Simplified Model of Consumer Behavior - Essay Example

?(Add (Add (Add Information) (Add Simplified Model of Consumer Behavior A simplified consumer behavior model comprises of three major phases namely input, process, and output. The process of purchase may be initiated by external factors such as firms’ marketing strategies and socio-cultural influences. The socio-cultural influences may include family, social and reference groups, public policies, innovations, and consumer protection. Once the consumer is influenced by marketing practices and/or socio-cultural factors, he will enter the next purchase phase, which is decision making. Under the decision making stage, the consumer behavior may be significantly influenced by a range of psychological factors including motivation, perception, learning, beliefs and attitudes. Those factors play a central role in the process of need recognition. Once a consumer identifies his actual needs, he will begin pre-purchase research so as to gather maximum information about available products in the required category. In addition, he may search for alternatives. In the output phase, the consumer makes a trial purchase and may or may not repeat the purchase based on the post trail purchase evaluation. Recently I purchased a Nokia N8 mobile phone. Certainly, a number of socio-cultural factors and Nokia’s promotional practices have influenced me to take this purchase decision. Firstly, I came to notice a Facebook post depicting extensive features of this cell phone. While I went through the post in detail, I could realize that most of the product features were really useful to my everyday life. When I researched further, most of the online mobile phone review forums strongly recommended me to order for a Nokia N8. In addition, reputed social status that I would obtain from purchasing this costly model also persuaded me to go on with the purchase decision. Sincerely, my girl friend greatly supported my idea of buying this multi-featured mobile phone. Furthermore, I considered Nokia’s high brand loyalty and better consumer service policies. In the decision making process, my perception that expensive products are of better quality also contributed to the purchase because the product was priced at $449. Since Nokia N8 has multi-faceted features in which many of them were unknown to me, I was really anxious to experiment with those features. My attitudes and beliefs toward the Nokia brand greatly influenced me to make this purchase decision. Since Nokia is world’s leading mobile manufacturer, I strongly believed that they had adequate expertise and experience to deliver high quality products. Moreover, I thought that Nokia N8 with 12 mega pixel camera would assist me to put off my plan for digital camera purchase. Trade Dress “Trade dress refers to total image or overall impression created by product’s configuration or packaging, interior and exterior decor, architecture and other promotional materials” (Finnegan, Henderson, Farabow, Garrett and Dunner). In the United States, a product’s trade dress is considered as a form of intellectual property and hence it is legally protected by the Lanham Act. In the country, registrable trade dress elements may include features like “size, shape, color, texture, graphics, and packaging” (Finnegan, et al). Evidently, the size, shape, and color of a product are major factors that distinguishes the particular product from other similarly products. A product’s texture indicates the font, style, and other characteristics of writing that are used to label name and other details of the product on its cover. The element of graphics plays a notable role in creating the product’s visual appearance and thereby attracting consumer attention. In addition, packaging also contributes to a product’s external look even though the primary intention of this feature is to protect the product from damages. Coca Cola’s 3-dimensional Coke product has a valuable trade dress. The shape and color of this 3-dimensional Coke product significantly add value to the product’s trade dress because these particular elements greatly assist consumers to distinguish Coke product from that of competitors. The distinctive shape and color of Coke’s red bottle constitute a valuable trade dress (“Trade dress law.”). Evidently, Coke’s brown color is a well recognized feature as the company has been following this feature throughout its corporate history. In addition, the bottle has a particular size and this feature also contributes to brand recognition. Coca Cola Company has created an attractive graphical design for this product, which added value to the product’s visual appearance. In short, this 3-dimensional Coke product’s major trade dress elements including size, shape, color, and graphics promote its brand loyalty which in turn has a positive influence on buyer behavior. Similarly, Coca Cola uses a distinctive texture to label its name on the bottle and this trade dress element is another major factor contributing to the Coke’s global brand recognition. Break even analysis Break-even point indicates the particular point at which a firm’s sales revenues equal total cost whereas the break-even volume refers to the number of units that have to be sold at particular price to reach the break-even point. A firm’s profit will be zero at the break-even point (Pliniussen, 155). Hence, when the firm sells 10,000 units (break-even volume) at a price of $10, its sales revenues will equal the total expenses and there will have no profit. If the firm’s production capacity is 10,000 units (break-even volume) or less, it should never price its product at $10 because such a condition would cause the firm to incur a zero profit or net loss. It is clear that every organization operates with the ultimate goal of wealth maximization. Hence, a company cannot achieve its ultimate aim when it sells break-even volume at the break-even price. Such operations will never benefit the company to grow its business or meet shareholder interests. In addition, zero profit operations would result in a business failure if the company faces any unforeseen contingency. In contrast, it is recommendable for the organization to price its product at $10 if its production capacity exceeds 10,000 units (break-even volume). Under such a condition, the firm’s sales revenues will certainly exceed its total cost and hence there will have a profit. External factors influencing pricing strategy Mainly, the external factors that an entrepreneur should consider while choosing a pricing strategy are elasticity of demand, customer expectations, competitive and other products, and government regulations. Elasticity of demand Under the concept elasticity of demand, there are three types of demand scenarios such as elastic demand, inelastic demand, and unitary demand. As Taylor and Weerapana point out, in case of elastic demanded products, a certain percentage increase in price will result in a more than proportionate percentage decline in demand; and in contrast, under the inelastic demand scenario, a certain percentage change in price will cause a relatively smaller and opposite change in demand (96). Finally, unitary demand indicates that the percentage change in demand in response to a certain percentage change in price will be equal and opposite. Hence, an entrepreneur must not fix higher prices for elastic and unitary demanded products. Customer Expectations Before making a purchase decision, customers will certainly assess the overall value of a particular product; and they also consider product value and price. If customers think that they do not obtain sufficient value for the price they pay, customers may not purchase the product. Hence, an entrepreneur should conduct a comprehensive market research so as to identify how customers perceive a particular product and what price points are acceptable to them. Competitive and other products While analyzing the market competition, an entrepreneur must give specific focus on direct competitors, related products, and primary products. By fixing competitive prices in markets where a clear leader does not exist, a marketer can effectively confront with direct competitors. In addition, the marketer has to pay particular attention to related products and primary products as their pricing can have a great influence on his product’s demand. Government regulations Finally, an entrepreneur should examine government regulations before setting a price for his products. There will be legal ramifications if the marketer does not comply with those government regulations and such a situation would adversely affect the firm’s market reputation. Works Cited Finnegan, Henderson, Farabow, Garrett & Dunner. “Martindale- Hubbell law digest.” United States Trademark, (2008): 1-10. Web. 03 August 2012. Pliniussen, John K, Jones, Tim & Cram, Alec. Business Case Analysis Process: Workbook with Software. Canada: Captus Press, 2002. Print. “Trade dress law.” Gaston & Gaston. (n.d). Web. 03 August 2012. Taylor, John B & Weerapana, Akila. Economics. USA: Cengage Learning, 2007. Print. Read More