The Marketing Mix and 4 PsUnderstanding How to Position Your Market Offering

What is marketing? The definition that many marketers learn as they start out in the industry is:Putting the right product in the right place, at the right price, at the right time.

It's simple! You just need to create a product that a particularly group of people want, put it on sale some place that those same people visit regularly, and price it at a level which matches the value they feel they get out of it; and do all that at a time they want to buy. Then you've got it made!There's a lot of truth in this idea. However, a lot of hard work needs to go into finding out what customers want, and identifying where they do their shopping. Then you need to figure out how to produce the item at a price that represents value to them, and get it all to come together at the critical time.But if you get just one element wrong, it can spell disaster. You could be left promoting a car with amazing fuel-economy in a country where fuel is very cheap; or publishing a textbook after the start of the new school year, or selling an item at a price that's too high – or too low – to attract the people you're targeting.The marketing mix is a good place to start when you are thinking through your plans for a product or service, and it helps you avoid these kinds of mistakes.Understanding the ToolThe marketing mix and the 4 Ps of marketing are often used as synonyms for each other. In fact, they are not necessarily the same thing."Marketing mix" is a general phrase used to describe the different kinds of choices organizations have to make in the whole process of bringing a product or service to market. The 4 Ps is one way – probably the best-known way – of defining the marketing mix, and was first expressed in 1960 by E J McCarthy.The 4Ps are: Product (or Service)

Place

Price

Promotion

A good way to understand the 4 Ps is by the questions that you need to ask to define you marketing mix. Here are some questions that will help you understand and define each of the four elements:Product/Service What does the customer want from the product/service? What needs does it satisfy?

What features does it have to meet these needs?

Are there any features you've missed out?

Are you including costly features that the customer won't actually use?

How and where will the customer use it?

What does it look like? How will customers experience it?

What size(s), color(s), and so on, should it be?

What is it to be called?

How is it branded?

How is it differentiated versus your competitors?

What is the most it can cost to provide, and still be sold sufficiently profitably? (See also Price, below).

Place Where do buyers look for your product or service?

If they look in a store, what kind? A specialist boutique or in a supermarket, or both? Or online? Or direct, via a catalogue?

How can you access the right distribution channels?

Do you need to use a sales force? Or attend trade fairs? Or make online submissions? Or send samples to catalogue companies?

What do you competitors do, and how can you learn from that and/or differentiate?

Price What is the value of the product or service to the buyer?

Are there established price points for products or services in this area?

Is the customer price sensitive? Will a small decrease in price gain you extra market share? Or will a small increase be indiscernible, and so gain you extra profit margin?

What discounts should be offered to trade customers, or to other specific segments of your market?

How will your price compare with your competitors?

Promotion Where and when can you get across your marketing messages to your target market?

Will you reach your audience by advertising in the press, or on TV, or radio, or on billboards? By using direct marketing mailshot? Through PR? On the Internet?

When is the best time to promote? Is there seasonality in the market? Are there any wider environmental issues that suggest or dictate the timing of your market launch, or the timing of subsequent promotions?

How do your competitors do their promotions? And how does that influence your choice of promotional activity?

The 4Ps model is just one of many marketing mix lists that have been developed over the years. And, whilst the questions we have listed above are key, they are just a subset of the detailed probing that may be required to optimize your marketing mix.Amongst the other marketing mix models have been developed over the years is Boom and Bitner's 7Ps, sometimes called the extended marketing mix, which include the first 4 Ps, plus people, processes and physical layout decisions.Another marketing mix approach is Lauterborn's 4Cs, which presents the elements of the marketing mix from the buyer's, rather than the seller's, perspective. It is made up of Customer needs and wants (the equivalent of product), Cost (price), Convenience (place) and Communication (promotion). In this article, we focus on the 4Ps model as it is the most well-recognized, and contains the core elements of a good marketing mix.Using the 4Ps Marketing Mix ModelThe marketing mix model can be used to help you decide how to take a new offer to market. It can also be used to test your existing marketing strategy. Whether you are considering a new or existing offer, follow the steps below help you define and improve your marketing mix.1. Start by identifying the product or service that you want to analyze.

2. Now go through and answer the 4Ps questions – as defined in detail above.

3. Try asking "why" and "what if" questions too, to challenge your offer. For example, ask why your target audience needs a particular feature. What if you drop your price by 5%? What if you offer more colors? Why sell through wholesalers rather than direct channels? What if you improve PR rather than rely on TV advertising?

Tip:Check through your answers to make sure they are based on sound knowledge and facts. If there are doubts about your assumptions, identify any market research, or facts and figures that you may need to gather.

4. Once you have a well-defined marketing mix, try "testing" the overall offer from the customer's perspective, by asking customer focused questions:

1. Does it meet their needs? (product)

2. Will they find it where they shop? (place)

3. Will they consider it's priced favorably? (price)

4. And will the marketing communications reach them? (promotion)5. Keep on asking questions and making changes to your mix until you are satisfied that you have

optimized your marketing mix, given the information and facts and figures you have available.

6. Review you marketing mix regularly, as some elements will need to change as the product or service, and its market, grow, mature and adapt in an ever-changing competitive environment.

Key Points:The marketing mix helps you define the marketing elements for successfully positioning your market offer.One of the best known models is the Four Ps, which helps you define your marketing options in terms of product, place, price and promotion. Use the model when you are planning a new venture, or evaluating an existing offer, to optimize the impact with your target market.

Value Chain AnalysisAchieving Excellence in the Things That Really Matter

Value should be added at each link.© iStockphoto/melhi

Value Chain Analysis is a useful tool for working out how you can create the greatest possible value for your customers.In business, we're paid to take raw inputs, and to "add value" to them by turning them into something of worth to other people. This is easy to see in manufacturing, where the manufacturer "adds value" by taking a raw material of little use to the end-user (for example, wood pulp) and converting it into something that people are prepared to pay money for (e.g. paper). But this idea is just as important in service industries, where people use inputs of time, knowledge, equipment and systems to create services of real value to the person being served – the customer.And remember that your customers aren't necessarily outside your organization: they can be your bosses, your co-workers, or the people who depend on you for what you do.Now, this is really important: In most cases, the more value you create, the more people will be prepared to pay a good price for your product or service, and the more they will they keep on buying from you. On a personal level, if you add a lot of value to your team, you will excel in what you do. You should then expect to be rewarded in line with your contribution.So how do you find out where you, your team or your company can create value?This is where the "Value Chain Analysis" tool is useful. Value Chain Analysis helps you identify the ways in which you create value for your customers, and then helps you think through how you can maximize this value: whether through superb products, great services, or jobs well done.

Note:This article looks at a simple approach to using value chains. A more structured approach was developed by Harvard Business School professor Michael Porter (also creator of the 5 Forces tool) in his book "Competitive Advantage". You can find out more about this version by clicking here.

