CHAPTER ONE STRATEGIC ISSUEWal-Mart is the world’s largest retailer and its headquarters is at Bentonville, Arkansas, USA.
It was founded by Sam Walton in 1962 and listed in the New York Stock Exchange in1972.It is the largest grocery retailer in USA taking almost 20-21% of retail grocery and consumables business. It is also the highest private employer in USA and Mexico. It is operating throughout USA and other countries like Japan, UK and Mexico. Further it has wholly owned operations in Brazil, Canada, Argentina, UK and Puerto Rico.
Due to high competition and continuous losses it closed down its operations in Germany and South Korea some time in 2006. Due to its specific business policies it has been criticized by labor unions, religious organizations, women’s rights groups etc.Buyers in the same market seek products for broadly the same function. But different buyers have different evaluative criteria about what constitutes the right choice for performing the function. As a consequence different offerings will attract different buyers.Buyers within a segment are more homogeneous in their market wants when compared to those who are in the market at large but differences will always remain in wants among those within a segment notwithstanding this similarity.
A marketer can always achieve additional homogeneity by subdividing the original set of segments further until, theoretically speaking, we have segments to which only one buyer belongs.At the most detailed level, every buyer is a market in himself for every buyer’s ‘want’ is probably distinct in some way. On the basis of similarities and differences, such unique wants can be grouped into sub-classes. What it means is that wants within a sub-class are more related to each other than wants between sub-classes.DemographicBasis::People in the market can be divided on the basis of demographic variables such as age, sex, family size, income, occupation, education, location, religion, race and nationality. Demographic variables are the most popular bases for distinguishing customer groups.
Demographic variables can be combined to form social classes. Social class is defined in terms of a number of demographic variables varying from a single indicator like occupation to the use of a combination of factors like occupation, source of income, type of home or residential area. Social class has a strong influence on the person’s preferences in regard to clothing, home furnishings, leisure activities, reading habits, and so on.Family life cycle: Another basis for segmentation that draws on demographic factors is family life cycle, where each stage in the cycle is a combination of age, marital status and age of children. A household with a young family tends to have different wants from an older married couple whose family is grown up.Psychographic basis: One can also segment the market on the basis of life style or mode of living. This helps to understand what those who are in the market do.
Some of the products where life style approach has been used for segmenting the market are women’s clothing, cigarettes, cosmetics, alcoholic beverages and furniture. Another basis is need- based segment, with companies making direct appeal to the loyal user. Companies selling in a brand-loyal market have a hard time gaining more market share. Similarly, companies that enter a need based market have a hard time getting in.CONCLUSION Marketing research helps in discovering what types of distribution channels and retail outlets are most profitable for the product. On the basis of comparative information for different channels and different types of outlets the store can choose the combination most suitable for their product. Marketing Research is a tool for decision-making and marketing decisions involve variables which are often external to the firm, dynamic in nature, uncontrollable by the firm and interact with each other in a complex manner.
The marketing team is always on the lookout for ways and means to reduce this risk. One way that the risk can be reduced is through the use of MR which by providing information reduces uncertainty and converts the unknown risk factor into a known calculated risk.References:1. Galbraith J, Strategic Implementation: The Role of Structure and Process, St. Paul, Minnesota, 19782. Hitt, Michael A, (2001), Strategic Management: Competitiveness and globalization, 4th ed.
, Thomson Learning.3. Hamel,G, Collaborate with your Competitors and Win, Harvard Business review,67,1,1989,133-9.CHAPTER TWO CURRENT PROMOTIONSWith growing competition in the market place as well as the customers becoming better informed and more choosy it is imperative that marketing communications of the right kind only are made to the right group of target buyers. Motivating the adoption of the promoted product as well as effecting the desired change in the consumer behavior are the goals of promotion function.
THE PROMOTION METHODSIn our daily life all are exposed to various tools of promotion aiming at communicating one thing or the other. At home we come across advertisements when reading a newspaper, watching TV, listening to radio. On our way to the office similar communications face us on bus panels, roadside hoardings, neon signs, posters and banners etc. And, while at a retail shop these take the shape of traffic builders, product displays, streamers, hangers. bins etc., all sharing information relating to a specific product of a company.Listed above are just a few types of the various promotion tools available to a marketer. We take a look at the definitions of the four major methods of promotion.
These are: advertising, personal selling, sales promotion and publicity:Advertising: Any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor. It includes the use of such media as magazines, newspapers, outdoor posters, direct mail novelties, radio, television, bus posters, catalogues, directories, programmes and circulars.Personal selling: Oral presentation in a conversation with one or more prospective purchasers for the purpose of making sales.Sales promotion: Those marketing activities—other than personal selling, advertising, and publicity—that stimulate consumer purchasing and dealer effectiveness such as displays, shows and exhibitions, demonstrations, coupons, contests, and other non-routine selling efforts. These are usually short-term activities.
