Competitor Analysis: A Recap

 The Red Oceans

 Industry structure and Five forces
 Identify and target competitors
 Assess their current position and strategy
 Anticipate competitive response
 Formulate your strategy
 Barco case
 Hyper-competition
 The Blue Oceans
Session Four: Customer Analysis
 Consumer Decision Making Process
 Segmentation, Targeting, Positioning
Model of Consumer Behavior
Marketing
Stimuli

Filters: Environment and

Consumer Characteristics
Consumer’s
Mind

Consumer’s
Response
Aggregate Consumer Analysis
 Trends in consumer demographics; geographic,
and economic changes
 Consumer Buying Trends
 Focus: Self, family, community
 Consumption Values: Price, value, quality
 Scarce Resources: Money, Time
 Environmental factors: Cultural values and differences
Cultural Factors

Visual of
Visual of dirty Visual of clean
detergent
clothes clothes
brand

1 2 3
Consumer Decision Making
Process
BLACK BOX
Need Recognition

Information Search

Evaluation of Alternatives

Product Choice

Post-purchase/consumption
Consumer Behavior Exercise
Findings from your research
 Buying a product
 Under $5 (mundane)
 Over $100 (utilitarian)
 Over $100 (self-expressive)
Consumer Behavior Exercise
How would these products be used?
 Using a product
 Under $5 (mundane)
 Over $100 (utilitarian)
 Over $100 (self-expressive)
Three Broad Types of Decision Modes
 Utilitarian
 Price/performance driven, most rational
 Driven by functionality
 Know  (Feel)  Do
 Mundane
 Low involvement, habitual
 Driven by availability
 Do  Know  (Feel)
 Self-Expressive
 Emotional, affective
 Driven by relevance to self
 Feel  Do  (Know)
Different Product Types
Consumer Buying Process different for different
product types
 Low price product decision: Post-it
 Utilitarian product decision: Buick
 Self-identity product decision: Molson
A. Consumer Decision Making:
The Rational Consumer
 Perfectly defines his/her problem
 Knows all relevant alternatives
 Identifies all relevant criteria
 Accurately weighs all the criteria according to their
goals
 Accurately assesses each alternative on each criterion
 Accurately calculates and chooses the alternative
with the highest value
In other words, consumers are efficient utility maximizers . . .
Decision Making:
The Real Consumer
 Is emotional as well as rational
 Forgets
 Takes shortcuts
 Gets swayed by the context and the
environment

In other words, consumers are boundedly rational

 Identifying Value Motives

Customers can’t (or won’t) always tell you which value motives they
are trying to fulfill.

Manifest motives: Latent motives:

It will be large & It will demonstrate

comfortable that I am successful

It will suggest I am
It will keep me safe wealthy

It performs well, is It will help me look

high in quality powerful
Understanding Consumer Need
 Motivation:
 Physiological, Safety, Social, Esteem and
Self-actualization
 Value-laddering (qualitative research)
 Kelvinator refrigerator
 The most critical step, and a difficult step
Consumer Decision Making
 Importance of understanding what
consumers want.
 What is the need being addressed in this
Hallmark ad?
Why People Do What They Do
Six Principles of Persuasion
Reciprocity
Scarcity
Authority
Consistency
Liking
Consensus
Information Acquisition
 Bottom-Up:
 New information, trying to make sense. (For example,
learning new language).
 Ask others, search the web, go to the store
 Top-Down:
 Guided by existing knowledge in memory. (For
example, failing to notice the typograpical error such as
the one you just passed).
 Recall from past experience
Level of Involvement
 Situational Factors: Occasion, Time
Pressure, Goal (Hedonic vs. Utilitarian), …
 Individual Differences: Need for cognition,
Age, Gender, …
 Product Factors: Cost/investment,
Search/experience/credence good, …
Evaluation of Alternatives
• Evoked set of brands (consideration set)
Brands available Consideration Set Choice
(>20 brands) (7 + 2 brands)
(1 brand)

Average consideration set size is 3 – 7: Beer 6.9, Bar soap 3.7, Cookies
4.9, Shampoo 6.1

• Set of Evaluative Criteria

Evaluation of Alternatives
 Customers value brands based on
 importance of benefits
 delivery of benefits

 Value to customer = (Importance of benefit)

*(Delivery of benefit)
Decision Processes

Handling
Size Sportiness
Headroom Roominess Preference
Mileage Economy
Repair Cost

Abstraction Process Aggregation Process

Aggregation Process: Example
Attribute Ratings .

Weight Mazda Ford Escort

Sportiness 10 8 6

Roominess 6 4 6

Economy 4 5 8
Linear Model
Lexicographic Model
Conjunctive Model
Elimination By Aspects Model
Some Points to Note
 Compensatory vs. Non-compensatory
attributes
 Optimizing vs. Satisficing
 Choosing vs. Rejecting
 Attribute based vs. Alternative based
Choosing and Thereafter
 What clinches the ‘deal’?
 How do they ‘feel’ about the vendor?
 Quality of service
 Was it fun and enjoyable?
 Do they feel valued?
 Experience: Unique and memorable
 My hair dresser in Barcelona
Post-Purchase Behavior

Consumer Expectations

Product’s Perceived
Performance

Dissatisfied? Satisfied? Delighted? Relationship or Transactional?

What type of Relationship – Marriage, Fling? Servant or Partner?
Choosing a Graduate
Program/School
 What method best describes your decision
process?
Role of Consumers in today’s
world
 Immense information access
 Consumer power – can voice their
dissatisfaction to great effect: United breaks
guitars!
 Conversation and connection with other
consumers – social media
 Consumer co-creation: Nike ID, Coke
Freestyle
 Conscience and social causes: Green,
organic, fair trade, traceability
Business Market: Overview

 Compared to consumers, business

markets have
 Fewer numbers but larger volumes
 Geographical concentration
 More complex and formalized decision process
Business Decision Process
 Users: Actual users of the product –
Functional units
 Influencers: Experts and opinion leaders –
MIS
 Buyers: Negotiate with vendors, place the
order – Admin
 Deciders: Power to select vendors – Dept
heads, Finance
Business Decision Process
 Role of marketer more complex
 Multiple people in the organization to be
managed: Different roles (& motivations) of
different people
 Buying process formalized and bureaucratic
 Final choice often on price: ‘Justification’ for
buying needed

‘No one got fired for buying IBM!’

Business buying behavior
 How marketers could be more effective:
 Build strong relationships
 Manage all involved in decision-making
 Provide superior service: delivery, spares,
maintenance
 Make decision easy: offer strong brand
Recap: Consumer
 Consumer Behavior exercise
 Consumer Decision Making Process
 Need (or Problem Recognition)
 Information Search
 Evaluation of Alternatives
 Purchase
 Post-Purchase Experience
 B2B