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Topic 2: Understanding Consumers and their behavior The buyer decision process - describes the process your customer goes through before they buy your product. 1. Problem/need recognition – First/most important step. A purchase cannot take place without the recognition of the need. The need may have been triggered by internal stimuli (such as hunger or thirst) or external stimuli (such as advertising or word of mouth). 2. Information search – Recognized the problem/need and searches information about it. Customer may rely on print, visual, online media or word of mouth for obtaining information. 3. Evaluation of alternatives - A factor that heavily influences this stage is the customer’s attitude. Involvement is another factor that influences the evaluation process. For example, if the customer’s attitude is positive and involvement is high, then they will evaluate a number of companies or brands; but if it is low, only one company or brand will be evaluated. 4. Purchase decisions - The penultimate stage is where the purchase takes place. Philip Kotler (2009) states that the final purchase decision may be ‘disrupted’ by two factors: negative feedback from other customers and the level of motivation to accept the feedback. For example, having gone through the previous three stages, a customer chooses to buy a new telescope. However, because his very good friend, a keen astronomer, gives him negative feedback, he will then be bound to change his preference. Furthermore, the decision may be disrupted due to unforeseen situations such as a sudden job loss or relocation. 5. Post Purchase Behavior - customers will compare products with their previous expectations and will be either satisfied or dissatisfied. Critical in retaining customers!

High involvement purchase – Big differences between brands. Risk is higher, usually a financial risk such as a house or a car. I Low involvement purchase – Usually commodities, does not require thinking, impulse buy. If high involvement, then consumer endures variety seeking behaviour.

Maslow Hierarchy of needs – Maslow (1943) stated that people are motivated to achieve certain needs. When one need is fulfilled a person seeks to fulfill the next one, and so on. One must satisfy lower level basic needs before progressing on to meet higher level growth needs. Once these needs have been reasonably satisfied, one may be able to reach the highest-level called self-actualization.

Topic 3: Market research and gaining consumer insights Developing a research plan – (Red Bull case study)  Determining specific information needs.  Gathering secondary information  Primary data collection o Qualitative research (focus groups, in-depth interviews. Etc) o Quantitative research (questionnaires/surveys ‘to measure.’)

Methods of survey –  Door to door/shopping mall intercepts/ in office surveys.  Internet/online surveys. Telephone interviews.  Mail surveys.

Topic 4: Market segmentation, targeting and positioning Markets consist of buyers, and buyers differ in one or more ways: wants, resources, locations, buying attitudes and buying practices. They will vary in preference of buying channels: ordering by mail or phone, via the Internet or from a physical location. Each buyer is potentially a separate market. However, most sellers do not find complete segmentation worthwhile. Instead they look for broad classes of buyers who differ in their product needs or buying responses.

Market segmentation Dividing a market into distinct groups of buyers with different needs, characteristics or behavior who might require separate products or marketing mixes.

Market targeting Evaluating each market segments attractiveness and selecting one or more of the market segments to enter.

Market positioning Identifying and creating a clear, distinctive and desirable place relative to competition in the minds of the consumers; and formulating competitive positioning and marketing mix strategies in this context.

Bases for segmenting consumer markets – Demographic segmentation Dividing the market into groups based on demographic variables such as age, sex, family size, family life cycle, income, occupation, education, religion and nationality. Demographic factors are the most popular bases for segmenting customer groups. Consumer needs, wants and usage rates often vary closely with demographic variables; also they are easier to measure than most other variables. a) Age and life-cycle Consumer needs and wants change with age, so some companies use age and life-cycle segmentation which divides a market based on age and life-cycle groups (p.347).