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Showing posts with label Introduction. Show all posts
Showing posts with label Introduction. Show all posts

Wednesday, 6 July 2011

External influences - Introduction

a. What a consumer eats, wears, and believes are all learned and influenced by the culture they live in, their family, childhood and social environment. All of these are external factors that affect purchases.



Here is a list of the external influences that affect consumer behavior:
  • Age
  • Race
  • Gender
  • Education level
  • Cross-cultural influences
  • Sub-cultures (Hispanic-American)
  • Social status (upper, middle, lower)
  • Customs, Beliefs, Expectations, Traditions, Habits
  • Reference groups are groups that have shared beliefs, interests and behaviors and influence a consumer’s behavior: 
  • Examples include: Religious, Political, Family, Friends, Co-workers, Clubs and Associations.

    People are social and they want to belong to special groups. Group members share common interests, influence each other, and share rules and values. Primary groups are those with the most influence, such as family members; secondary groups have less interaction than the primary group, such as clubs and organizations. As children grow into teenagers, their parents become less of an influence and peer groups become more of an influence. All groups exert what is called social power; some groups have more power than others over consumers’ decisions.
  • Values
  • Community
  • Family Life Cycle

Type of Social Power
Description
Example
Referent
A person likes a group and acts like them so the group will accept them
A teenager wants to join a popular group, so they begin to dress like them and listen to their groups’ chosen music
Legitimate
Membership comes with agreements and there will be consequences for nonconformity
A boss has authority over his employees and can fire them if they don’t do an adequate job
Expert
Groups have knowledge that others want to gain
Consumers who want to be members of The American Medical Association seek to gain their knowledge of health and wellness
Reward
Groups with power to give rewards to members
A school soccer team can give trophies to their best players (members)
Coercive
A group can penalize members for not following the rules
In the army, soldiers who do not report for duty on time can be forced to do manual labor or even get kicked out of the army

c. External influences can also include situational influences, sometimes called atmospherics—sensory items in an environment that may change buying patterns, such as music, color, smell, and lighting. If a store plays loud rock music, they may attract young adults, but drive away older consumers. Color is a huge influence on behavior, but is also dependent on culture, since different cultures perceive colors differently. In the US white is a color worn at weddings, and in China, red is the color of choice for weddings. Many bakeries will pump the smell of their treats outside the store, so that passersby will be more likely to want to come in.
d. Before making a purchase, consumers will go through an external information search. They will go through this search in order to evaluate the alternatives and narrow down their list of choices. It includes:
  • Personal experience—have they purchased this product before? How do they feel about it?
  • Websites/Internet search—researching the quality of the product
  • Knowledge—someone with little or no knowledge of the product will need lots of information!
  • Friends/reference groups—consumers ask friends, family and coworkers about their experiences with the product.
  • Advertising and promotions
e. A purchase may be ultimately made due to Heuristics. This is a personal set of values that everyone has and it causes consumers to buy what they are comfortable buying, such as purchasing from specific countries of origin, or products that they are brand loyal to.
by Mkt Teachers

Tuesday, 5 July 2011

Product Life Cycle

The Product Life Cycle (PLC) is based upon the biological life cycle. For example, a seed is planted (introduction); it begins to sprout (growth); it shoots out leaves and puts down roots as it becomes an adult (maturity); after a long period as an adult the plant begins to shrink and die out (decline).

In theory it's the same for a product. After a period of development it is introduced or launched into the market; it gains more and more customers as it grows; eventually the market stabilises and the product becomes mature; then after a period of time the product is overtaken by development and the introduction of superior competitors, it goes into decline and is eventually withdrawn.

However, most products fail in the introduction phase. Others have very cyclical maturity phases where declines see the product promoted to regain customers.

Strategies for the differing stages of the Product Life Cycle.

Introduction.

The need for immediate profit is not a pressure. The product is promoted to create awareness. If the product has no or few competitors, a skimming price strategy is employed. Limited numbers of product are available in few channels of distribution.

Growth.

Competitors are attracted into the market with very similar offerings. Products become more profitable and companies form alliances, joint ventures and take each other over. Advertising spend is high and focuses upon building brand. Market share tends to stabilise.

Maturity.

Those products that survive the earlier stages tend to spend longest in this phase. Sales grow at a decreasing rate and then stabilise. Producers attempt to differentiate products and brands are key to this. Price wars and intense competition occur. At this point the market reaches saturation. Producers begin to leave the market due to poor margins. Promotion becomes more widespread and use a greater variety of media.

Decline.

At this point there is a downturn in the market. For example more innovative products are introduced or consumer tastes have changed. There is intense price-cutting and many more products are withdrawn from the market. Profits can be improved by reducing marketing spend and cost cutting.
Product Life Cycle

Problems with Product Life Cycle.

In reality very few products follow such a prescriptive cycle. The length of each stage varies enormously. The decisions of marketers can change the stage, for example from maturity to decline by price-cutting. Not all products go through each stage. Some go from introduction to decline. It is not easy to tell which stage the product is in. Remember that PLC is like all other tools. Use it to inform your gut feeling.
Another marketing tool for evaluating PRODUCT is the Three Levels of a Product.
 
by Mkt Teachers