Publicity: Non-personal stimulation of demand for a product. service or business unit by generating commercially significant news about it in published media or obtaining favorable presentation of it on radio, television or stage. Packaging, public relations and role of other elements of marketing mix in promotion:Although definitions vary about the number of components that constitute promotion, marketing practice brings out that almost all marketing activities influence the promotion function. Notably, packaging performs the promotion function in addition to providing protection to the product. By incorporating creativity in its design, a package can add the pick-me-up appeal to the product and also help to communicate its features, uses and benefits more effectively.CULTURAL CONTEXT:Culture is an extremely critical and all pervasive influence in our life. “It is a mould in which we are all cast, and it controls our daily lives in many unsuspected ways”.
Culture encompasses all aspects of a society such as its religion, knowledge, language, laws, customs, traditions, music, technology, work patterns, products, etc. All these factors make up the unique, distinctive ‘personality’ of each society. Culture is defined as the sum total of learned beliefs, values and customs which serve to guide and direct the consumer behavior of all members of that society.CONCLUSION: The marketing techniques used to communicate with existing and potential customers are called promotion. The four major promotion methods available to a marketer are:advertising, personal selling, sales promotion and publicity. Packaging, public relation and other elements of the marketing methods supplement the promotion efforts of the marketer in their own way. Culture is the most pervasive influence on our lives and influences all aspects of our behavior; consumers operate within the cultural framework of their society and purchase only those products which fit in with their cultural norm.
References1. Galbraith J, Strategic Implementation: The Role of Structure and Process, St. Paul, Minnesota, 19782. Hitt, Michael A, (2001), Strategic Management: Competitiveness and globalization, 4th ed., Thomson Learning.3.
Hamel,G, Collaborate with your Competitors and Win, Harvard Business review,67,1,1989,133-9.CHAPTER THREE THE CONSUMERWe have in common is that we are all consumers. In fact, everybody in this world is a consumer. Everyday of our life we are buying and consuming an incredible variety of goods and services. However, we all have different tastes, likes and dislikes and adopt different behavior patterns while making purchase decisions. One may have a certain set of preferences in food, clothing, books, magazines, recreational activities, forms of savings and the stores from where prefers to shop, which may be different not only from those of family but also friends, neighbors and colleagues. Each consumer is unique and this uniqueness is reflected in the consumption behavior and pattern and process of purchase.
Consumer behavior provides us with reasons why consumers differ from one another in buying and using products and services.‘What’ products and services do we buy, ‘why’ do we buy, ‘how often’ do we buy, from ‘where’ do we buy, ‘how’ do we buy, etc. are the issues which are dealt with in the discipline of consumer behavior. Consumer behavior can be defined as those acts of individuals directly involved in obtaining, using, and disposing of economic goods and services, including the decision processes that precede and determine these acts.IMPORTANCE OF CONSUMER BEHAVIOUR FOR MARKETERSConsumer behavior is helpful in understanding the purchase behavior and preferences of different consumers.
As consumers, we differ in terms of our sex, age, education, occupation, income, family set-up, religion, nationality and social status. Because of these different background factors we have different needs and we only buy those products and services which we think will satisfy our needs. In marketing terminology, specific types or group of consumers buying different products (or variation of the same basic product) represent different market segments. To successfully market to different market segments, the company needs appropriate marketing strategies which can design only when they understand the factors which account for these differences in consumer behavior and tastes.In today’s world of rapidly changing technology, consumer tastes are also characterized by fast changes. To survive in the market, a firm has to be constantly innovating and understand the latest consumer trends and tastes.
Consumer behavior provides invaluable clues and guidelines to marketers on new technological frontiers which they should explore. Consumer behavior is a process, and purchase forms one part of this process. To the extent that the marketer can understand and manipulate the influencing factors, he can predict the behavior of consumers. Though prediction can never be absolutely accurate, it certainly reduces the risk associated with different marketing strategies. Thus, the importance of consumer behavior lies in the fact that behavior can be understood and influenced to ensure a positive purchase decision.
The marketing manager’s interest lies exactly here i.e. to ensure that his marketing strategy results in purchase of the product.FACTORS INFLUENCING CONSUMER BEHAVIOURConsumer behavior is affected by a host of variables, ranging from personal motivations, needs, attitudes and values, personality characteristics, socio-economic and cultural background, age, sex, professional status to social influences of various kinds exerted by family, friends, colleagues and society as a whole. The combinations of these various factors produce a different impact on each one of us as manifested in our different behavior as consumers.
