Consumer Behavior in the EU Market - Essay Example

?Table of Contents Table of Contents Introduction 3 Company Overview 3 Product 4 MEIXIAN TV 4 Industry Trends in Consumer Electronics 4 Marketing Strategy 5 Customer Orientation 6 Consumer Perception 6 Perception Theory 7 Product Strategy 7 Customer decision making 8 Problem recognition 9 Information Search 10 Evaluation and Selection Alternatives 10 Decision implementation 10 Post-Purchase Evaluation 10 4P’s Analysis 11 Product 11 Price 13 Place 13 Promotion 13 External Influences 14 The external factors that affect Meixian TV include: 14 1.Legal Environment 14 2.Environmental Factors 14 3.Competition 14 Multimedia Strategy 14 Advertising process 14 1.Study of the target customers 14 2.Study of the Market Environment 15 3.Defining Advertising Objective 15 4.Selecting Media for Advertising 15 5.Evaluation of Advertising Effectiveness 15 Branding Strategy 16 Works Cited 17 Introduction In Europe, UK is the leading market for consumer’s electronics as it hold 22 percent share of the European market with its sales reaching about ?10 billion (Consumer Electronics, 2010). The market offers unique opportunities for cutting-edge consumer electronic products by serving as a platform for research & development on technology and by providing the business infrastructure to stimulate and capitalize on the concept of innovation. The citizens of UK spend more on innovative electronic products compared to any other EU country. These products include mobile handsets, HD-ready TVs and Blu-Ray players. Due to its promotions in consumer electronics UK is renowned for its innovations in engineering, electronic designs and optoelectronics as it serves a hub for the technological excellence in consumer electronics. Company Overview Meituxian (Guangzhou) Electronics Co. Ltd is a privately owned company, with its head office in Guangzhou China. The company is renowned to be high-tech enterprise with keen focus on R&D, manufacturing, sales and after sales service of its range of LCD TVs. The company has patented products which include: Wardrobe LCD TV, Waterproof Mirror LCD TV, Network LCD TV and Hotel LCD TV. Since its inception in the year 2005 the company has managed to maintain a close collaboration, integrating technology exchange with domestic enterprises. The company now has well equipped facility and a high-speed automated production line. The company maintains a quality standard and adheres to ISO 9001 for the standardization of its production operations, thus ensuring to deliver high-quality products to the customer. This is quality consciousness is entrusted to the employees as “quality is the life of an enterprise”, thus bringing out the best quality in the company brand “MEIXIAN”. The company also believes in delivering technologically efficient after-sales service adhering to the philosophy of “Thoughtful, Dedicated, and Adequate” that is the preferences of the customers thus delivering more customer-centric service in order to maximize customer satisfaction (MEITUXIAN) Product Meituxian Electronics has had first-movers advantage in the industry by introducing its state-of-the art technical and innovative TV Ranges to the market. Its huge product range of LED and LCD TVs incorporates a combination of innovation and advanced technology with its integrated features. MEIXIAN TV Meituxian’s Meixian TV integrates IPTV (Internet Protocol TV) with regular TV functions. It is the TV that integrates internet and access to web channels, unlike the other TVs that have internet portal, Meixian’s service is a lot more comprehensive. It gives access to various internet channels including YouTube application, media streaming from other networks and social networking sites such as twitter and facebook on the TV screen.  The network can be accessed through a cable or a WiFi dongle that can be plugged into the USB port. The network setup is easy and user-friendly and the remote has a dedicated button to access the internet. The Aesthetics are the ultimate feature of the TV that combine the domestic specialties focusing on the world wide consumers thus providing aesthetic life and aesthetic service to the consumers (MEITUXIAN) Industry Trends in Consumer Electronics The consumer electronics sector in the UK comprises of a vast range of companies which include the ground-breaking smaller companies as well as the large organizations having global presence. As the sector hold a large market share, it is home to about 40 percent of the Europe’s design industry and serves as a hub for technological excellence in order to provide a platform to refine the consumer electronic products (Consumer Electronics, 2010) The consumer electronics industry has seen different transitions as the conversions from analog to digital has opened up different possibilities in audio and video thus enhancing the quality and affordability along with the whole multimedia digital experience. In addition, the accessibility provided by broadband has further accelerated the consumer preferences for hi-tech electronics, thus leading to the following electronic trends: The consumers preference has grown more towards High-Definition (HD) TVs as the prices of the flat-panel (LCD, Plasmas) has been decreasing by 30 percent a year. Thus, the consumers want the HD experience in their homes along with the access to the broadband, cable, to enjoy complete theatrical experience at home. Also, the possibility of staying connected is always what a customer wants. With the advent of mobile broadcast services and broadband wireless connectivity (WiFi and WiMAX) the consumers can experience to stay connected. The technology needs to be updated with these features so as to keep up with then consumer demand. Moreover the demand for electronics that can handle both the media and convergence is increasing. The consumers demand electronics that can handle both media and data on the same platform. The trends in the consumer electronics market show that this market is in constant