some cases, both partners may be working. This stage therefore represents a high expenditure period. Purchases include durable goods such as refrigerators and other appliances, inexpensive durable furniture, home entertainment items such as TV sets. These items often take priority over other purchases.
Full Nest 1 (Young, married, with child)
The arrival of a child creates major changes. Some wives may stop working and they suffer a reduction in income. The financial resources thus change significantly. Child rearing and educational responsibilities increase. Money is now directed to baby furniture, toys, chest rubs, vitamins, baby foods and baby medicines. While more shopping is done, the family also faces more medical bills. This is also the period that they become dissatisfied with their income and with their inability to accumulate earnings.
Full Nest 2 (Older, married, with children)
The family's financial position starts to improve because of career progress and also because many wives return to work. They present an active market for a wide variety of food products, bicycles, music lessons, magazines and also educational services as children are growing up.
Full Nest 3 (Older, married, with dependent children)
Income is high for the family at this stage. However, they now represent experienced buyers and tend to be less interested in new product purchases. Expenditures continue to be high due to replacement buying in the later phases of the stage.
Empty Nest (Older, married, with no children living with them)
With no children living at home, the financial position stabilises., Savings accumulate. There may be a resurgence in self-education. Hobbies also become an important source of satisfaction. More is spent on luxury appliances, magazines. and health products. Major expenditures are on home ownership, home improvements and also on medical care. 35 r Family Buying Influences, Family Life Cycle and Buying Roles
7) Solitary Survivor (Older, single, retired people)
Simple, often more economical lifestyle. A lower income due to retirement may be a restrictive factor. Health care and other services become important.
The stages at which families find themselves thus affect the nature of the goods and services required, their wants and consumption patterns, as well as the volume of consumption on specific products. At each stage there are unique needs, different patterns of object accumulation, and different demands that are placed on the family.
It would seem, therefore, that the family life cycle is a better predictor of consumption patterns than age. For example, it is well known that major furniture items are bought at or shortly after marriage, regardless of age. Conversely, furniture purchases tend to be put off in favour of baby furniture and medical expenses at the time and stage required.
The family life cycle stages are therefore used along with age in analysing and segmenting markets. Since it combines incomes, marital status, social perceptions, and family needs into one measure, richer picture of family is obtained than is possible on any single variable. Family life cycle analysis thus permits marketers to segment families into subgroups that are relatively homogeneous in terms of age, interests, needs and disposable income. Segmentation by stage in the family life cycle also permits marketers to develop products and services to meet the specific needs of families at each stage, and to design promotional strategies for their specific target audiences.
You will find in Table 1 the differences in the consumption patterns and characteristics of families in the various family life cycle stages. As you can see, the presence or absence of children to a large extent dictates the families activities and much of a family's disposable income gets spent in fulfilling children's needs.
The traditional view of the family life cycle has, however, been criticised for failing to recognise that a single family unit may not exist throughout the life of an individual. Families may be created by second marriages, and these families may involve children from prior marriages. Also, the traditional model ignores the existence of single parent households. The modern family life cycle, which takes into accounts, the existence of working women, is a more complex and more useful model than the traditional model.
The modern family life cycle accounts for women in the work force and dual income families. The pace of life is faster and there is less time for children and for one another. As a result the two income households is more likely to spend more on time saving and convenience goods. Women also appear to retain the primary responsibility for housekeeping though husbands appear to help more than in the past. Convenience products ranging from paper plates automatic appliances and other convenience foods appeal to the working women segment. There is also more sharing of responsibilities than in single income households.
In conclusion, while the family life cycle concept segments families on the basis of demographic variables, it still has the disadvantage that it ignores the psychological variables. It is therefore used to supplement the concept of lifestyle which emphasises behavioural dispositions and attitudes. it is a good idea to remember, moreover, that while the family life cycle is an important factor in controlling consumption patterns, there are other variables such as available income, education, occupation, whose effects govern spending on such items as food, clothing, housing and even cars, and which control how consumers spend their. money. Family life cycle is also related to the use of leisure time, family expenditure patterns for services and other consumer activities.
IMPLICATIONS OF FAMILY DECISION-MAKING FOR MARKETING STRATEGY
Once it is recognised that the same individual may not perform all the purchase consumption tasks, it becomes clear that the development of a successful marketing mix depends on answers to questions such as:
1) Is the product likely to be purchased for joint or family use?