Thus you would find that each person has his or her own standards of judgments and distinct behavior in every aspect of his role as a consumer. But at the same time, underlying the individual differences are similarities which help explain behavior of specific types or groups of people. It is these similarities which make it possible for us to classify and analyze the behavior of individual consumers.Psychological factors such as individual consumer needs and motivations, perceptions, attitudes, the learning process and personality characteristics are the similarities which operate across different types of people and influence their behavior. Amongst the social influences affecting behavior, we can classify the influences of family, friends. leaders and the social class to which the consumer belongsPSYCHOLOGICAL FACTORSMotivationsAll people have needs and we consume different goods and services with the expectation that they will help fulfill these needs.
When a need is sufficiently pressing, it directs the person to seek its satisfaction. It is known as motive. All our needs can be classified into two categories—-primary and secondary. Primary needs or motives are the physiological needs which we are born with, such as the need for air, water, food, clothing, shelter. The secondary needs are our acquired needs which we have developed in response to the society and environment in which we live.
The secondary needs are the result of the individuals’ psychological make-up and his relationship with other members of the society. The secondary needs may include the need for power, prestige, esteem, affection, learning, status etc. All needs can be ranked in order of importance from the low biological needs to the higher level psychological needs.
PerceptionThe second major psychological factor that influences consumer behavior is perception. Perception can be described as “how we see the world around us. Since each individual’s needs, motives and expectations are unique therefore each individual’s perception is unique.
Perception helps to explain the phenomenon of why different individuals respond differently to the same stimulus under the same condition. Marketing manager is providing stimulus to consumers through the physical shape, color, size, fragrance, feel, taste of product, its package, advertisements and commercials. The interest is to understand why and what different types of perceptions are associated with each of the stimuli so that he can highlight that particular stimulus or combination of stimuli which evokes the most favorable perception in the maximum number of consumers.Selective exposure: One must have noticed that when he is on the look-out for purchasing a specific product, be it camera, refrigerator, television or any other product or service, he suddenly seems to notice more than the usual number of advertisements pertaining to that specific product. This is because of his selective exposure. People are more likely to notice stimuli which relate to their immediate needs. For the marketer, the implication is that he has to carefully and accurately identify his potential customers since other customers are not at all likely to notice the stimuli.
A company which wants to grow must keep a tab on such major cultural trends to ensure that its products fit in well with these new trends.CONCLUSIONConsumer behavior is the study of why, how, what, when, where, and how often do consumers buy and consume different products and services. Knowledge of consumer behavior is helpful to the marketer in understanding the needs of his different consumer segments and developing appropriate marketing strategies for each. It is also useful for the marketer in developing an understanding of how consumers respond to the various marketing stimuli, which he provides in terms of the product, price, promotion and place. A consumer’s decision to purchase a product is influenced by a number of variables.
Man is a many faceted, complex psychological being. His consumer behavior is influenced by his motives, perceptions, attitudes and learning. Each of these psychological factors provides a unique mental framework for each consumer within which he makes his purchase decisions.Culture is the most pervasive influence on our lives and influences all aspects of our behavior; consumers operate within the cultural framework of their society and purchase only those products which fit in with their cultural norms. Within each culture there exist many sub-cultures comprising distinct nationality groups, religious groups, racial groups, geographic groups that have their own unique values and life-style.ReferencesKotler, Philip (2002), Marketing Management, Prentice-Hall Private Limited, London2.
Hitt, Michael A, (2001), Strategic Management: Competitiveness and globalization, 4th ed., Thomson Learning.3. Srivastava, R.M. (1999). Strategic Planning: Formulation Of Corporate Strategy (Texts and Cases) 1st ed., Macmillan Limited.
4. Hamel,G, Collaborate with your Competitors and Win, Harvard Business review,67,1,1989,133-9.CHAPTER FOUR LITERATURE REVIEWINTRODUCTIONA study has been made about consumer , products target market, promotional methods, targeted consumers decision making influences etc.
These are the standard formulae applicable in the market development systems. It gives the information on consumer behavior and market ups and downs. Academic journals present all the latest data and ongoing market situations with wider focus on the present business situations. Adequate research is made in each and every subject by the subject authors, and further after getting the final figures, these are presented in the journals.Subjectwise referencing can be monitored and general marketing situation –how the purchaser will go through different situations before purchasing the product.