How to Use the Tool:

Value Chain Analysis is a three-step process:

1. Activity Analysis: First, you identify the activities you undertake to deliver your product or service;

2. Value Analysis: Second, for each activity, you think through what you would do to add the greatest value for your customer; and

3. Evaluation and Planning: Thirdly, you evaluate whether it is worth making changes, and then plan for action.

We follow these through one-by-one:-Step 1 – Activity AnalysisThe first step to take is to brainstorm the activities that you, your team or your company undertakes that in some way contribute towards your customer's experience.At an organizational level, this will include the step-by-step business processes that you use to serve the customer. These will include marketing of your products or services; sales and order-taking; operational processes; delivery; support; and so on (this may also involve many other steps or processes specific to your industry).At a personal or team level, it will involve the step-by-step flow of work that you carry out.But this will also involve other things as well. For example: How you recruit people with the skills to give the best service.

How you motivate yourself or your team to perform well.

How you keep up-to-date with the most efficient and effective techniques.

How you select and develop the technologies that give you the edge.

How you get feedback from your customer on how you're doing, and how you can improve further.

Tip:If you carry out the brainstorming behind the Activity Analysis and Value Analysis with your team, you'll almost certainly get a richer answer than if you do it on your own. You may also find that your team is more likely to "buy into" any conclusions you draw from the exercise. After all, the conclusions will be as much theirs as yours.

Once you've brainstormed the activities which add value for your company, list them. A useful way of doing this is to lay them out as a simplified flow chart running down the page – this gives a good visual representation of your "value chain". You can see an example of this in Figure 1 below.Step 2 – Value AnalysisNow, for each activity you've identified, list the "Value Factors" – the things that your customers' value in the way that each activity is conducted.For example, if you're thinking about a telephone order-taking process, your customer will value a quick answer to his or her call; a polite manner; efficient taking of order details; fast and knowledgeable answering of questions; and an efficient and quick resolution to any problems that arise.If you're thinking about delivery of a professional service, your customer will most likely value an accurate and correct solution; a solution based on completely up-to-date information; a solution that is clearly expressed and easily actionable; and so on.Next to each activity you've identified, write down these Value Factors.And next to these, write down what needs to be done or changed to provide great value for each Value Factor.Step 3 – Evaluate Changes and Plan for Action

By the time you've completed your Value Analysis, you'll probably be fired up for action: you'll have generated plenty of ideas for increasing the value you deliver to customers. And if you could deliver all of these, your service could be fabulous!Now be a bit careful at this stage: you could easily fritter your energy away on a hundred different jobs, and never really complete any of them.So firstly, pick out the quick, easy, cheap wins – go for some of these, as this will improve your team's spirits no end.Then screen the more difficult changes. Some may be impractical. Others will deliver only marginal improvements, but at great cost. Drop these.And then prioritize the remaining tasks and plan to tackle them in an achievable, step-by-step way that delivers steady improvement at the same time that it keeps your team's enthusiasm going.

Tip:If you have a strong enough relationship with one or more of your customers, it may be worth presenting your conclusions to them and getting their feedback – this is a good way of either confirming that you're right or of getting a better understanding of what they really want.

Example:Lakshmi is a software development manager for a software house. She and her team handle short software enhancements for many clients. As part of a team development day, she and her team use Value Chain Analysis to think about how they can deliver excellent service to their clients.During the Activity Analysis part of the session, they identify the following activities that create value for clients: Order taking

Enhancement specification

Scheduling

Software development

Programmer testing

Secondary testing

Delivery

Support

Lakshmi also identifies the following non-client-facing activities as being important: Recruitment: Choosing people who will work well with the team. Training: Helping new team members become effective as quickly as possible, and helping team

members learn about new software, techniques and technologies as they are developed.Lakshmi marks these out in a vertical value chain on her whiteboard (you can see the first three client-facing activities shown in the "Step 1: Activity Analysis" box in Figure 1 below):

Next, she and her team focus on the Order Taking process, and identify the factors that will give the greatest value to customers as part of this process. They identify the following Value Factors: Giving a quick answer to incoming phone calls.

Having a good knowledge of the customer's business, situation and system, so that they do not waste the customer's time with unnecessary explanation.

Asking all the right questions, and getting a full and accurate understanding of the customer's needs.

Explaining the development process to the customer and managing his or her expectations as to the likely timetable for delivery.

You can see these in the "Value Factors" column of figure 1.They then look at what they need to do to deliver the maximum value to the customer. These things are shown in the Figure 1's "Changes Needed" column.They then look at what they need to do to deliver the maximum value to the customer. These things are shown in the Figure 1's "Changes Needed" column.They then do the same for all other processes.Once all brainstorming is complete, Lakshmi and her team may be able to identify quick wins, reject low yield or high cost options, and agree their priorities for implementation.

Key Points:Value Chain Analysis is a useful way of thinking through the ways in which you deliver value to your customers, and reviewing all of the things you can do to maximize that value.It takes place as a three stage process: Activity Analysis, where you identify the activities that contribute to the delivery of your

product or service. Value Analysis, where you identify the things that your customers value in the way you conduct

each activity, and then work out the changes that are needed. Evaluation and Planning, where you decide what changes to make and plan how you will make

them.By using Value Chain Analysis and by following it through to action, you can achieve excellence in the things that really matter to your customers.

Porter's Value ChainUnderstanding How Value is created within Organizations

Porter's Value Chain.How does your organization create value? How do you change business inputs into business outputs in such a way that they have a greater value than the original cost of creating those outputs?This isn't just a dry question: it's a matter of fundamental importance to companies, because it addresses the economic logic of why the organization exists in the first place.Manufacturing companies create value by acquiring raw materials and using them to produce something useful. Retailers bring together a range of products and present them in a way that's convenient to customers, sometimes supported by services such as fitting rooms or personal shopper advice. And insurance companies offer policies to customers that are underwritten by larger re-insurance policies. Here, they're packaging these larger policies in a customer-friendly way, and distributing them to a mass audience.The value that's created and captured by a company is the profit margin:Value Created and Captured – Cost of Creating that Value = MarginThe more value an organization creates, the more profitable it is likely to be. And when you provide more value to your customers, you build competitive advantage.Understanding how your company creates value, and looking for ways to add more value, are critical elements in developing a competitive strategy. Michael Porter discussed this in his influential 1985 book "Competitive Advantage," in which he first introduced the concept of the value chain.A value chain is a set of activities that an organization carries out to create value for its customers. Porter proposed a general-purpose value chain that companies can use to examine all of their activities, and see how they're connected. The way in which value chain activities are performed determines costs and affects profits, so this tool can help you understand the sources of value for your organization.Elements in Porter's Value ChainRather than looking at departments or accounting cost types, Porter's Value Chain focuses on systems, and how inputs are changed into the outputs purchased by consumers. Using this viewpoint, Porter described a chain of activities common to all businesses, and he divided them into primary and support activities, as shown below.

Primary ActivitiesPrimary activities relate directly to the physical creation, sale, maintenance and support of a product or service. They consist of the following: Inbound logistics – These are all the processes related to receiving, storing, and distributing

inputs internally. Your supplier relationships are a key factor in creating value here. Operations – These are the transformation activities that change inputs into outputs that are

sold to customers. Here, your operational systems create value. Outbound logistics – These activities deliver your product or service to your customer. These

are things like collection, storage, and distribution systems, and they may be internal or external to your organization.