2) Is the product likely to be purchased with individual or family funds?
3) Is the product so expensive that the purchase involves a trade-off in purchasing other products for the family?
4) Are family members likely to disagree about the product?
37 r Family Buying Influences, Family Life Cycle and Buying Roles
5) Is the product likely to be used by more than one family member? If so, are product modifications necessary to accommodate different persons?
6) Which family members will influence the purchase and what media and messages should be used to appeal to each?
7) Are particular stores preferred by various family members or families in the target market?
Forward-thinking companies can anticipate and take advantages of trends that are likely in the future.
9)Explain with examples how marketers can use group influences for Developing marketing and person selling strategies
Humans are inherently social animals, and individuals greatly influence each other.
A useful framework of analysis of group influence on the individual is the so called reference group—the term comes about because an individual uses a relevant group as a standard of reference against which oneself is compared. Reference groups come in several different forms. The aspirational reference group refers to those others against whom one would like to compare oneself. For example, many firms use athletes as spokespeople, and these represent what many people would ideally like to be. Associative reference groups include people who more realistically represent the individuals’ current equals or near-equals—e.g., coworkers, neighbors, or members of churches, clubs, and organizations. Finally, the dissociative reference group includes people that the individual would not like to be like. For example, the store literally named The Gap came about because many younger people wanted to actively dissociate from parents and other older and "uncool" people. The Quality Paperback Book specifically suggests in its advertising that its members are "a breed apart" from conventional readers of popular books.
Reference groups come with various degrees of influence. Primary reference groups come with a great deal of influence—e.g., members of a fraternity/sorority. Secondary reference groups tend to have somewhat less influence—e.g., members of a boating club that one encounters only during week-ends are likely to have their influence limited to consumption during that time period.
Another typology divides reference groups into the informational kind (influence is based almost entirely on members’ knowledge), normative (members influence what is perceived to be "right," "proper," "responsible," or "cool"), or identification. The difference between the latter two categories involves the individual’s motivation for compliance. In case of the normative reference group, the individual tends to comply largely for utilitarian reasons—dressing according to company standards is likely to help your career, but there is no real motivation to dress that way outside the job. In contrast, people comply with identification groups’ standards for the sake of belonging—for example, a member of a religious group may wear a symbol even outside the house of worship because the religion is a part of the person’s identity.
The aspirational reference group refers to those others against whom one would like to compare oneself.
B]Membership of health club
Associative reference groups include people who more realistically represent the individuals’ current equals or near-equals .
. Primary reference groups come with a great deal of influence—e.g., members of a fraternity/sorority .
10) Explain how the income is better predictor of consumer behavior then other measures.
Income is more important than social class in explaining the consumption of low social value products and services that are not related to class symbols , but require substantial expenditures (major kitchen and laundry appliances and recreational vehicles). Income also better determines the purchase frequency for soft drinks, mixers and distilled alcohol, i.e. alcoholic beverages;
Social class is a better predictor than income in areas that do not involve high dollar expenditures, but reflect an underlying lifestyle, values, (e.g. concern with health and body, drinking imported and domestic wines) or homemaker role differences, not captured by income. Furthermore, social class is superior for understanding the purchase of highly visible, symbolic, and expensive goods, such as living room furniture ; and (3) The combination of social class and income is generally superior for highly visible products that require moderate or substantial expenditure and also serve as class-linked symbols (clothing, automobiles, etc.]
11) What is innovation? How experts have classified the innovation?
Innovation generally refers to renewing, changing or creating more effective processes, products or ways of doing things.
For businesses, this could mean implementing new ideas, creating dynamic products or improving your existing services. Innovation can be a catalyst for the growth and success of your business, and help you adapt and grow in the marketplace.
Being innovative does not mean inventing; innovation can mean changing your business model and adapting to changes in your environment to deliver better products or services. Successful innovation should be an in-built part of your business strategy and the strategic vision, where you create an environment and lead in innovative thinking and creative problem solving.
Some common themes around innovation
1. Conduct an analysis of the market environment, your customers wants and needs and competitors. Be open to new ideas and adaptive to change.
