Hello All! So this week has
been interesting. I went through an entire session of PharmSim. I think I did
pretty well. I tried to launch a new product during some rounds, but my stock
kept dropping for the next couple of rounds. Also, I had a hard time trying to
split my money between both products, so I dropped my product. As soon as I
did, my stock price started increasing.
One
topic we read about was buying behavior of consumers and customers. Consumers
make decisions in one of three categories. The different categories are
nominal, limited, and extended. Each one has different levels of purchase
involvement. Since consumer behavior cannot be neatly tied into a specific
category, the reading talked about how it is better to think of it a scale.
Sort of like the spectrum of light scale. Here I have demonstrated this scale
from the scale that is used from the spectrum of light. (Time to add some color
to my blog)
Purchase involvement on a product is basically how much time
a consumer or customer spends thinking about purchasing the product. The larger
the item, how many risks involved with making the wrong purchase, and the
product’s significance to the consumer’s life are just some of the reasons that
there would be a high involvement in regards to purchasing a decision. Right
now I have a high purchase involvement with buying a kitchen table. We
currently have one from my boyfriend’s family. It is the table that everyone
gets when they first move into a place, and then return once they buy their
own. We live in a very small one bedroom apartment, so we need maximize on
space while staying in small budget. So we have been looking at different
tables that could help us. We found this almost perfect one at Costco. It was
only $200 which is very much within our budget, and it has “bookcase” like
legs. Kind of like this one:
However, as much as it maximizes storage and space, it also
is about a foot longer than we like, because if we buy it then only one person
can be in the kitchen at a time. We found another table we like where it is
expandable, but since my boyfriend is going back to school and I am in grad
school we will need a table that is sturdy and can hold all out books and
laptops. My books are pretty light, but he is going for civil engineering
technology and I really rather doubt his books will be light. Since we can’t
find anything that meets both our size and budget requirements, we have turned
to pinterest. We have found out how people have made their own project tables
from cubicle book cases. So we have researched where to get bookcases, what
size we want, when to purchase (tax free weekend on August 10th),
and how to do this table. Turns out, right now and knock on wood, that if we
make this table we could end up only spending about $100. Good thing my
boyfriend is in construction. If he was not then we would be doing something
else.
Nominal decision making is the one
where you think the least when buying a product or have the least involvement
when making a decision. For example, you need a bottle of water at work you go
to the vending machine and get one. The interesting part about nominal
decisions is that a decision about a product could of once had a more involved
decision making process, but if you really liked the product and became brand
loyal, then you would just repurchase without a lot of involvement. Think of
your cellphone. You most likely did a lot of research on the perfect one, and
when it came to upgrade you may have gotten your phone that was upgraded. I
know my iPhone is due for an upgrade soon, and I will most likely just upgrade
to the iPhone 5 from my iPhone 4. I know it, have been satisfied, and am brand
loyal to this company and product. When I bought a new computer, I just bought
another HP because my last one had been so great. I knew right off the bat I
wanted another HP laptop.
Limited decision making is the
middle of the road in the spectrum. It is a little more extensive than simple,
but nowhere near that of extended decision making. The way it was described is
sort of as if there is only one decision factor or very few that go into a consumer
or customer buying a product. So it could be quality, product availability,
style, price, color, it could be anything. It is the job of the marketer to
figure out what is the leading decision maker and market it to that.
Extended decision making is very
in-depth. A customer or consumer considers both internal but also mostly a lot
of researched external alternative. My table example is probably a good
example, or that of buying a house, or car. This is also where post purchase
dissonance comes into play. Have you ever made a purchase and regretted it
somehow? If a purchase has one of these four factors the most likely you feel a
strong post-purchase dissonance:
1.
The decision’s permanence
2.
The cost of the decision
3.
The importance of the decision in your life
4.
The difficulty of choosing between options
I myself go through post-purchase dissonance whenever I make
a high involvement/extended decision. I took a trip to England for Christmas to
visit my sister, and there have been several times where I wish hadn’t because
I wish I still had the money. However, I had a great time and all I had to do
was pay for the plane ticket. Or when I bought my new computer. My other one
worked, but had power cord socket had issues and it was also 6 years old. Since
I was starting graduate school I didn’t want to be in the middle of huge a
product and my computer die. So I bought a new one. There are times that I wish
I hadn’t bought it, but then I remind myself it was for bettering my education.
Ways companies can avoid this is by using advertisements that highlight how
great their product is get new customers and reassure those that have
purchased. Companies also will make direct contact with the customers after
they buy to thank them, and follow up on satisfaction.
