consumer behavioursilvia cacho-elizondo1 session 5 consumer behaviour & marketing strategy...

Consumer Behaviour

Silvia Cacho-Elizondo

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Session 5

Consumer Behaviour & Marketing Strategy

November 21, 2005

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Agenda

Review Consumer Behaviour & Marketing Strategy Terry’s Case Study

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Learning Objectif

Analyze the interaction between marketing strategy

and the insights provided by consumer behaviour research

ReviewCulture & Lyfestyles

Team conclusion

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Psychographic Segmentation Schemes

AIO (activities, interests & opinions)

Cohort Analysis (age groups)

PRIZM (regional lifestyles) Value-based approach (VALS)

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A research and consulting tool

Built by consumer futurist Arnold Mitchell in the 1970s

It was developed from the works of Riesman and Maslow for whom the strongest motivations are first linked to fundamental needs

In 1989, VALS was redefined to maximize its ability to predict consumer behaviour. A team of experts from SRI International, Stanford University and Berkeley University determined that consumers should be segmented on the basis of enduring personality traits rather than social values that change overtime

VALS Framework

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Segments Features

Innovators

Successful, sophisticated, take charge people with high self- esteem. Very active consumers, seek challenges.

characterized by variety. their purchases reflect cultivated tastes for upscale and niche market.

ThinkersMature,satisfied,comfortable, reflective and well educated people. Actively seek out information. Conservative,practical consumers. Look for durability, functionality and value in the products.

Achievers

Goal-oriented lifestyles and a deep commitment to career and family. Consensus, predictability, stability over risk,intimacy and self-discovery. Active consumer.Interested in time saving devices

Experiencers

Young,enthusiastic and impulsive consumers. Seek variety,excitement, savoring the new and the risky. Spend high proportion of their income on fashion, entertainment and socializing.

The VALS Segments

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Segment Features

Believers

Conservative, conventional people with concrete beliefs based on traditional, established codes such as moral codes. Predictable consumers. Choose familiar products and established brands.

Strivers

Motivated by achievement. Concerned about the opinions and approval of others. Active and impulsive consumers.

Like stylish product.

Makers

Motivated by self-expression. Practical people who have constructive skills and value self-sufficiency.

Have a Suspicious of new ideas and large institutions such as big business.

Survivors

Do not show a strong primary motivation. Cautious consumers .focus on meeting needs rather than fullfilling desires. Loyalty to favorite brands, Especially, if they can purchase them at a discount.

The VALS Segments

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Lifestyles ResearchForces

Identification of consumer segments

More comprehensive than demographics, behavioral and socioeconomic measures alone

Weaknesses It does not consider

segment membership mobility over time

Weak predictive power of new patterns

Limited reliability and transparence of measurement methods

The link between consumer research and

marketing strategy

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Strategy

The choices a company has to do

in order to attain its goals

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What constitutes a winning marketing strategy ?

Prof Michael Porter of Harvard argues that

“a company doesn’t really have a strategy if it performs the same activities as its competitors, only a little better. It is just operationally more effective”

Being operationally excellent is not the same as having a robust strategy

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Types of strategies CostDifferentiation (specialization or niche) Volume Prix Technology Human Resources Relational

The main objectif of these strategies is to build “demand” and therefore, “profits” for the company

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Nine ways to build demand Products

MARKETS Existing Modified New

Existing customer

Market penetration

Product Modification

New product development

New geographic

al areas

Geographical

Expansion

Offer and sell modify products

to new geographical

markets

Design new products to prospects in

new geographic

areas

New type of

customers

Segment invasion

Offer and sell modified

products to new types of

customers

Diversification

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Marketing strategy is too frequently associated or stereotyped as the outcome of mechanical application of traditional analytic frameworks and techniques

(SWOT, portfolio analysis, scenario analysis etc.) to highly standardized situations (growth market, mature markets, etc)

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Swot Analysis

Strengths Weaknesses Opportunities Threats

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Portfolio Analysis & Strategic Business Units

The boston consulting group box (BCG box)

Stars: high-growth, high-share produts

Cash cow: low-growth,high-share established products

Question marks: low-share products in high-growth markets

Dogs: low-growth, low-share products

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Strategic Alliances & Relationships

Firms

Relationships

Client / Suppliers

Competitors

Market Relationships

Transactions Competition

M & A Vertical Integration

Concentration

Cooperation Vertical Partnership

Strategic Alliance

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Consumer Research & Strategy

A choice implies a decision … A decision implies an action

Consumer research collect and analyse information that help

managers make better decisions

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Questions to guide the information gathering needs

What type of information do you regularly get? What types of special studies do you request? What information would you want daily, weekly,

monthly, yearly… What presse support would you like to see

regularly? What types of data-analysis programs would

you like to use? What would be the most helpful improvements in

the company’s marketing information system?

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Types of Information needed

Demographic, EconomicLifestyles,

TechnologicalPolitical/regulatory

Sales and market shareOrders and back ordersCostsCustomer profitability by

customer, product, segment, channel, order size and geography

Other infomation

Consumer Information

Collaborator Information

Competitor Information

Macro-environment

Company Environment

Task environment

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Consumer Research & Strategy

Emotions + / -

Behaviour On /off line

Thoughts / Attitudes

Marketing Strategies

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Marketing Strategy: a quick outlook

It specifies a target market and a related marketing mix

and also a relational approach

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EconomyTargetProduct

Promotion Price

Place

Technology

Economy

Society

CompetitionRegulation

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EconomyTargetProduct(customer needs & wants)

Promotion(communication)

Price(cost to the consumer)

Place(convenience)

PlanningAnalysis

ImplementationControl

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Marketing Management Analysis

The company analyze its markets and marketing environment. SWOT

PlanningThrough strategic planning the company decides what it wants to do with each business unit

ImplementationThe company turns strategic and marketing plans into actions.

ControlThe company measures and evaluates the results of marketing plans.

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The core of Marketing Strategy

Market Segmentation Targeting Product Positioning Communication model

“Competence in strategy is the sine qua non of the marketing manager.

Yet even among well-schooled and experienced managers, strategy failure

rates remain uncomfortable high” Dale Fodness, Journal of Business Strategy,

2005

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Thinking strategically about Marketing

Thinking strategies: The use of critical thinking techniques to improve creative problem-solving skills

Strategic Decision-making: Principles and techniques to ensure production and implementation of the best quality strategy

Strategic Competences: The skills that make up strategic thinking

Communication strategy: The techniques to reveal and share the substance rather than the process of marketing strategy

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Components of Marketing ROI

Market performance

Operational Performance

Profit performance

Product awarenessMarket shareCustomer satisfactionCustomer retentionService quality

MarginInventory turnoverCapacity utilization

Returns on assetsEarnings per sharePrice-Earnings ratio

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idea generation

ideas for a new product are thought up

qualitative

| research

product screening focus

the ideas are assessed and

the most promising one selected

groups

| concept development

the idea is turned into a finished product

| prototype development

a model of the product is made

|

feasibility study

quantitative

the product is assessed to determine if it is viable

research |

focus test marketing

groups

market research is carried out to determine consumer

reaction

| launch

the product is introduced to

the market

Product development process

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Case Study Presentation

Terry’s GroupDesigning novelty

chocolates

consumer behavioursilvia cacho-elizondo1 session 5 consumer behaviour & marketing strategy...

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