Consumer Behavior Side Of Markstrat Marketing Essay

Introduction to Consumer Behavior and its role in Marketing Startegy

There is seen a paradigm shift in the way marketing is perceived. Marketing Communication Practices have changed over a period of time and hence demand for more Consumer/Customer focused strategies. There is seen a major growth in many more media options. Companies and competitors are trying various techniques to reach the end customer. There is a visible reduced faith in mass media techniques. Eventually the reliance on highly targeted customized methods is increasing and tradition media is losing its charm. Companies spend a huge amount of money on marketing and newly discovered communication methods, hence it is important to check and innovate methods to calculate ROI of communication attempts.

According to Robert Lauterborn, we see a shift from marketing 4P’s model to 4C’s model. According to this model Product is considered to be a solution to “Customers Problem”. Price is “Customer Cost” and in more tied to value as perceived by customer. Place, which was compulsorily a Company’s decision and idea, is now decided keeping “Customer’s convenience “in mind. Promotion was essentially an extremely one sided dialogue. Now “Communication” makes it two sided and creates a dialogue between consumer and the company.

Consumer behavior is important to Understand and Leverage Buyer Psychology & Behavior.

Shopping Mechanics – Physical realities & reactions regarding space & people

Shopping Demographics – shopping behavioural patterns of various segments of shoppers

Shopping Dynamics – psychology of shopping, responses to merchandise, packaging & offers

MARKSTRAT – Situation Analysis

Team A of tiger industry as received by us in Round zero was not in a great condition. All the companies were at the stock price index of 1000. Tiger industry has 6 companies – A, E, I, O, U and Y. All teams had comparative Market capitalization, i.e. all in terms of market size and business opportunity was almost same. The market in round zero is very nascent and is growing. All the companies in Tiger industry have the opportunity to grow in two product categories – Sonite and Vodite. The market opens with all companies competing with each other in Sonite Market. Company A has lowest market share in the industry and strands last in Sonite Market. Market leader is O followed by E with 21.3% and 19.6% market share respectively. This round has no information about our two products SAMA and SALT, in terms of the product perceptual map and other consumer behavior reports. The price of both the products is as per the industry standards and trend. SAMA is very popular among others, while SALT has distributed purchase among all segments. In terms of total unit sales Company A was doing much better than E, U and Y. Net contribution of Company A is minimum is stock market. Brand awareness of both brands SAMA and SALT is extremely high. Physical characteristics are different from those of market leaders.

Study of consumer behavior in Markstrat world and implementation of strategies

aims and objectives set, the strategies employed, the results achieved, the monitoring carried out and corrective actions

Round Zero –

Aims and Objectives – With no Consumer reports and market information, it was difficult to map products to customers expectations. There was no information about perceptual map and customer trends. Hence, the only change that was made was pricing change.

Strategies Employed – Price was made competitive to industry standards and was almost near to market leaders in both single and others segments. Marketing mix was focused to singles and others segments by referring the information given in pdf shared. Advertising budget was increased and was directed towards singles and others (Refer AIDA model). The distribution was focused on mass merchandize and departmental stores. All market Research studies of Sonite market were ordered in this round.

Mistakes and Learnings – It was suggested that entering Vodite market is not a good idea this early in the period. But it was later discovered that first movers and early movers in Vodite market always had. We conveniently forgot to order Conjoint analysis of Sonite products.

Round One –

Last Round Results – Total market share increased only by 2.1%. There was a negligible increase in stock price, but with a negative overall average growth. Retail sales increased by 15.7% and thus it was apparent that price war strategy was working in others and singles market. A very small increase in Contribution after marketing. Stock price improved our ranking to 4th in the industry.

Aims and Objectives – The main aim for this round was to understand the consumers much more in detail and understand competitors and market trend.

Strategies Employed -Perceptual map study could tell us that SAMA was nearest to others and hence it has a maximum market share in others category. While SALT (targeted to Singles) was nowhere near Singles expected market. In Others segment SAMA was the market leader while in Singles segment there were two more major players hence making the industry for this segment fragmented. Lack of budget made us go for price war again. We tried spending on marketing mix to create a better product perception (Refer AIDA Model).

