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TABLE OF CONTENT

CONTENT PAGE

1.0 LEARNING ISSUES 2

2.0 INTRODUCTION 7

3.0 DEFINING ISSUES 8

4.0 ANALYSIS OF ISSUES 9

5.0 RECOMMENDATIONS 12

6.0 CONCLUSION 13

REFERENCES
MARKETING

“Why Consumer Buy or Don’t Buy”

1.0 LEARNING ISSUES

WHAT IS MARKETING?

Marketing is the process by which companies create customer interest in products or services. It

generates the strategy that underlies sales techniques, business communication, and business

development.[1] It is an integrated process through which companies build strong customer relationships

and create value for their customers and for themselves.[1]

Marketing is used to identify the customer, to keep the customer, and to satisfy the customer. With the

customer as the focus of its activities, it can be concluded that marketing management is one of the major

components of business management. Marketing evolved to meet the stasis in developing new markets

caused by mature markets and overcapacities in the last 2-3 centuries. The adoption of marketing

strategies requires businesses to shift their focus from production to the perceived needs and wants of

their customers as the means of staying profitable.

The term marketing concept holds that achieving organizational goals depends on knowing the needs and

wants of target markets and delivering the desired satisfactions.[2] It proposes that in order to satisfy its

organizational objectives, an organization should anticipate the needs and wants of consumers and

satisfy these more effectively than competitors

COMSUMER BEHAVIOR

Marketing is closely related to Consumer behavior.

Consumer behavior is the study of when, why, how, and where people do or do not buy product. It blends

elements from psychology, sociology, social anthropology and economics. It attempts to understand the

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buyer decision making process, both individually and in groups. It studies characteristics of individual

consumers such as demographics and behavioural variables in an attempt to understand people's wants.

It also tries to assess influences on the consumer from groups such as family, friends, reference groups,

and society in general.

Customer behaviour study is based on consumer buying behaviour, with the customer playing the three

distinct roles of user, payer and buyer. Relationship marketing is an influential asset for customer

behaviour analysis as it has a keen interest in the re-discovery of the true meaning of marketing through

the re-affirmation of the importance of the customer or buyer. A greater importance is also placed on

consumer retention, customer relationship management, personalisation, customisation and one-to-one

marketing. Social functions can be categorized into social choice and welfare functions.

Factors influencing consumer behavior

Consumer purchases are influenced strongly by or there are four factors.

i. Cultural Factor ii. Social Factor iii. Personal Factor iv. Psychological Factor.

i. Cultural Factor :-

Cultural factor divided into three sub factors (i) Culture (ii) Sub Culture (iii) Social Class

• Culture:-

o The set of basic values perceptions, wants, and behaviours learned by a member of

society from family and other important institutions. Culture is the most basic cause of a

person's wants and behaviour. Every group or society has a culture, and cultural

influences on buying behaviour may vary greatly from country to country.

• Sub Culture :-

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 A group of people with shared value systems based on common life experiences

and situations.

 Each culture contains smaller sub cultures a group of people with shared value

system based on common life experiences and situations. Sub culture includes

nationalities, religions, racial group and geographic regions. Many sub culture

make up important market segments and marketers often design products.

• Social Class:-

 Almost every society has some form of social structure, social classes

are society's relatively permanent and ordered divisions whose members

share similar values, interests and behaviour.

ii. Social Factors :-

• A consumer's behaviour also is influenced by social factors, such as the (i) Groups (ii) Family

(iii)Roles and status

o Groups :-

 Two or more people who interact to accomplish individual or mutual goals.

 A person's behavious is influenced by many small groups. Groups that

have a direct influence and to which a person belongs are called

membership groups.

 Some are primary groups includes family, friends, neighbours and

coworkers. Some are secondary groups, which are more formal and

have less regular interaction. These includes organizations like religious

groups, professional association and trade unions.

o Family:-

 Family members can strongly influence buyer behaviour. The family is the most

important consumer buying organization society and it has been researched

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extensively. Marketers are interested in the roles, and influence of the husband,

wife and children on the purchase of different products and services.

o Roles and Status :-

 A person belongs to many groups, family, clubs, organizations.

 The person's position in each group can be defined in terms of both role and

status.

 For example. M & "X" plays the role of father, in his family he plays the role of

husband, in his company, he plays the role of manager, etc. A Role consists of

the activities people are expected to perform according to the persons around

them.

iii. Personal Factors :-

It includes

i) Age and life cycle stage (ii) Occupation (iii) Economic situation (iv) Life Style (v) Personality and self

concept.

• Age and Life cycle Stage:-

o People changes the goods and services they buy over their lifetimes. Tastes in food,

clothes, furniture, and recreation are often age related. Buying is also shaped by the

stage of the family life cycle.