Marketing and sales – These are the processes you use to persuade clients to purchase from you instead of your competitors. The benefits you offer, and how well you communicate them, are sources of value here.

Service – These are the activities related to maintaining the value of your product or service to your customers, once it's been purchased.

Support ActivitiesThese activities support the primary functions above. In our diagram, the dotted lines show that each support, or secondary, activity can play a role in each primary activity. For example, procurement supports operations with certain activities, but it also supports marketing and sales with other activities. Procurement (purchasing) – This is what the organization does to get the resources it needs to

operate. This includes finding vendors and negotiating best prices. Human resource management – This is how well a company recruits, hires, trains, motivates,

rewards, and retains its workers. People are a significant source of value, so businesses can create a clear advantage with good HR practices.

Technological development – These activities relate to managing and processing information, as well as protecting a company's knowledge base. Minimizing information technology costs, staying current with technological advances, and maintaining technical excellence are sources of value creation.

Infrastructure – These are a company's support systems, and the functions that allow it to maintain daily operations. Accounting, legal, administrative, and general management are examples of necessary infrastructure that businesses can use to their advantage.

Companies use these primary and support activities as "building blocks" to create a valuable product or service.Using Porter's Value ChainTo identify and understand your company's value chain, follow these steps.Step 1 – Identify subactivities for each primary activity.For each primary activity, determine which specific subactivities create value. There are three different types of subactivities: Direct activities create value by themselves. For example, in a book publisher's marketing and

sales activity, direct subactivities include making sales calls to bookstores, advertising, and selling online.

Indirect activities allow direct activities to run smoothly. For the book publisher's sales and marketing activity, indirect subactivities include managing the sales force and keeping customer records.

Quality assurance activities ensure that direct and indirect activities meet the necessary standards. For the book publisher's sales and marketing activity, this might include proofreading and editing advertisements.

Step 2 – Identify subactivities for each support activity.For each of the Human Resource Management, Technology Development and Procurement support activities, determine the subactivities that create value within each primary activity. For example, consider how human resource management adds value to inbound logistics, operations, outbound logistics, and so on. As in Step 1, look for direct, indirect, and quality assurance subactivities.Then identify the various value-creating subactivities in your company's infrastructure. These will generally be cross-functional in nature, rather than specific to each primary activity. Again, look for direct, indirect, and quality assurance activities.Step 3 – Identify links.Find the connections between all of the value activities you've identified. This will take time, but the links are key to increasing competitive advantage from the value chain framework. For example, there's a link between developing the sales force (an HR investment) and sales volumes. There's another link between order turnaround times, and service phone calls from frustrated customers waiting for deliveries.Step 4 – Look for Opportunities to Increase Value.Review each of the subactivities and links that you've identified, and think about how you can change or enhance it to maximize the value you offer to customers (customers of support activities can internal as well as external).

Tip 1:Your organization's value chain should reflect its overall generic business strategies. So, when deciding how to improve your value chain, be clear about whether you're trying to set yourself apart from your competitors or simply have a lower cost base.Tip 2:You'll inevitably end up with a huge list of changes. See our article onprioritization if you're struggling to choose the most important changes to make.Tip 3:This looks at the idea of a value chain from a broad, organizational viewpoint. Our separate article

on value chain analysis takes different look at this topic, and uses an approach that is also useful at a team or individual level. Clickhere to explore this.

Key PointsPorter's Value Chain is a useful strategic management tool.It works by breaking an organization's activities down into strategically relevant pieces, so that you can see a fuller picture of the cost drivers and sources of differentiation, and then make changes appropriately.

The Boston MatrixFocusing effort to give the greatest returnsRelated variants: The BCG Matrix, the Growth-Share Matrix and Portfolio Analysis

If you enjoy vivid visual metaphors for business, then you'll love the Boston Matrix!Also called the BCG Matrix, it provides a useful way of screening the opportunities open to you, and helps you think about where you can best allocate your resources to maximize profit in the future.

Note:The origin of the Boston Matrix lies with the Boston Consulting Group in the early 1970s. It was devised as a clear and simple method for helping corporations decide which parts of their business they should allocate their available cash to. Following the credit crunch, this is newly important in some sectors because of the limited availability of credit.However, the Boston Matrix is also a good tool for thinking about where to apply other finite resources: people, time and equipment.

Understanding the ModelMarket Share and Market GrowthTo understand the Boston Matrix, you need to understand how market share and market growth interrelate.Market share is the percentage of the total market that is being serviced by your company, measured either in revenue terms or unit volume terms. The higher your market share, the higher the proportion of the market you control.The Boston Matrix assumes that if you enjoy a high market share you will be making money. (This assumption is based on the idea that you will have been in the market long enough to have learned how to be profitable, and will be enjoying scale economies that give you an advantage).The question it asks is, "Should you be investing additional resources into a particular product line just because it is making you money?" The answer is, "not necessarily."This is where market growth comes into play. Market growth is used as a measure of a market's attractiveness. Markets experiencing high growth are ones where the total market is expanding, meaning that it’s relatively easy for businesses to grow their profits, even if their market share remains stable.

By contrast, competition in low growth markets is often bitter, and while you might have high market share now, it may be hard to retain that market share without aggressive discounting. This makes low growth markets less attractive.Understanding the MatrixThe Boston Matrix categorizes opportunities into four groups, shown on axes of Market Growth and Market Share:

These groups are explained below:Dogs: Low Market Share / Low Market GrowthIn these areas, your market presence is weak, so it's going to take a lot of hard work to get noticed. You won't enjoy the scale economies of the larger players, so it's going to be difficult to make a profit. And because market growth is low, it's going to take a lot of hard work to improve the situation.Cash Cows:High Market Share / Low Market GrowthHere, you're well-established, so it's easier to get attention and exploit new opportunities. However it's only worth expending a certain amount of effort, because the market isn't growing, and your opportunities are limited.Stars:High Market Share / High Market GrowthHere you're well-established, and growth is exciting! There should be some strong opportunities here, and you should work hard to realize them.Question Marks (Problem Child):Low Market Share / High Market GrowthThese are the opportunities no one knows what to do with. They aren't generating much revenue right now because you don't have a large market share. But, they are in high growth markets so the potential to make money is there.Question Marks might become Stars and eventual Cash Cows, but they could just as easily absorb effort with little return. These opportunities need serious thought as to whether increased investment is warranted.How to Use the Tool:To use the Boston Matrix to look at your opportunities, first download our freeworksheet, and then use the following steps:

Step One: Plot your products on the worksheet according to their market share and market growth.Step Two: Classify them into one of the four categories. If a product seems to fall right on one of the lines, take a hard look at the situation and rely on past performance to help you decide which side you will place it.