Brand Map – As per the Brand map which shows physical characteristics on a scale of 1-7 and how near or far they are from target consumers. It is an important study, done through consumer research to understand what physical characteristics are more important to your segments. It is an important tool to compare positioning of your brand with ideal positioning for your target segments. The tool also lets you compare two features of a product on the same scale. Through consumer survey we could also study that brand purchase intentions of SAMA among others was good and others segment was also interested in buying SALT. The shift could be explained by Ideal value evaluation chart.

Mistakes and Learning – Few major reports on Sonite is missing, Vodite market reports not asked for. The price war strategy was working but was not a full proof method to sustain the market. Industry was growing at a fast rate, while our company was showing positive improvement very slowly. One major constraint was budget. Every year, each company gets budget which is a linear function of last year’s performance. Because of fewer budgets we decided not to invest in R&D and hence we continued losing on Sonite market.

Round Two –

Last Round Results – Total market share decreased to 10.6. It was visible that Sonite working is moving ahead and prce war and marketing mix was not working at all. There was a mismatch between our products and consumer’s expected products. Stock proce decreased. Decreased contribution after marketing. Decresed stock price.

Aims and Objectives – The main aim for this round was to understand the consumers much more in detail and understand competitors and market trend. Also if possible, indulging into Sonite R&D, to create products that were mapped to segment expectations. We wanted to capture Sonite market volume wise, as the maximum expected growth was in Single and Others segment,

Strategies Employed – With the use of tables like perceptual map, brand map, ideal value evaluation, and consumer purchase intentions, we tried investing in two R&D projects called SALA and SALM to improve our existing products SAMA and SALT to map to Others and Singles segments respectively. They were supposed to be ready by next year.

Mistakes and Learning – Ideal value evaluation chart gives you a fair idea about the trend market is following, in was not considered in this term. By missing on ideal value evaluation chart is become difficult to predict the ideal value over next coupld of years, and if the industry is dynamic and ever changing, this mistake can be fatal for the company.

Round Three

Last Round Results – BIG TECHNICAL BLUNDER. We loaded our results of first round on time but no results were reflected in the file received by the server. Hence all the changes and decisions taken in the last round stand cancel and were not implemented. It was almost like Company A was sleeping for one year and suddenly got up and found itself in huge mess. Industry had grown, shares reduced, new products entrants in Singles and Others category were eating up our share because our products were becoming obsolete for our target segments. Our total market share dropped. Stock price index reduced. Contribution after marketing was very small.

Aims and Objectives – The technical glitch made us lose in terms of market share and in terms of catering to consumer expectations. The aim was to fix this with any possible way

Strategies Employed -With no major budget in our pocket, and with losing on strategies for one year, we decided to take bold steps. We were losing in Sonite market, so it was important to enter new markets and categories. Hence, with only one report of Vodite, ie, Expected ideal values on semantic scales, we tried investing on Vodite product development. It was a risk worth taking, with nothing much left to lose.

Mistakes and Learning – Major bad luck was missing on one round because of technical problem. As learning, in the actual market it is extremely important to track the kind of changes you are putting In place and should have a feedback of every major/minor step taken as a part of marketing strategy.

Round Four

Last Round Results – We kept losing on Sonite market because of one year gap. On the other hand because of lack of understanding on consumer ideal trends growth.

Aims and Objectives – Entering Vodite market well in time and capturing it.

Strategies Employed – With Vodite product available this term, the main focus was to enter the Vodite market with right marketing mix.

Mistakes and Learning – It was becoming extremely important and key to the company to map products to customer expectations. One major mistake was removing SAMA from the product portfolio. SAMA was well aware across segments and there were good purchase intentions for the brand. SAMA’s brand equity was not leveraged. Instead SALA failed and was nowhere near any segment on perceptual map. Companies which were entering into new segments with new products every year were doing well. Sticking to only two segments was not a right strategic decision. R&D could have been used to enter other segments.