• Occupation :-

o A person's occupation affects the goods and services bought. Blue collar workers tend to

buy more rugged work clothes, whereas white-collar workers buy more business suits. A

Co. can even specialize in making products needed by a given occupational group. Thus,

computer software companies will design different products for brand managers,

accountants, engineers, lawyers, and doctors.

• Economic situation :-

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o A person's economic situation will affect product choice

• Life Style :-

o Life Style is a person's Pattern of living, understanding these forces involves measuring

consumer's major AIO dimensions.

o i.e. activities (Work, hobbies, shopping, support etc) interest (Food, fashion, family

recreation) and opinions (about themselves, Business, Products)

• Personality and Self concept :-

o Each person's distinct personality influence his or her buying behaviour. Personality

refers to the unique psychological characteristics that lead to relatively consistent and

lasting responses to one's own environment.

iv. Psychological Factors :-

• It includes these Factors.

i) Motivation (ii) Perception (iii) Learning (iv) Beliefs and attitudes

· Motivation :-

• Motive (drive) a need that is sufficiently pressing to direct the person to seek satisfaction of

the need

Perception :-

• The process by which people select, Organize, and interpret information to form a meaningful

picture of the world.

· Learning:-

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• Changes in an individuals behaviour arising from experience.

· Beliefs and attitudes :-

• Belief is a descriptive thought that a person holds about something

• Attitude, a Person's consistently favourable or unfavourable evaluations, feelings, and

tendencies towards an object or idea

The learning issues

The learning issues which are further discussed in the report are summarized as follows :-

1) The environmental factors that influence consumer behavior

2) The buyers characteristics, decision process and the level of need of the consumer

3) The buyers response to the factors above i.e. the behavior of the buyers decision and how

consumers make decisions

2.0 INTRODUCTION

MDD Distribution Sdn. Bhd, a manufacturer of Mister Potato snack food has recently introduced a

additional new range of product i.e. the Baked potato chips and the Reduced Fat potato chip. Mr

Rosyam, the new Product Manager is wondering what could be the factors that influence consumer

behavior in general and in particular snack food purchases.

In understanding the factors influencing the consumer behavior, there are five factors that Mr. Rosyam

needs to understand on the Consumer Behavior. The factors are defined in the next few sections.

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3.0 DEFINING THE ISSUES

Below is a tabulated representation of the Black Box of Consumer Behaviour

BLACK BOX MODEL

ENVIRONMENTAL FACTORS BUYER'S BLACK BOX


BUYER'S
Marketing Environmental Buyer RESPONSE
Decision Process
Stimuli Stimuli Characteristics
Problem
Economic Attitudes recognition
Product choice
Product Technological Motivation Information search
Brand choice
Price Political Perceptions Alternative
Dealer choice
Place Cultural Personality evaluation
Purchase timing
Promotion Demographic Lifestyle Purchase decision
Purchase amount
Natural Knowledge Post-purchase
behaviour

The black box model shows the interaction of stimuli, consumer characteristics, decision process and

consumer responses. It can be distinguished between interpersonal stimuli (between people) or

intrapersonal stimuli (within people). The black box model is related to the black box theory of

behaviourism, where the focus is not set on the processes inside a consumer, but the relation between

the stimuli and the response of the consumer. The marketing stimuli are planned and processed by the

companies, whereas the environmental stimuli are given by social factors, based on the economical,

political and cultural circumstances of a society. The buyer’s black box contains the buyer characteristics

and the decision process, which determines the buyer’s response.

The black box model considers the buyers response as a result of a conscious, rational decision process,

in which it is assumed that the buyer has recognized the problem. However, in reality many decisions are

not made in awareness of a determined problem by the consumer.

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4.0 ANALYSIS OF THE ISSUES

1) MARKETING STIMULI

Product

Historically, the thinking was: a good product will sell itself. However there are no bad products

anymore in today's highly competitive markets. Plus there are many laws giving customers the right to

send back products that he perceives as bad. Therefore the question on product has become: does

the organization create what its intended customers want? The new snack food product needs to

portray the current trend or need of the customer (consumer) i.e. healthy food. By having reduced fat

and baked potatos using the finest selected potatos will in a way play a role in influencing the

customer to be interested in the product.

Price

How much are the intended customers willing to pay? Here we decide on a pricing strategy - do not

let it just happen! Even if you decide not to ask (enough) money for a product or service, you must

realize that this is a conscious decision and forms part of the pricing strategy. Although competing on

price is as old as mankind, the consumer is often still sensitive for price discounts and special offers.

Price has also an irrational side: something that is expensive must be good. Permanently competing

on price is for many companies not a very sensible approach. The price of the new snack food

product needs to be strategized in such a way to attract the purchase of the product e.g. Lower price

than other competitive products (within Mr. Potatos’s own product line or with other brands) or higher

price if Rosyam want the product to be of an exclusive nature (within Mr. Potatos’s own product line

or with other brands). In other words Rosyam should regard aspects of the pricing strategies

(premium, basic or value for money).