Tip1:There’s nothing “magical” about the position of the lines between the quadrants. There may be very little real difference, for example, between a Problem Child with a market share of 49%, and a Star with a market share of 51%. It’s also not necessarily true that the line should run through the 50% position. As ever, use your common sense.Tip 2:A similar (and equally powerful) tool is the Action Priority Matrix, which helps you pick projects which legitimately give you the quickest and highest value returns. By using the BCG Matrix and Action Priority Matrix together, you get the best of both worlds!

Step Three: Determine what you will do with each product/product line. There are typically four different strategies to apply: Build Market Share: Make further investments (for example, to maintain Star status, or to turn a

Question Mark into a Star). Hold: Maintain the status quo (do nothing). Harvest: Reduce the investment (enjoy positive cash flow and maximize profits from a Star or a

Cash Cow). Divest: For example, get rid of the Dogs, and use the capital you receive to invest in Stars and

Question Marks.

Tip 3:From a personal perspective, you can evaluate the opportunities open to you by substituting the dimension of Market Share with one of Professional Skills. Plot the options open to you on the personal version of the BCG Matrix, and take action appropriately.

Key PointsThe Boston Matrix is an effective tool for quickly assessing the options open to you, both on a corporate and personal basis.With its easily understood classification into Dogs, Cash Cows, Question Marks and Stars, it helps you quickly and simply screen the opportunities open to you, you – and identify where best to invest the finite amount of money, time, and effort you have available.

Product Life CycleManaging Your Product to Maximize Success

We're regularly bombarded by advertisements telling us about exciting new features of existing products: a car that now has SatNav as standard, perhaps; a brand of shampoo with a new, improved formula; or a snack that now contains even more delicious fruit.Yet, at the same time, if we go to the shops, there are hundreds of products which are seemingly not advertised at all.So why are some established products regularly given make-overs and generous new marketing budgets, while others are apparently left to sell themselves?One answer is that the marketers are acting according to where the item is in its product lifecycle.Understanding the ModelJust as people go through infancy, childhood, adult hood and old age, so too do products and brands. And just as we swing from being needy, to being overall contributors to our families or to society, and then back to being needy again over the course of our lives, so – in effect – do products.The four phases usually used to describe a product's life cycle are: Introduction

Growth

Maturity

Decline

Tip:Sometimes a pre-launch Development phase is also included, but as the main application of the idea of the product lifecycle is to guide the type of marketing used, we'll not consider it here.

During the earlier parts of the product lifecycle, the cost of promoting the product may be larger than the revenue it brings in. However, for successful products that are marketed effectively, the product will become increasingly profitable during the Growth and Maturity phases. A typical lifecycle for a well-managed product is shown in Figure 1, below.

As products moves from lifecycle phase to lifecycle phase, the elements of themarketing mix used to promote them change.

During the Introduction phase, there will most-likely be heavy promotional and advertising activity designed to raise awareness of the new product, and to seek sales amongst "early adopters" – adventurous consumers who like to own cutting edge products.

Depending on the nature of the product, it will either have a premium price so that its development costs can be recouped quickly (this is the approach used with most high-tech products) or be priced low to encourage widespread adoption – what marketers call "market penetration".

Moving on to the Growth phase, promotional activities will tend to focus on expanding the market for the product into new segments – usually either geographic or demographic – and supporting this by expanding the product family, for example with new flavors or sizes (cartons of fruit drinks specifically sized for kids lunch boxes, for instance).

By the time a product reaches its Maturity phase, the company producing it needs to reap considerable rewards for the time and money spent developing the product so far.

The product's features may continue to be refreshed from time to time, and there will still be some promotion to differentiate the product from the competition and increase market share. However, the marketing activity and expenditure levels may be much lower than earlier on in the lifecycle.

Finally, once the product begins to Decline, marketing support may be withdrawn completely, and sales will entirely be the result of the product's residual reputation amongst a small market sector. (Elderly people, for example, may go on buying brands that they started using forty or even fifty years earlier.)

By this stage, the most important decision that needs to be made is when to take the product off the market completely. It can be tempting to leave a declining product on the market – especially if it served the company well in its time, and there's a certain sentimental attachment to it. However, it is essential that the product is not allowed to start costing its producer money, and this can easily happen if production costs increase as volumes drop.

More importantly, the old product's very existence can absorb managers' time and energy, and can discourage or delay the development of a new, potentially more profitable replacement product.

Controlling the Length of Lifecycle PhasesThe duration of each lifecycle phase can be controlled, to a certain extent. This is particularly true of the Maturity phase: this is the most important one to extend from a financial point of view because this is the period when the product is at its most profitable.Typical tactics designed to extend the maturity phase include: Increasing the amount of the product used by existing customers (this is why food producers

issue recipe cards that use their ingredients).

Adding or updating product features.

Price promotions to attract customers who use a rival brand.

Advertising to encourage trial of the product people who don't use this category of product at all.

Limitations of the ModelOne criticism of the product lifecycle concept is that it in no way predicts the length of each phase, and nor can it be used to forecast sales with any accuracy.

Another is that the model can be self-fulfilling: If a marketer decides that a product is approaching its Decline phase, and so stops actively marketing it, the product's sales will almost inevitably decline. This might not have happened had it been managed as if it was still in its Maturity phase.Furthermore, it's possible that by improving a product aggressively on an ongoing basis, growth can continue for a long time. Just think of the market for PCs in the 1980s and 1990s: Successful producers launched new and better products month after month after month.Successful marketers need to draw on a wide range of data and analysis to help them decide which phase a product is in, and whether that phase can be extended. And while this model is useful and thought-provoking, they need to base their decisions on a good understanding of the facts.

Key PointsThe Product Lifecycle model describes how products go through the four phases of Introduction, Growth, Maturity and Decline after they are launched. Each phase requires a different mix of marketing activities to maximize the lifetime profitability of the product. In general, this involves early investment to help secure revenue later on.While the model does not predict sales, when used alongside carefully analyzed sales figures and forecasts, it provides a useful guide to marketing tactics that may be most appropriate at a given time.

Porter’s Five ForcesAssessing the Balance of Power in a Business Situation

The Porter's Five Forces tool is a simple but powerful tool for understanding where power lies in a business situation. This is useful, because it helps you understand both the strength of your current competitive position, and the strength of a position you're considering moving into.With a clear understanding of where power lies, you can take fair advantage of a situation of strength, improve a situation of weakness, and avoid taking wrong steps. This makes it an important part of your planning toolkit.Conventionally, the tool is used to identify whether new products, services or businesses have the potential to be profitable. However it can be very illuminating when used to understand the balance of power in other situations.Understanding the Tool:Five Forces Analysis assumes that there are five important forces that determine competitive power in a business situation. These are:1. Supplier Power: Here you assess how easy it is for suppliers to drive up prices. This is driven by

the number of suppliers of each key input, the uniqueness of their product or service, their strength and control over you, the cost of switching from one to another, and so on. The fewer the supplier choices you have, and the more you need suppliers' help, the more powerful your suppliers are.