Round Five –

Last Round Results

Sonite – We were becoming almost nonexistent in Sonite market . SALA failed and there was no scope of bringing SAMA back to product portfolio. On perceptual map SALT was bang on Others but because of extremely low price, no unit sales was profitable for us. Singles and others average market share was decreasing, but there was no way it could reach to industry lowest that we were offering. Somewhere there was a gap, as what we learn in Marketing Management Lower price and increased product offering increases the overall value as perceived by customer. In markstrat, one limitation that we saw was this strategy was not working as the regardless of the fact that ideal characteristics of SALT matched to others, the price was much lower than what they were ready to pay, hence SALT lost market.

Vodite – First mover advantage worked in Vodite market. There were only two product offerings in Vodite market. The other was by team Y. Vodite is a high end product hence quoting and deciding price of the product in last round was a key decision which was taken randomly with no figure to refer.

Aims and Objectives – Entering Vodite market well in time and capturing it.

Strategies Employed – We were sure, not to get into price war in this industry as this industry was in its nascent stage. But bringing the price closer to competitive base was important.

There were no consumer reports available for Vodite market because if it being a new market and still growing.

Mistakes and Learning – The Semantic mapping to expected ideal characteristics on semantic scale was done in hurry and thus our Vodite product VATA, was not exactly mapped to innovators expectations. While competitor product brand purchase intention as well as market share was good in all segments.

Round Six –

Last Round Results –

Sonite market showing negligible contribution after marketing. All the strategies we were trying to put in Sonite market was failing because the market by this stage was extremely fragmented and there was a lot of competition. On the other hand, having very limited product portfolio, and both singles and others market evolving extremely fast, none of the R&D efforts were working.

Vodite – VATA was growing in the market but at an extremely slow pace.

Aims and Objectives – Mapping both Vodite products VATA and VATO to Innovators and Followers expectations. From ideal value evolution graph we could see that early adopters expectations were moving towards that of Innovators, hence VATA was becoming popular between both adopters and innovators.

Strategies Employed – Launching VATO, with the right marketing mix and spent on sales force was the key focus. (refer AIDA Model)

Mistakes and Learning – Not being able to formulate the right strategy in Sonite market. We were losing our existence there and had no clue how to gain back consumers faith and increase their intention to purchase.

Round Seven –

Last Round Results –

Sonite – SARS showing negative contribution after marketing hence going on a loss. SALT making very less margin.

Vodite – VATO being market leader in followers segment. And VATA in innovators segment. On perceptual map also VATA is very near to innovators.

Aims and Objectives – Directing more budget towards creating more opportunities and sales in Vodite market. Increasing sales force because we had high brand purchase intentions, and we can easily capture good part of the market with our two products.

Strategies Employed – Increased advertising spent and sales force on Vodite products

Mistakes and Learning – there was no point spending money on Sonite fragmented market, as all attempts to improve there were failing.

Round Eight to Eleventh

Major Strategies – No major R&D changes in Sonite market. SALT net contribution was shifting to negative, because increased number of brands resulting in a big fragmented industry. VATE and VATI were ready by year 9 and were used to improve VATA and VATO respectively. VATO which was supposed to target followers was nowhere near them in perceptual map. Adopters expectations were changing drastically in the market. VATA which had a decent share in both followers and adopters market was fighting hard to match to followers expectations. In year 10, R&D was put on VATA to improve it and a modified VATA can then be introduced in year 11. Because of change in expectations of followers and VATA being an adopters product, VATA lost a lot of market share in followers market resulting in decreased net contribution

Sonite – Sonite market being very price sensitive needs price decrease almost every year. SARS price was reduced eventually, while SALT price is already low as per industry. Good amount was spent on adv and sales for SARS, while SALT almost has a negative contribution

Vodite – VATA price was reduced to 950 from 1200 because of price war in year 8. Price was further reduced for both VATA and VATO to 850 and 700 in year 10. To gain further market share with adopters VATA’s price was again reduced in year 11th. Though it didn’t prove helpful. A huge money was spent on Advertising and sales in Vodite market