2. Develop a strategic responsive plan which includes innovation as a key business process across the entire business.
3. Leadership in innovation. Train and empower employees to think innovatively from the top down. Inspirational leadership and motivation is what drives innovation in business.
4. Connect with customers and employees to generate ideas for improving processes, products and services both internally and externally.
5. Seek advice. Utilise available resources, business advisors, grants and assistance to drive innovation in your business. This may include seeking Intellectual Property (IP) protection for commercialisation of ideas.
Remember, innovation is the key to competitive advantage for your business.
four broad categories where such change can take place:
• 'Product innovation’ – changes in the things (products/services) which an organisation offers
• 'Process innovation’ – changes in the ways in which products and services are created or delivered
• 'Position innovation’ – changes in the context in which the products/services are framed and communicated
• 'Paradigm innovation’ – changes in the underlying mental models which shape what the organisation does
Perhaps the most commonly understood form of innovation is that which introduces or improves a product or service – a change in what is offered to end users. The Bic ballpoint pen is an example of a product innovation, which has also benefited from a range of incremental innovations since its original invention. The emblematic humanitarian product is food, which is the dominant form of assistance. Different forms of food aid might be seen as incremental innovations.
There may also be innovative products which help to achieve humanitarian goals. For example, the LifeStraw is a portable water filter developed by Vestergaard-Frandsen which enables individuals to drink clean water from almost any source. Another example is PlumpyNut, a therapeutic food which is both durable and can be dispensed outside of traditional medical settings.
Innovations can also focus on processes through which products are created or delivered. Because so many of the products used in relief settings are initially developed for non-relief contexts, a natural focus for humanitarian innovation is to consider how an existing product might be used in resource-poor or rapidly changing settings. Examples of process innovations that have had a positive effect on the humanitarian sector are the increasing stockpiling of goods in strategic locations, or the use of pre-made packs and kits.
The third focus of innovation involves re-positioning the perception of an established product or process in a specific context. Position-based innovations refer to changes in how a specific product or process is perceived symbolically and how they are used. For example, Levi-Strauss jeans are a well-established global product line, originally developed as manual workers’ clothing materials, but then re-branded as a fashion item.
In the humanitarian context, position innovations include changes in the signals that are disseminated about a humanitarian organisation and its work. This may relate to the way in which aid is marketed and packaged for potential donors. Alternatively, it may involve a repositioning of humanitarian assistance within a particular operational context or for particular users. An example of the former can be seen in attempts by humanitarian agencies in different complex emergencies to develop principle based cross-agency positions in relation to belligerent parties in complex emergencies which amount to a set of conditions under which humanitarian aid would be delivered, and a clear articulation of the situations where it would not. Agencies such as Disability International or HelpAge International are position innovators in that they call for the delivery of humanitarian products and services to groups that are often excluded.
The final ‘P’ relates to innovation that defines or redefines the dominant paradigms of an organisation or entire sector. Paradigm-based innovations relate to the mental models which shape what an organisation or business is about. Henry Ford provides a pithy quote, when talking about the development of the Model T motor car: ‘If I asked people what they wanted, they would have asked for a five-legged horse’.
Examples of paradigm innovation in the international humanitarian sector include an increasing emphasis on local ownership and leadership of responses to crises as an alternative to internationally dominated responses. A greater and more central role for aid recipients is another example, and finally, perhaps the most radical innovation is the idea of disaster risk reduction approaches, which if successful can negate the need for any kind of response.
The development of community-based feeding therapy is one of the most recent examples of such innovations, with the combination of a product (PlumpyNut), a process (community-based distribution) , a re-positioning (the idea that aid agencies do not need to do the feeding themselves directly) and a paradigm shift (the notion that families and communities can treat malnutrition at home). Similarly, cash-based programming at its most radical involves a new product (cash), new processes (means of distributing cash), new position (a change in how aid is perceived by donors) and new paradigms (a change in how recipients are perceived by aid agencies).
"Innovation" is most often used in describing new inventions, but innovation is so much more. Often times we don’t even recognize innovation because it is so pervasive. The Warren Company has identified the following seven types of innovation. Sometimes companies focus on one type of innovation but often times several of the types will be part of a company’s innovation toolkit.