What
are influences on customer/consumer behavior? Well external factors are huge,
they consist of culture, values, social class, reference groups, and
opinion-leaders. We have already talked about culture and values in other blog
posts. Social class is where a customer/consumer is categorized in society
based on education, income, and occupation. Reference groups are groups that
influence behavior in a certain situation. So when I worked at a different
company, everyone was into Lululemon. So that influenced me to start buying
there so I could better fit in. I can’t afford much, but I can afford
headbands! And head bands were a big thing at my work (I was an Assistant
Women’s Lacrosse Coach in New Hampshire). So boom! When I needed a head band
that is where I got it.
Opinion leaders are people who constantly research product
and brand specific information and share
what they find with others. I have a friend who always has the newest technological
gadgets. So whenever I look into purchasing a new gadget, and by this time it
is not new, I tap into his expertise. He is my opinion leader when it comes
technological gadgets.
Sometimes
marketing can be different due to what a company does business with. You maybe
asking yourself what not who? Well this is because some companies sell business
to business (B2B), and not necessarily business to consumer (B2C). There are
several difference in business marketing. They are the individual roles of the
buying center, evaluative criteria, buying situations, business ethics, and
customer service. A buying center is made up the person who suggests the
company to buy from (initiator), the people who decide what is needed
(influencer or evaluator), the people who filter unwanted companies
(gatekeepers), and those that decide (decider), purchase (purchaser), and use
the product (user). Most evaluative criteria for sales has to with quality of the
item, the service of the company that provides the item, and the price of the
item. Very similar to how general consumer make decisions on products. Buying
situations can be a new buy which is a first time buy, straight rebuy which is
the same exact order as last time, or modified rebuy which the customer makes a
few changes to the order. Business ethics is well sort of self-explanatory. Who
wants to do business with an unethical company? Of course customer service is
huge when dealing with business to business marketing.
We also
talked about market segmentation. There are five ways to segment a market. They
are geographic, demographics, psychographics, benefits sought, and usage rate.
Geographic segmentation if when a market is broken down into sections by
climate, density, market size, world or states. So you would want to sell most
of your snow shovels in New England where is a ton of snow in the winter and
not in the south where there is little to no snow. Demographic segmentation is
based on age, income, gender, ethnic background, and family life cycle.
Psychographic segmentation is based on personality, motives, and lifestyles.
Benefit segmentation is based on segmenting groups by the benefits that the
consumer/customer using the product or
service. Usage-rate segmentation is based on how much of the product a customer
uses or consumes. Usage-rate segmentation generally has the 80/20 Principle
associated with it. The 80/20 rule is that the 20% of your customers make up
80% of the demand for a product or service.
Our
chalk talk this week was based on benefit ladders. Every product has benefits
that it provides. The example used in the chalk talk was that of a drill. The
benefit of drill is that it makes the holes you want. Benefits have physical
attributes, economic benefits, intangible attributes that are perceived or
psychological, and emotional benefits. The ladder’s first step is product benefits
(what are the characteristics, features, specific measurable of the product),
then functional benefits (what does the product actually do for the customer,
what is the unique value of the product), and followed by emotional benefits
(what are the dominant feelings produce by or associated with the possession of
or use of the product). For our PharmSim application one could construct a
benefit ladder for the product Allround. The product benefits is the product
helps people with their cold symptoms through a certain make up of
chemicals/ingredients. The functional benefits are that relieves cough,
congestion, and other cold symptoms. Lastly, the emotional benefit of Allround
is that it is a trusted brand name product verse a generic brand.
When I
purchase OTC cold remedies I look for the medication that I am most familiar
with and that offers the benefits. I grew up on Robitussin. It tastes AWEFUL!
In fact I know I am really sick if the thought of “oh this stuff isn’t too bad”
enters my mind. When I go shopping for cold medication I look for the kind of
Robitussin that has most of my symptoms listed that it helps. My boyfriend makes decisions based on what
symptoms he has and what knows is a good brand. With OTC Cold medications there
isn’t much cognitive dissonance because I am so sick I can’t think.
Our
company makes B2B purchasing decisions. We buy skirts and products from other
companies. We base our purchase decisions on where we have ordered from before,
price, budget, and urgency of need. Our budgets have been shrinking each year,
so that has forced us to look at other vendors. We have tried to avoid this
with our skirts as the colors have to be the exact same, and sometimes
companies have a different tint to their colored products. But for work shirts
we have looked for cheaper places, or even the clips we need for our tables. We
don’t experience much cogitative dissonance with events, or at least with my
experience. Most groups want to come back. Those who may not have liked their
event here though we try to figure out why, and make notes for next year if
they decide to come back.
Ok so I think this shall be it. Sorry for the long post. Hope you found it informative.
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