2. Buyer Power: Here you ask yourself how easy it is for buyers to drive prices down. Again, this is driven by the number of buyers, the importance of each individual buyer to your business, the cost to them of switching from your products and services to those of someone else, and so on. If you deal with few, powerful buyers, then they are often able to dictate terms to you.

3. Competitive Rivalry: What is important here is the number and capability of your competitors. If you have many competitors, and they offer equally attractive products and services, then you'll most likely have little power in the situation, because suppliers and buyers will go

elsewhere if they don't get a good deal from you. On the other hand, if no-one else can do what you do, then you can often have tremendous strength.

4. Threat of Substitution: This is affected by the ability of your customers to find a different way of doing what you do – for example, if you supply a unique software product that automates an important process, people may substitute by doing the process manually or by outsourcing it. If substitution is easy and substitution is viable, then this weakens your power.

5. Threat of New Entry: Power is also affected by the ability of people to enter your market. If it costs little in time or money to enter your market and compete effectively, if there are few economies of scale in place, or if you have little protection for your key technologies, then new competitors can quickly enter your market and weaken your position. If you have strong and durable barriers to entry, then you can preserve a favorable position and take fair advantage of it.

These forces can be neatly brought together in a diagram like the one in figure 1 below:Figure 1 - Porter's Five Forces

Using the Tool:

Brainstorm the relevant factors for your market or situation, and then check against the factors listed for the force in the diagram above.Then, mark the key factors on the diagram, and summarize the size and scale of the force on the diagram. An easy way of doing this is to use, for example, a single "+" sign for a force moderately in your favor, or "--" for a force strongly against you (you can see this in the example below).

Then look at the situation you find using this analysis and think through how it affects you. Bear in mind that few situations are perfect; however looking at things in this way helps you think through what you could change to increase your power with respect to each force. What’s more, if you find yourself in a structurally weak position, this tool helps you think about what you can do to move into a stronger one.

This tool was created by Harvard Business School professor, Michael Porter, to analyze the attractiveness and likely-profitability of an industry. Since publication, it has become one of the most important business strategy tools. The classic article which introduces it is "How Competitive Forces Shape Strategy" in Harvard Business Review 57, March – April 1979, pages 86-93.

Example:Martin Johnson is deciding whether to switch career and become a farmer – he's always loved the countryside, and wants to switch to a career where he's his own boss. He creates the following Five Forces Analysis as he thinks the situation through:Figure 2 - Porter's Five Forces Example - Buying a Farm

This worries him: The threat of new entry is quite high: if anyone looks as if they're making a sustained profit,

new competitors can come into the industry easily, reducing profits. Competitive rivalry is extremely high: if someone raises prices, they'll be quickly undercut.

Intense competition puts strong downward pressure on prices. Buyer Power is strong, again implying strong downward pressure on prices.

There is some threat of substitution.Unless he is able to find some way of changing this situation, this looks like a very tough industry to survive in. Maybe he'll need to specialize in a sector of the market that's protected from some of these forces, or find a related business that's in a stronger position.

Key Points:Porter's Five Forces Analysis is an important tool for assessing the potential for profitability in an industry. With a little adaptation, it is also useful as a way of assessing the balance of power in more general situations.It works by looking at the strength of five important forces that affect competition: Supplier Power: The power of suppliers to drive up the prices of your inputs. Buyer Power: The power of your customers to drive down your prices. Competitive Rivalry: The strength of competition in the industry. The Threat of Substitution: The extent to which different products and services can be used in

place of your own. The Threat of New Entry: The ease with which new competitors can enter the market if they

see that you are making good profits (and then drive your prices down).By thinking about how each force affects you, and by identifying the strength and direction of each force, you can quickly assess the strength of your position and your ability to make a sustained profit in the industry.You can then look at how you can affect each of the forces to move the balance of power more in your favor.

Consumer Behavior

Before understanding consumer behaviour let us first go through few more terminologies:

Who is a Consumer ?

Any individual who purchases goods and services from the market for his/her end-use is called a consumer.

In simpler words a consumer is one who consumes goods and services available in the market.

Example - Tom might purchase a tricycle for his son or Mike might buy a shirt for himself. In the above examples, both Tom and Mike are consumers.

What is consumer Interest ?

Every customer shows inclination towards particular products and services. Consumer interest is nothing but willingness of consumers to purchase products and services as per their taste, need and of course pocket.

Let us go through the following example:

Both Maria and Sandra went to the nearby shopping mall to buy dresses for themselves. The store manager showed them the best dresses available with him. Maria immediately purchased two dresses but Sandra returned home empty handed. The dresses were little too expensive for Sandra and she preferred simple and subtle designs as compared to designer wears available at the store.

In the above example Sandra and Maria had similar requirements but there was a huge difference in their taste, mind set and ability to spend.

What is Consumer Behaviour ?

Consumer Behaviour is a branch which deals with the various stages a consumer goes through before purchasing products or services for his end use.

Why do you think an individual buys a product ?

Need

Social Status

Gifting Purpose

Why do you think an individual does not buy a product ?

No requirement

Income/Budget/Financial constraints

Taste

When do you think consumers purchase products ?

Festive season

Birthday

Anniversary

Marriage or other special occasions

There are infact several factors which influence buying decision of a consumer ranging from psychological, social, economic and so on.

The study of consumer behaviour explains as to:

Why and why not a consumer buys a product ?

When a consumer buys a product ?

How a consumer buys a product ?

During Christmas, the buying tendencies of consumers increase as compared to other months. In the same way during Valentines week, individuals are often seen purchasing gifts for their partners. Fluctuations in the financial markets and recession decrease the buying capacity of individuals.

In a layman’s language consumer behaviour deals with the buying behaviour of individuals.

The main catalyst which triggers the buying decision of an individual is need for a particular product/service. Consumers purchase products and services as and when need arises.

According to Belch and Belch, whenever need arises; a consumer searches for several information which would help him in his purchase.

Following are the sources of information:

Personal Sources

Commercial Sources

Public Sources

Personal Experience

Perception also plays an important role in influencing the buying decision of consumers.

Buying decisions of consumers also depend on the following factors:

Messages, advertisements, promotional materials, a consumer goes through also called selective exposure.

Not all promotional materials and advertisements excite a consumer. A consumer does not pay attention to everything he sees. He is interested in only what he wants to see. Such behaviour is called selective attention.

Consumer interpretation refers to how an individual perceives a particular message.

A consumer would certainly buy something which appeals him the most. He would remember the most relevant and meaningful message also called as selective retention. He would obviously not remember something which has nothing to do with his need.

Stages in Consumer Decision Making Process

An individual who purchases products and services from the market for his/her own personal consumption is called as consumer.

To understand the complete process of consumer decision making, let us first go through the following example:

Tim went to a nearby retail store to buy a laptop for himself. The store manager showed him all the latest models and after few rounds of negotiations, Tim immediately selected one for himself.

In the above example Tim is the consumer and the laptop is the product which Tim wanted to purchase for his end-use.

Why do you think Tim went to the nearby store to purchase a new laptop ?