We have arrived at the situation to understand as to how a consumer actually arrives at the decision to purchase a specific product or brand out of the so many available in the market.A consumer receives stimuli from the environment and the specifics of the marketing strategies of different products and services, and responds to these stimuli in terms of either buying or not buying the product. In between the stage of receiving the stimuli and responding to it, the consumer goes through the process of making his decision.DECISIONA decision is the selection of an alternative out of the several number of alternatives available. It is only when there are two or more alternatives available that there is the need to make a choice.
In the field of consumer behavior, there is situation in which the consumer has to take a purchase decision where there is a choice available.PROCESS OF DECISION-MAKINGThe most basic and important requirement for the marketer is to understand how consumers make choices. Generally speaking—human beings are usually quite rational and make systematic use of information available to them. People consider the implications of their actions before they decide to engage or not to engage in a given behavior.Thus, making a decision is a rational and conscious process in which the consumer evaluates each of the available alternatives to select the best amongst them. Each decision he makes involves an elaborate mental thought process, a degree of active reasoning, though on the surface it may not always seem to be so. This may be because over a period of time he has taken certain decisions, so many times that they now seem to be made almost automatically but that is not true all.
The degree of active reasoning that is undertaken by the consumer in his process of decision-making are:I) Involvement: When a product is perceived to be of great personal importance to the customer, the level of involvement in making the decision is likely to be very high. The consumer is likely to spend a great deal of time before arriving at the final decision.ii) Differentiation: When the consumer perceives that the various alternatives which are available are very different from one another in terms of their features and benefits offered, he is likely to spend more time in gathering information about and evaluating these different features.iii) Time Pressure: When one is under pressure to make a decision quickly, he cannot afford to spend a long time finding out about the various products or brands. He would probably buy whatever is readily available.Consumer behavior is a process and purchase is only one stage in that process. There are many underlying influences ranging from internal motivations and attitudes to social and external influences of many kindsTYPES OF PURCHASE DECISION BEHAVIOURIt has become quite clear that consumer buying behavior varies with the type of buying decision.
The buying behaviors are:i) Routinised response behavior: This occurs when the consumer already has some experience of buying and using the product. He is familiar with the various brands available and the attributes of each and has well established criteria for selecting his own brand. Consumers do not give much thought or time when buying such products and already have a preferred brand. The degree of involvement in buying such products is low. Marketers dealing in products involving routinised response behavior must ensure the satisfaction of existing customers by maintaining consistent quality, service and value.ii) Limited Problem Solving: In this type of buying behavior, the consumer is familiar with the product and the various brands available, but has no established brand preference. The consumer would like to gather additional information about the brands to arrive at his brand decision.
iii) Extensive Problem Solving: Extensive problem solving occurs when the consumer is encountering a new product category. He needs information on both the product category as well as the various brands available in it, this kind of decision is by far the most complex. The marketing strategy for such buying behavior must be such that it facilitates the consumer’s information gathering and learning process about the product category and his own brand.SUMMARYThe marketer must know who are his customers and how do they arrive at the decision to purchase or not to purchase a product, so that he can design an effective strategy. Thus, companies are particularly interested in the consumer decision-making process.A decision refers to the selection of a particular alternative out of the several available alternatives. The marketer’s task is to study the buyer’s behavior at each stage and understand what influences are operating.
This simple model becomes increasingly complex, as the complexity of the decision-making process increases. Three distinct types of buying decision behavior can be identified ranging from the rather simplified routinised response behavior to the increasingly complex limited problem solving and extensive problem solving. The complexity of a decision also increases depending upon the number of people involved in making the decision.ReferencesMeier, Gerald M,: Leading Issues In Economic Development, Oxford University Press New York,19842. Galbraith J, Strategic Implementation: The Role of Structure and Process of Modern Trade, St.
Paul, Minnesota, 19783. Cascio, W.F., Fundamentals of Free Trade, McGraw-Hill Book Company, New York,19924. Purecell J.,Boxall P., Marketing Management, Plagrave, Macmillan, New York,2003CHAPTER FIVE CONCLUSIONS AND RECOMMENDATIONSMarketers rarely rely on only one promotion method.
They make use of two or more methods to accomplish promotion and marketing objectives. When a firm makes use of more than one promotion method for one product, the promotion methods used constitute the promotion mix for that product. Promotion function being linked with the ever changing market environment is a dynamic function. The promotion mix, therefore, acquires the dimension of dynamism and varies from product to product and over a period of time Quite similar to the problems faced by a marketer in the determination of the optimal marketing mix are the problems faced in the determination of the promotion mix. The task involved is rather more complex due to cross-substitutability of the various promotion methods thereby making the measurement of promotional effectiveness more difficult.