1. Technical invention: Product Creation/Development with a new core technology. Next/new generation, breakthrough/discontinuous technology:
• Example: composite hockey stick
2. Systems solution: Rethinking and integrating existing systems to solve complex customer problems:
• use solution alliances to integrate complexities
• often generates new solutions to existing problems
• usually closely linked to customer
• Example: self-serve check-outs
3. Product improvement: Continuous improvements making the product more:
• efficient, effective
• leveraging existing core technology
• useful or user friendly
• integrated with other products, technologies, or systems
• valuable to users
• Example: automobile
4. Process improvement: Make processes:
• more accurate
• more reliable
• less expensive
• more integrated
• Example: lean manufacturing.
5. New business models: Reconfigure the nature of how business is framed to serve the customer:
• make it easier to do business
• create more integrated products and services
• devise better ways to be profitable
• use resources in a new way
• Example: Dell Computers, selling computer online rather than through dealers
6. Market extension: Develop new products, services to:
• support Existing Customers
• Market Bases who buy our current products
• facilitate product/technological adoption and create value from usage
• introduce new services & value streams
• Example: IBM migrated from being a hardware/software company to a services company.
7. Socio-organizational: Design new human relationships to:
• increase results (strategic alliances & value networks)
• reorient or restructure human interaction (Facebook, employee ownership, diversity of thought)
• enable people to interact differently with technology
• Example: Westjet employee ownership
12) Discuss the need and ways of consumerism
In the consumer society, "I am what I have" is the operative definition of self. In today's society consumerism is often portrayed to be a negative aspect of people's lives and purchasing behaviors, which inevitably leads to materialism. But, if looked at in a positive light, consumerism have certain positive characteristics.
Consumerism has emerged as part of a historical process that has created mass markets, industrialization, and cultural attitudes that ensure that rising incomes are used to purchase an ever-growing output. Consumerism rests on the assumption that human desires are infinitely expandable; if there are an infinite number of ways to be dissatisfied; there are boundless opportunities to create new products to meet those desires. Every day companies compete by inventing a new product to satisfy consumer's need. Some of these things are very useful and make some people wonder how they would live without them. Many of these products don't have much impact on society and fade out throughout the years.
Although it has been said that money is the root of all evil, many people actually believe that they would be happier if they were wealthier. People often want more than they have now, more money, a better car, a bigger house, more shoes and cloths. They will never be satisfied, because every day there is new ads for new cars, clothes and electronics. Nowadays, big companies and corporations try to make people buy their products by using more and more advertising techniques. TV commercials, posters on the walls, newspaper ads and a variety of different flyers are just some examples of the massive propaganda used by businesses. Not only have advertisers learned to identify specific products that appeal to men and women, but they have also found that the "want" of the consumer can be turned into a "need" for the advertised product. Many of the beauty product companies advertise their products as a "need" which ultimately appeals to a vast majority of women.
There are many ways that consumerism can effect the environment. Consumerism can cause air and water pollution, land contamination, and forest degradation. Consumption itself, plus the production and waste of products used in consumption is related to pollution. Industrial waste (especially when just dumped into the rivers and oceans), waste from the tourist industry (including cruise liners, air travel, etc.), waste from industrial agriculture, and automobile emissions are examples of air and water pollutions caused by consumerism. Tobacco production, for example, can lead to soil degradation and land contamination.
Worried about the negatives effects on environment by consumerism, Ted Dave, a Canadian artist, founded the "Buy Nothing Day", which is an informal day of protest against consumerism. The "Buy Nothing Day" is a good way to show people how addicted to shopping they are, and it is a good way to make people think how consumption is destroying the planet. I personally do not think that the "Buy Nothing Day" would affect the country's economy, because this protest lasts only 24 hours and what people do not buy that day will be bought at a later date.
Consumerism can actually have some positive effects on society. The economy depends on people buying stuff. If people only bought the absolute necessities, most of the country would be unemployed and unable to make enough money to buy those absolute necessities. The growth of demand for consumer goods also encourages investors to put their money into expanded production so consumption growth also stimulates economic growth.
Consumerism increases consumption, more consumption requires more production, more production means more jobs and more income in society, and more income means more consumption. This is the cycle which if managed properly can bring growth and prosperity to society. Consumerism is essential to our economy, but authorities should imply rules and laws to make sure that consumerism does not destroy our planet.