The answer is very simple. Tim needed a laptop. In other words it was actually Tim’s need to buy a laptop which took him to the store.

The Need to buy a laptop can be due to any of the following reasons:

His old laptop was giving him problems.

He wanted a new laptop to check his personal mails at home.

He wanted to gift a new laptop to his wife.

He needed a new laptop to start his own business.

The store manager showed Tim all the samples available with him and explained him the features and specifications of each model. This is called information. Tim before buying the laptop checked few other options as well. The information can come from various other sources such as newspaper, websites, magazines, advertisements, billboards etc.

This explains the consumer buying decision process.

A consumer goes through several stages before purchasing a product or service.

NEED↓

INFORMATION GATHERING/SEARCH↓

EVALUATION OF ALTERNATIVES↓

PURCHASE OF PRODUCT/SERVICE↓

POST PURCHASE EVALUATION

1. Step 1 - Need is the most important factor which leads to buying of products and services. Need infact is the catalyst which triggers the buying decision of individuals.

An individual who buys cold drink or a bottle of mineral water identifies his/her need as thirst. However in such cases steps such as information search and evaluation of alternatives are generally missing. These two steps are important when an individual purchases expensive products/services such as laptop, cars, mobile phones and so on.

2. Step 2 - When an individual recognizes his need for a particular product/service he tries to gather as much information as he can.

An individual can acquire information through any of the following sources:

Personal Sources - He might discuss his need with his friends, family members, co workers and other acquaintances.

Commercial sources - Advertisements, sales people (in Tim’s case it was the store manager), Packaging of a particular product in many cases prompt individuals to buy the same, Displays (Props, Mannequins etc)

Public sources - Newspaper, Radio, Magazine

Experiential sources - Individual’s own experience, prior handling of a particular product (Tim would definitely purchase a Dell laptop again if he had already used one)

3. Step 3 - The next step is to evaluate the various alternatives available in the market. An individual after gathering relevant information tries to choose the best option available as per his need, taste and pocket.

4. Step 4 - After going through all the above stages, customer finally purchases the product.5. Step 5 - The purchase of the product is followed by post purchase evaluation. Post purchase

evaluation refers to a customer’s analysis whether the product was useful to him or not, whether the product fulfilled his need or not?

Cultural Factors affecting Consumer Behaviour

Consumer behaviour deals with the study of buying behaviour of consumers. Consumer behaviour helps us understand why and why not an individual purchases goods and services from the market.

There are several factors which influence the buying decision of consumers, cultural factors being one of the most important factors.

What are Cultural Factors ?

Cultural factors comprise of set of values and ideologies of a particular community or group of individuals. It is the culture of an individual which decides the way he/she behaves. In simpler words, culture is nothing but values of an individual. What an individual learns from his parents and relatives as a child becomes his culture.

Example - In India, people still value joint family system and family ties. Children in India are conditioned to stay with their parents till they get married as compared to foreign countries where children are more independent and leave their parents once they start earning a living for themselves.

Cultural factors have a significant effect on an individual’s buying decision. Every individual has different sets of habits, beliefs and principles which he/she develops from his family status and background. What they see from their childhood becomes their culture.

Let us understand the influence of cultural factors on buying decision of individuals with the help of various examples.

Females staying in West Bengal or Assam would prefer buying sarees as compared to Westerns. Similarly a male consumer would prefer a Dhoti Kurta during auspicious ceremonies in Eastern India as this is what their culture is. Girls in South India wear skirts and blouses as compared to girls in north India who are more into Salwar Kameez.

Our culture says that we need to wear traditional attire on marriages and this is what we have been following since years.

People in North India prefer breads over rice which is a favorite with people in South India and East India.

Subcultures

Each culture further comprises of various subcultures such as religion, age, geographical location, gender (male/female), status etc.

Religion (Christianity, Hindu, Muslim, Sikhism, Jainism etc)

A Hindu bride wears red, maroon or a bright colour lehanga or saree whereas a Christian bride wears a white gown on her wedding day. It is against Hindu culture to wear white on auspicious occasions. Muslims on the other hand prefer to wear green on important occasions.

For Hindus eating beef is considered to be a sin whereas Muslims and Christians absolutely relish the same. Eating pork is against Muslim religion while Hindus do not mind eating it.

A sixty year old individual would not like something which is too bright and colorful. He would prefer something which is more sophisticated and simple. On the other hand a teenager would prefer funky dresses and loud colours.

In India widows are expected to wear whites. Widows wearing bright colours are treated with suspicion.

Status (Upper Class, Middle class and Lower Class)

People from upper class generally have a tendency to spend on luxurious items such as expensive gadgets, cars, dresses etc.You would hardly find an individual from a lower class spending money on high-end products. A person who finds it difficult to make ends meet would rather prefer spending on items necessary for survival. Individuals from middle class segment generally are more interested in buying products which would make their future secure.

Gender (Male/Female)

People generally make fun of males buying fairness creams as in our culture only females are expected to buy and use beauty products. Males are perceived to be strong and tough who look good just the way they are.

Social Factors affecting Consumer Behaviour

Consumer Behaviour is an effort to study and understand the buying tendencies of consumers for their end use.

Social factors play an essential role in influencing the buying decisions of consumers.

Human beings are social animals. We need people around to talk to and discuss various issues to reach to better solutions and ideas. We all live in a society and it is really important for individuals to adhere to the laws and regulations of society.

Social Factors influencing consumer buying decision can be classified as under:

Reference Groups

Immediate Family Members

Relatives

Role in the Society

Status in the society

1. Reference Groups

Every individual has some people around who influence him/her in any way. Reference groups comprise of people that individuals compare themselves with. Every individual knows some people in the society who become their idols in due course of time.

Co workers, family members, relatives, neighbours, friends, seniors at workplace often form reference groups.

Reference groups are generally of two types:

a. Primary Group - consists of individuals one interacts with on a regular basis.

Primary groups include:

Friends

Family Members

Relatives

Co Workers

All the above influence the buying decisions of consumers due to following reasons:

They have used the product or brand earlier.

They know what the product is all about. They have complete knowledge about the features and specifications of the product.

Tim wanted to purchase a laptop for himself. He went to the nearby store and purchased a Dell Laptop. The reason why he purchased a Dell Laptop was because all his friends were using the same model and were quite satisfied with the product. We tend to pick up products our friends recommend.

A married individual would show strong inclination towards buying products which would benefit not only him but also his family members as compared to a bachelor. Family plays an important role in influencing the buying decisions of individuals.

A consumer who has a wife and child at home would buy for them rather than spending on himself. An individual entering into marriage would be more interested in buying a house, car, household items, furniture and so on. When an individual gets married and starts a family, most of his buying decisions are taken by the entire family.

Every individual goes through the following stages and shows a different buying need in each stage:

Bachelorhood: Purchases Alcohol, Beer, Bike, Mobile Handsets (Spends Lavishly)

Newly Married: Tend to purchase a new house, car, household furnishings. (Spends sensibly)

Family with Children: Purchases products to secure his as well as his family’s future.