Mistakes and Learning – Low on production again for all three brands – SARS, VATA and VATO, poor decisions in terms of production level. Not being able to place VATO well in adopters market. Vodite market being so volatile, it is difficult to judge and predict next year’s or futures semantic scales of target segment. Price war affects perceptual objectives of marketing dept

Consumer Behavior Models and Concepts Used to strategize actions in Markstrat

Marketing Concept

Categorizing Team – A product portfolio into following categories –

Marketing concept essentially consists of – production concept, product concept and selling concept.

Production Concept – It assumes that consumers are mostly interested in product availability at low prices; its implicit marketing objectives are cheap, efficient production and intensive distribution.

SAMA with low base cost and targeting others market is actually a marketing concept

SALA – extremely low priced product

Product Concept – It assumes that consumer will buy the product that offers them the highest quality, the best performance, and the most features. Used by extremely R&D focused companies.

VATA – catering to ideal expected semantics by innovators with high price

VATO – catering to ideal expected semantics by followers

Selling Concept – Marketers’ primary focus is selling the product that it has unilaterally decided to produce

SALT brand purchase intention is good enough and follows selling concept

SARS – trying to sell with right marketing mix

AIDA Model

AIDA model describes the list of events in a purchase cycle –

A – Attention (Awareness): attract the attention of the customer.

I – Interest: raise customer interest by focusing on and demonstrating advantages and benefits

D – Desire: convince customers that they want and desire the product or service and that it will satisfy their needs.

A – Action: lead customers towards taking action and/or purchasing.

This model essentially describes how important it is for all marketing functions to be in sync to have a combined overall conversion in terms of sales. It starts from deciding the target segment that looks most promising, then considering R&D criteria, followed by right marketing mix, deciding the apt perceptual objectives for the target customers, deciding advertising budget, deciding the price and deciding the sales force and placement of the product.

AIDA Model helps determine and understand bottlenecks in the system of purchase. It acts as an essential check while deciding any marketing strategy for the product.

All decisions related to marketing mix were taken after evaluating the bottle necks of the system.

Deciding Number of units for production

A key strategic decision of any marketing strategy is to decide the number of units to be ordered for production. This requires an extremely good knowledge of market and its growth. Forecasted growth can help a little but the final decision depends on market share of the company, expected increase in share in the coming year, expected impact of strategies incorporated etc. The model described below tells how consumers keep decreasing at each level.

Methods of Problem Solving for a Consumer

Extensive Problem Solving – This occurs when the buyer in uncertain about the alternatives and perceives high risk what alternatives are there to fulfill his need and how to go about them and make a choice. For example for Sonite customers in Markstrat round 5-6 the market became essentially fragmented giving them a pool of choices with lots of companies offering same product at competitive prices.

limited problem solving – The second stage of learning to buy a brand of product. The buyer is confronted with a new brand in a product class with which he/she is already familiar. Limited search is likely to follow. In Sonite market, when it was fragmented, entering with a new brand was not making much sense. The reason was the buyers are already used to one brand and it is not easy to change their purchase habits easily.

Routine Problem Solving – With the entrance of a new product, the procedure of prolem solving does not get complex, because mind learns techniques to solve problems on a routine basis, hence making it a routine task. Thus once customers start buying one product, making them switch to another becomes even more difficult. Thus, entering Vodite market very early I stage was the right strategy that worked and helped gain A its position back

Multivariate Data Analysis

Multidimensional Scaling – Class of procedures for representing perceptions and preferenced of respondents spatially by means of visual displays. The geographic representations often called Spacial maps. Information provided by MDS is used for varierty of applications like – Image measurement, Market segmentation, New product development, Asesing Advertising effectiveness, Pricing analysis, channel decision, attitude Scale construction. It helps understand following three points –

The number and nature of dimensions consumers use to perceive different brands in market place

Positioning of current brand on these dimensions

Positioning of consumers’ ideal brand on these dimensions

Markstart uses MDS to build all kind of consumer related reports that are used at each step of decision making.