Notwithstanding these difficulties, factors as mentioned below act as the major determinants of the promotion mix:I Type of product2 Nature of Market3 Stage of product in its life-cycle4 Available budget and5 Company policy.These determinants are briefly discussed.Type of Product: In terms of the promotion task involved the type of product is the major influence on the promotion-mix. Goods with newspaper advertising playing only the limited role of keeping the public informed about the company’s activities and accomplishments. Publicity however, to the extent it projects the desired image of the company plays a more important role.
Nature of Market: The locational characteristics of the customers, intensity of competition in the market place and the requirements of wholesalers and retailers influence the promotion mix relating to the product in their own way. For example, if the target audience of a consumer product is both large as well as widely dispersed in different parts of the country, advertising and sales promotions emerge to be both more effective and economical promotional methods than the others. That is why advertising and sales promotions are so dominant among consumer goods companiesStage in the Product Life Cycle: The promotion mix changes with the movement of the product from one stage to the other in its life-cycle.The Available Budget: Each method of promotion has certain costs associated with it. The level at which each promotion method is to be used and the selection of the promotion mix is dependant on the promotion budget of the firm. It needs to be emphasized here that for the promotion function to be effective the minimum threshold level must always be exceeded.Company Policy: In the ultimate analysis an aggregate, consideration of the above four determinants clothed in the company’s own marketing and promotion policy determines the mix. Important factors here include the conviction of the top management in the role of promotion and its various components, the product market strategy, and the type of corporate image it wants to project.
MODELS OF BUYER RECOMMENDATIONConsumer behavior is a process and purchase is only one stage in that process. There are many underlying influences ranging from internal motivations and attitudes to social and external influences of many kinds. Having explained the consumer decision- making process, we move our attention to the process of consumer or buyer behavior on which the whole subject stands:I) Input: The input to the customer decision process is provided by distinct types of stimuli. Of these two types of stimuli are provided by the marketer in the form of physical, tangible product characteristics known as significative stimuli, and intangible, perceptual product characteristics known as symbolic stimuli.II) Perceptual and learning constructs: These constructs are composed of psychologicalvariables such as motives, attitudes, perceptions which influence the consumer’sdecision process. The consumer receives the stimuli and interprets it.
The two factors that may influence his interpretation are stimulus ambiguity and perceptual bias. Stimulus ambiguity occurs when the consumer is not sure about the meaning of the stimulus that he has received and how it may influence his response. Perceptual bias occurs when he distorts the information he receives to fit his established needs or experiences. The manner in which the consumer interprets the stimuli leads him to the stage of brand comprehension.
This refers to the consumer’s understanding and overall rating of the brand. If the consumer rates it high, it leads him to have confidence in it and eventually to the purchase decision.iii) Output: The purchase decision is the output. If after using the product, the consumer is satisfied with it, this will reinforce his positive attitude and purchase intent about the product and brand. Also, the positive attitude makes the consumer more attentive to the product/brands stimuli and further increases his brand comprehension.If the consumer is dissatisfied with experience of using the product/brand, it will trigger off a reaction of negative attitude, low attention to the product stimuli, poor brand comprehension and negative intention to purchase.iv) Exogenous or external variables: These are not directly a part of the decision making process.
But they are important to the extent that they influence the consumer. These exogenous variables vary from one consumer to another and include: consumer personality traits, social class, importance of the purchase, financial status etc.CONCLUSION SUMMARYA major social trend which deserves mention here is that of urbanization which is reflected in the growing number of cities and increasing percentage of population living in them. Lack of employment opportunities at the village level, and the general lure of the big cities has resulted in a massive influx of people from villages into cities.
Another important social characteristic is the stratification of society into various socio-economic classes. Both these social characteristics have important implication for a marketer in terms of what products to sell, to whom, and the manner in which their distribution should be organized.Europe is a vast continent populated by many million people. Its unique feature is its diversity of religions, languages, social customs, regional characteristics, which is both a boon and a bane for the marketer: boon because there is tremendous scope for a wide variety of products and services to be successfully marketed and a bane because the marketer often need to adapt his marketing strategy to suit different tastes and values.No doubt the urban areas with their concentration of numbers and market potential are the priority target markets, but a company like Wal-Mart which wants to ensure its future survival must start making inroads into the rural market as well.References1. Beaumont,P.
B., Applied Microeconomics for Decision Making, Sage Publications, London,19932. Bean, R. Salesmanship and sales Management, Croom Helm, London,19993. Kaplan , P.
L., Advertising management, McGraw-Hill, New York,19974. Smith, B.D. Customer inceptions management, Bristol Publishers, London,1996