Empty nest (Children getting married)/Retirement/Old Age: Medicines, Health Products, and Necessary Items.

A Ford Car in the neighbourhood would prompt three more families to buy the same model.

b. Secondary Groups - Secondary groups share indirect relationship with the consumer. These groups are more formal and individuals do not interact with them on a regular basis, Example - Religious Associations, Political Parties, Clubs etc.

2. Role in the Society

Each individual plays a dual role in the society depending on the group he belongs to. An individual working as Chief Executive Officer with a reputed firm is also someone’s husband and father at home. The buying tendency of individuals depends on the role he plays in the society.

3. Social Status

An individual from an upper middle class would spend on luxurious items whereas an individual from middle to lower income group would buy items required for his/her survival.

Personal Factors affecting Consumer Behaviour

Consumer Behaviour helps us understand the buying tendencies and spending patterns of consumers. Not all individuals would prefer to buy similar products.

Consumer behaviour deals with as to why and why not an individual purchases particular products and services.

Personal Factors play an important role in affecting consumer buying behaviour.

1. Occupation

The occupation of an individual plays a significant role in influencing his/her buying decision. An individual’s nature of job has a direct influence on the products and brands he picks for himself/herself.

Tim was working with an organization as Chief Executive Officer while Jack, Tim’s friend now a retired professor went to a nearby school as a part time faculty. Tim always looked for premium brands which would go with his designation whereas Jack preferred brands which were not very expensive. Tim was really conscious about the clothes he wore, the perfume he used, the watch he wore whereas Jack never really bothered about all this.

That is the importance of one’s designation. As a CEO of an organization, it was really essential for Tim to wear something really elegant and unique for others to look up to him. A CEO or for that matter a senior professional can never afford to wear cheap labels and local brands to work.

An individual’s designation and his nature of work influence his buying decisions. You would never find a low level worker purchasing business suits, ties for himself. An individual working on the shop floor can’t afford to wear premium brands everyday to work.

College goers and students would prefer casuals as compared to professionals who would be more interested in buying formal shirts and trousers.

2. Age

Age and human lifecycle also influence the buying behaviour of consumers. Teenagers would be more interested in buying bright and loud colours as compared to a middle aged or elderly individual who would prefer decent and subtle designs.

A bachelor would prefer spending lavishly on items like beer, bikes, music, clothes, parties, clubs and so on. A young single would hardly be interested in buying a house, property, insurance policies, gold etc.An individual who has a family, on the other hand would be more interested in buying something which would benefit his family and make their future secure.

3. Economic Condition

The buying tendency of an individual is directly proportional to his income/earnings per month. How much an individual brings home decides how much he spends and on which products?

Individuals with high income would buy expensive and premium products as compared to individuals from middle and lower income group who would spend mostly on necessary items. You would hardly find an individual from a low income group spending money on designer clothes and watches. He would be more interested in buying grocery items or products necessary for his survival.

4. Lifestyle

Lifestyle, a term proposed by Austrian psychologist Alfred Adler in 1929, refers to the way an individual stays in the society. It is really important for some people to wear branded clothes whereas some individuals are really not brand conscious. An individual staying in a posh locality needs to maintain his status and image. An individual’s lifestyle is something to do with his style, attitude, perception, his social relations and immediate surroundings.

5. Personality

An individual’s personality also affects his buying behaviour. Every individual has his/her own characteristic personality traits which reflect in his/her buying behaviour.A fitness freak would always look for fitness equipments whereas a music lover would happily spend on musical instruments, CDs, concerts, musical shows etc.

Psychological Factors affecting Consumer Behaviour

Consumer Behaviour deals with the study of buying behaviour of consumers.

Let us understand the effect of psychological factors on consumer behaviour:

Motivation

Nancy went to a nearby restaurant and ordered pizza for herself.

Why did Nancy buy pizza ?

Answer - She was feeling hungry and wanted to eat something.

In the above example, Hunger was the motivating factor for Nancy to purchase pizza. There are several other factors which motivate individuals to purchase products and services. An individual who is thirsty would definitely not mind spending on soft drinks, packaged water, juice and so on. Recognition and self esteem also influence the buying decision of individuals.

Why do people wear branded clothes ?

Individuals prefer to spend on premium brands and unique merchandise for others to look up to them. Certain products become their status symbol and people know them by their choice of picking up products that are exclusive. An individual who wears a Tag Heuer watch would never purchase a local watch as this would be against his image.

Perception

What is Perception ?

What an individual thinks about a particular product or service is his/her perception towards the same. For someone a Dell Laptop might be the best laptop while for others it could be just one of the best brands available.

Individuals with the same needs might not purchase similar products due to difference in perception.

Catherine and Roselyn had a hectic day at work and thus wanted to have something while returning from work. Catherine ordered a large chicken pizza with French fries and coke while Roselyn preferred a baked vegetable sandwich. Though both Catherine and Roselyn had the same motivation (hunger), but the products they purchased were entirely different as Roselyn perceived pizza to be a calorie laden food. Individuals think differently and their perceptions do not match.

Individuals perceive similar situation differently due to difference in the way they interpret information.

There are three different processes which lead to difference in perception:

1. Selective Attention - Selective attention refers to the process where individuals pay attention to information that is of use to them or their immediate family members. An individual in a single day is exposed to numerous advertisements, billboards, hoardings etc but he is interested in only those which would benefit him in any way. He would not be interested in information which is not relevant at the moment.

2. Selective Distortion - Consumers tend to perceive information in a way which would be in line to their existing thoughts and beliefs.

3. Selective Retention - Consumers remember information which would be useful to them, rest all they forget in due course of time. Michael wanted to purchase a watch for his wife and thus he remembered the RADO advertisement which he had seen several days ago.

Learning

Learning comes only through experience. An individual comes to know about a product and service only after he/she uses the same. An individual who is satisfied with a particular product/service will show a strong inclination towards buying the same product again.

Beliefs and Attitude

Beliefs and attitude play an essential role in influencing the buying decision of consumers. Individuals create a certain image of every product or service available in the market. Every brand has an image attached to it, also called its brand image.

Consumers purchase products/services based on their opinions which they form towards a particular product or service. A product might be really good but if the consumer feels it is useless, he would never buy it.

Role of Consumer Behaviour in Marketing

Consumer Behaviour refers to the study of buying tendencies of consumers. An individual who goes for shopping does not necessarily end up buying products. There are several stages a consumer goes through before he finally picks up things

available in the market. Various factors, be it cultural, social, personal or psychological influence the buying decision of individuals.

Marketers need to understand the buying behaviour of consumers for their products to do well. It is really important for marketers to understand what prompts a consumer to purchase a particular product and what stops him from buying.

What marketers need to understand ?

The psychology of consumers (what they feel about a particular product and their brand on the whole).

How consumers are influenced by their immediate surroundings, family members, friends, co workers and so on.

What a consumer thinks when he goes out for shopping ?

A marketer needs to first identify his target consumers and understand their lifestyles, psychologies, income, spending capabilities, mentalities to offer them the right product.