MDS Markstrat Reports – Perceptual Map, Brand perception, Ideal Values, Ideal Value Evolution, Influence of characteristics, Relationship between product characteristics and perceptions etc

Conjoint Analysis – It attempts to determine relative importance consumers attach to salient attributes and the utilities they attach to the level of attributes. Conjoint Analysis has been used for variety of purposes like

Determining the relative importance of attributes

Estimating market share of brands that differ In attribute levels

Determining the composition of most preferred brand

Segmenting the market on the basis of similarity of preferences for attribute levels

Conjoint Analysis Markstrat Reports – Utility graph, Utilities, Relative importane, Market Shares, Ideal Values Determination etc

Both MDS and Conjoint are key to Consumer behavior data analysis. These tooks essentially describes the market from Consumers’ point of view and can build key reasons to substantiate strategic decisions.

Carlsberg India Private Limited – Marketing Strategies and implementations

My internship at Carlsberg india essentially involved to study three kind of aspects of Maketing strategy

To study and understand the consumer trends and behavior towards strong beers

To come up with activation plans for Carlsberg Beer

To build a Re – launch strategy for Palone (Strong Beer Brand of Carlsberg)

To study and understand the consumer trends and behavior towards strong beers

Two MR projects were required to handle this – both consumer study and Customer study. Following are the objectives of both MR projects –

Consumer Study Research Objectives –

Objective 1 – To determine the lifestyle of the Strong Beer consumer- Demographic details and lifestyle preferences.

Objective 2- To understand beer drinking and purchase habits.

Objective 3- To understand brand image and positioning of Palone and its competitors among the target group

Objective 4- Recall and preference for Strong Beer brands.

Customer Study Research Objectives –

Objective 1: To find out the Customer’s perception about various beer brands in the Strong Beer Segment.

Objective 2: To study the methodology through which the competition brands of Palone are trying to capture the Strong beer segment and overall market share of the brands at the outlets.

Objective 3: The report also aims to study and analyze the effect of packaging and pricing on the sale of beer brands.

Objective 4: To analyze various trade activation and trade schemes at the wine shops

Objective 5: To study the branding elements and the environment at various Wine shops, ahatas and permit rooms.

The consumer behavior reports and studies are the key ingredients of any marketing strategy and hence help in business decisions related to a product category. These MR projects helped company to understand both Consumer and Customer better and hence change their communication strategy to bring about expected changes.

To come up with activation plans for Carlsberg Beer

This project incolved an indepth competitive analysis in terms of STP, Promotions, Brand perception, Brand Image etc. The most important task was to create a consumer profile for Carlsberg Customer.

Determining Activation Purposes like – increasing beer occasions, make beer fun and social, continue to increase desirability etc.

The project involved coming up with activation plans for Mild Beer Carlsberg, to ivolve as many beer drinkers as possible and create a BUZZ in market around the event. Carlsberg, with no other product category except beer, cannot get into surrogate advertising, and hence activations remain the only way to reach customers.

To build a Re – launch strategy for Palone (Strong Beer Brand of Carlsberg)

Understanding the reasons behind Palone – Reluanch

Changed market conditions imply re launching of a brand on the same positioning plank

A brand might have failed in previous years because the market would not have been suitable for it at that point of time

The current market situation, having become suitable for the product, could warrant a re-launch of the brand

Brands are re-launched, as the company believes that there is enough brand equity in the market

Determining the key Factors behind Relaunch –

Re – Positioning?

Entering New Markets?

Solving Brand Identity Conflict?

Leveraging Brand Equity?

Hence, the Relaunch plan involved studying of 5Cs – Company, Competitors, Customers, Collaborators and context

http://www.westburnpublishers.com/marketing-dictionary/e/extensive-problem-solving.aspx

http://www.westburnpublishers.com/marketing-dictionary/l/limited-problem-solving.aspx