Place

Available at the right place, at the right time, in the right quantities? Some of the recent major

changes in business have come about by changing Place. Think of the Internet and mobile

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telephones. The new Mr. Potato product must be available in all stores that sell Mr. Potato Products.

Strategy of distribution must be taken into account (e.g. Intensive, selective or exclusive). New places

of high visitation or places that has become the new place of gathering (e.g. Hang-out areas) where

Mr. Potato Products were not sold previously are to be considered also. This is another strategy to

pave the way to infiltrate new markets of consumers.

Promotion

(How) are the chosen target groups informed or educated about the organization and its products?

This includes all the weapons in the marketing armory - advertising, selling, sales promotions, Direct

Marketing, Public Relations, etc. While the other three P's have lost much of their meanings in today's

markets, Promotion has become the most important P to focus on. Rosyam must ensure that the

advertisement of the new flavours are incoporated in all advertising billboards, flyers, etc of Mr.

Potato advertisements.

2) ENVIRONMENTAL STIMULI

The world is full of stimuli that can attract our attention through various senses. The environmental

stimulus is everything in our environment that has the potential to be perceived. The stimuli to healthy

food is a major plus to the influence of the new product of Mr. Potato. Low fat products has been a

growing interest to the public in the previous and current time.

3) BUYER CHARACTERISTICS

Buyers ranging from individual consumers to organization consumers are distinct from one another

based on consuming behavior. Such behaviors can vary from the different influences, and

comprehending the consumers’ purchasing characteristics or market segmentation, can identify the

plethora of strategic marketing tools to implement. Due to the amount of time and costs that research

requires to isolate and locate their consumers or business market, an organization can ensure their
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marketing strategy is appropriate by practicing target marketing or questioning center participants,

center participants’ influence, environments, organizations, and interpersonal characteristics.

Concisely, target marketing defines the relationship between a consumer and product based on

market segmentation, which is the dividing of the buyers’ market into categorical segments, such as

needs or characteristics; then the process of evaluating segments based on attractiveness, which in

turn, subsequently determines the appropriate position to competitively perform for the benefit of the

target consumer. All of these strategies are interpreted as a basis for marketing research and as

stated in my previous response, can determine the appropriate strategic plan and collective budget.

Mr Potato snack food product has been in the market.

4) DECISION PROCESS

Buyer decision processes are the decision making processes undertaken by consumers in regard to

a potential market transaction before, during, and after the purchase of a product or service. More

generally, decision making is the cognitive process of selecting a course of action from among

multiple alternatives. Common examples include shopping and deciding what to eat. Decision making

is said to be a psychological construct. This means that although we can never "see" a decision, we

can infer from observable behaviour that a decision has been made. Therefore we conclude that a

psychological event that we call "decision making" has occurred. It is a construction that imputes

commitment to action. That is, based on observable actions, we assume that people have made a

commitment to effect the action.

5) BUYER'S RESPONSE

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The buyer’s personal and psychological characteristics and the decision process influence buyer’s

responses such as product selection, pricing acceptance, seller and service choice, reactions to

product promotion, purchase location, amount, and timing

5.0 RECOMMENDATIONS

i. Customers like best quality product on any price, so the company should add latest

technology to their products. Provide information on what positive qualities that the product

has and most importantly deliver what has been mention about the product (quality control).

ii. Customer’s behavior always looks for the best value that money can buy. They demand for

an affordable price for the product and value packages where they can feel that they are

getting more than the product itself.

iii. The company should give more emphasis not just on advertising but also the target group

where the advertisements are to be directed. This will provide a better control in creating

market (or consumer) awareness and to position or sometimes re-position the brand image in

the minds of consumers (product branding or re branding). Using classical conditioning

techniques in the advertising are highly recommended.

iv. The company should definitely keep a close eye on (be aware of) competitors strategies

(direct or indirect threat of their products) and changes in the market environment.

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7.0 CONCLUSION

The report has shown the consumer buying behavior regarding snack food. Since the consumer

buying behavior is the important factor to forecast the sales of any product in a particular area. So

company should keep close eye on the market situation. Yet, customers are price sensitive, but

the changing market trend (environment) and customer views and preferences show that

customers are also quality sensitive. They prefer quality products, good services, product

convenience and better end result from consuming product.

REFERENCES

1. Kotler, Philip; Gary Armstrong, Veronica Wong, John Saunders (2008). "Marketing defined".
Principles of marketing (5th ed.). p.7. http://books.google.com/books. Retrieved 2010-08-30.

2. Kotler, Philip; Gary Armstrong, Veronica Wong, John Saunders (2008). "Marketing defined".
Principles of marketing (5th ed.). p.17. http://books.google.com/books Retrieved 2010-08-30.

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