Individuals from lower income group would never be interested in buying expensive and luxurious products. He would first fulfill his basic physiological needs like food, air, water etc. Trying to sell a Mercedes or a Rado watch to someone who finds it difficult to make ends meet would definitely be a disaster.

Kellogg’s K special would hardly find any takers in the low income group. In this segment, individuals would be more interested in buying fresh fruits, vegetables, pulses which are necessary for their survival rather than spending on health supplements.

It is really essential for the marketers to understand the needs of consumers. Find out what they are actually looking for?

There are ideally two different ways which enable marketers to understand their consumers.

Primary Research

Secondary Research

Primary Research - Primary Research refers to a research methodology where marketers interact with consumers directly and gather as much information as they can. Information is generally collected through surveys, questionnaires, feedback forms, interviews etc.

Secondary Research - Secondary Research often refers to relying on information which has been collected by others at some point of time.

The background and family status of an individual also influence his/her buying behaviour.

Selling a laptop to an individual who is not much educated would be pointless. Remember consumers would show interest in your products only if they are of any use to them or their immediate family members. A low grade worker would never be interested in purchasing business suits or formal shirts.

Canned juices are a hit among middle and higher income group where individuals are really conscious about their health and fitness. Individuals who live hand to mouth would never spend on sugar free tablets, health supplements, or for that matter “Diet Coke”.

It is also important to give complete information to end-users. Do not hide anything from them. It is not ethical. All tobacco products come with a warning. Individuals should be familiar with not only the benefits but also the side effects of the products.

Marketers must also take into account:

Age group of consumers

Geographical location

Lifestyle of consumers

Social Status of consumers

Funky designs, loud colours would be a hit among teenagers whereas middle aged and elderly people would prefer subtle colours and sophisticated designs.

Salwar Suits are extremely popular in North India whereas females prefer saris and skirt blouses in eastern and southern parts of India.

Individuals from posh localities and good jobs would show keen interest towards buying exclusive and unique products as compared to individuals who do not come from an affluent background.

Role of Consumer Behaviour in Advertising

Marketers need to understand the buying behaviour of consumers while designing their advertisements for the desired impact. Advertisements play an essential role in creating an image of a product in the minds of consumers. Advertisements must be catchy and communicate relevant information to consumers.

Understanding the needs of the consumer is really important when it comes to creating the right advertisement for the right audience. Remember it is only through advertisements; individuals are able to connect with your brand.

Identify your target audience. The advertisement in some way must touch the hearts of the end-users for them to buy the product.

It is really essential to show what the consumers like. Meet your target audience and find out what they expect from your product and brand on the whole. Do not show anything which might offend any religious group or community. Make sure the message is relevant and crisp. Overload of information nullifies the effect and the advertisement might go unnoticed. Don’t try to confuse the consumers. They will never buy your product. Understand their psychologies well.

The advertisement must show what the product is all about. It should, in a way give some kind of information about its price, benefits, usage, availability and so on.

Consumers perceive Women Horlics as a health and energy drink which is a must for all working women as well as expecting mothers for their overall well -being. A Horlics advertisement with a male model does not make sense as the target audience would never be able to connect with the product. A lean and inactive office going female drinking Women’s Horlics and thereafter beaming with energy and confidence would be the ideal concept for the advertisement. Through advertisements, the company actually tries to win over the confidence of consumers who would not mind spending on their product.

A Tag Heuer, Omega, Mercedes, I phone advertisement ought to be classy for people to recognize these products as status symbols. Use expensive props, unique concepts and well known faces for all premium and exclusive brands.

Advertisements meant for younger people (college goers, young professionals) ought to be colourful and trendy for them to be able to relate themselves with the product. Serious advertisements do not go very well with the youngsters. It is essential to understand the mindsets, attitudes and preferences of target audience.

Advertisements for insurance plans, medical benefits, hospitals ought to be sensible as they convey much serious information and target a mature segment of individuals altogether.

The time slot of commercials also needs to be taken care of. Advertisements for products meant for children should ideally be aired during afternoon or early evening hours as this is the time when they watch maximum television. Understand the lifestyle of your target audience. Prime time commercials are the ones which are viewed by maximum people.

Choose the right theme for your advertisement. The advertisements ought to create the need among the consumers for them to buy the product. Commercials ought to give complete information to the consumers. All tobacco and alcohol commercials must show the warning message.

Role of Family in Consumer Behaviour

No two individuals have same buying preferences. The buying tendencies of individuals vary as per their age, need, income, lifestyle, geographical location, willingness to spend, family status and so on. An individual’s immediate family members play an essential role in influencing his/her buying behaviour.

An individual tends to discuss with his immediate family members before purchasing a particular product or service. Family members might support an individual’s decision to buy a particular product, stop him for purchasing it or suggest few other options.

Family comprises of:

Parents

Siblings

Spouse

Grandparents

Relatives (Cousins/Aunts, Uncles etc)

What an individual imbibes from his parents becomes his/her culture. In countries like India, where children are supposed to stay with their parents till the time they get married, the influence of parents on an individual’s buying decisions can not be ignored. What he sees from his childhood becomes his habit or in other words lifestyle. A female from an orthodox background would prefer salwar suits, saris instead of westerns or short outfits. In India, parents expect their children to dress up in nice, colourful outfits during marriages, festivals or other auspicious occasions. Even if children want to buy something

else, their parents would always prompt them to buy traditional attire, thus influencing their buying decision.

The moment an individual enters into wedlock, his/her partner influences his buying decisions to a great extent. In most families, wife accompanies her husband for shopping be it grocery, home appliances, furnishings, car etc.An individual would always discuss with his/her partner before any major purchase. After marriage, individuals generally do not like spending on himself/herself; rather they do it for their partner or family. A young bachelor would not mind spending on alcohol, attending night parties, casinos but the moment he has a wife at home, he would instead spend on household and necessary items. No bachelor likes to invest money on mutual funds, insurance policies, mediclaims etc but for someone who is married buying an investment plan becomes his first priority. Women generally are inclined towards buying toiletries, perfumes, dresses, household items, furnishings, food products while men would rather love to spend on gadgets, cars, bikes, alcohol etc.Both have different tastes but when they come together, they mutually decide on what to buy and what not to buy.

A Bachelor would never purchase Women’s Horlicks or Kellogg’s K special or a female perfume but when he has a wife at home; he would love to purchase them for his wife. A young girl who has never purchased shaving creams or men’s perfume all through her life for herself would not mind purchasing for her husband, father or father in law. A working woman would have different needs as compared to a housewife. A woman who goes to office would prompt her husband to buy formal trouser and shirt, office bag, make up products etc for her while a house wife would not like spending on all these as she does not require an office bag and so on.

Children also influence the buying decisions of individuals. An individual spends happily on toys, candies, ice creams, chocolates. sweets when he has children at home. Children in the family prompt their parents to subscribe to Disney Channel, Cartoon network and so on.

Individuals do not mind spending on medicines, health supplements, vitamin tablets, protein drinks if they have ailing parents at home.