phase of evolution where the manufacturers have to take due consideration of the technological advancements and consumers demands in order to take the first-movers advantage by introducing products that are unique, innovative and differentiated products. However a successful product in the market is soon copied by the competition and thus affects the prices leading to price erosion. This on the whole effects the consumer product life cycle as it decreases where to stay ahead of competition the manufacturers are forced to constantly enhance products or support emerging technologies (Altera). Marketing Strategy Marketing strategy is an important aspect of the corporate planning as it takes into consideration the study of the technology, product, channels, consumer behavior and other such important features. The product and marketing strategies of a company are greatly influenced by the consumer behavior and it is important to understand the needs of the customers in order to effectively stimulate the additional market needs (Chiu, Chi Chen, Hshiung Tzeng, & Shyu, 2006). Thus, for technology based firms, improving the customer satisfaction and adding value in the high technology purchases is quite essential (Burger, 1995). In order to market Meixian TV in the UK, the marketing strategy needs to entail the study of the consumers behavior and needs thus to make them accept the product. For that matter the study of market-orientation in prime focus with customer-orientation needs to be done. Customer Orientation Market orientation is an important factor in understanding the market in which the product is to be launched. It covers the four basic components of the market which include the customer orientation, competitor orientation, inter-functional coordination and customer focus-one of two long-term decision-criteria (Kohli, 1990). Thus the concept of Market Orientation and Customer Orientation are used to define the implementation of the marketing concept of an organization and thus Customer Orientation is central to the overall market orientation. In order to promote the Meixian it is essential for Meituxian to study customer orientation accordingly and to analyze the consumer buying-behavior in order to better position the product in the market. This would allow improving the marketing strategy of Meixian and will assist in the product promotion, pricing and the channel strategy. The customer orientation is distinguished into three categories by (Brown, 2006); these are personal, psychological and social factors. However to this (Kotler, Marketing Management, 10th Ed., 2001) added the cultural factors that shape up the orientation of the customers towards a product. Following these factors is another important factor the situational factors, which effect the decision making of the consumers (Stavkova, Stejskal, & Toufarova, 2008) Consumer Perception Consumer Perception is critical to the value of the product and hence the product strategy needs to be adopted keeping in view the customer needs in order to remain competitive and to gain competitive advantage in providing the innovative and differentiated product (Sun, Sridhar, & O’Brien, 2009) Perception Theory Perception is based on the information of the surrounding world where the inputs are the sensations received from sight, taste, hearing, smell and touch (Alex). The role of visuals is critical in the formation of the perception towards a product and the cross-cultural pictorial elements tend to differ. Hence it’s essential to base the products image on the pictorial value that is equally perceived by the consumers of that market. The different types of Consumer perceptions is based on the following exposures (Mooij & Mooij, 2010) Selective Exposure – is based upon the exposure of the consumer in terms of the awareness towards the product. Thus, it is more likely to be linked with an event or tend to satisfy the needs of the consumer. It generally makes them see the values associated as those of their own. Aesthetic Experience – refers to the experience of the consumer in perceiving the product as attractive or unattractive, pleasurable or un-pleasurable. The disposition to aesthetic experience varies from culture to culture and hence the variables that influence the aesthetic responses include complexity, novelty and uncertainty. Selective Distortion – refers to changing and twisting in the current received information that tends to develop inconsistency with the beliefs. In advertising the comparative advertisements generally use the approach of selective distortion Product Strategy Product image is a psychological concept associated with the consumer’s beliefs in relation to particular product i.e. the image of the product the consumers carry in their mind. In the current age of technological advancements the product lifecycle has reduced and thus in order to remain competitive it is imperative to main imperative product associations in minds of the consumers (Sun, Sridhar, & O’Brien, 2009) and the good image of the product is also likely to increase the level of product equity i.e. the value the consumer assigns to the product above all other features (Hawkins, Best, & Coney, 1998) Keeping this in view the Meixian will be launched as a necessity as it provides a combination of both the High-Definition (HD) visuals as well as the internet access. The product will be portrayed as a high-tech home network experience providing one-stop solution to all activities. Consumers are keen to have access to all their daily things in one place which gives the advantage and value of their time. Thus Meixian providing dual features would gain the benefit of innovation and blending of networks. Consumer’s preference with respect to HDTV is influenced by different features including the type of HDTV, the price as well as the choice of service to be used for broadcasting. However LCDs are considered the most popular type of HDTV set with 34% of the consumers owning one (Consumer, 2006). The preferences of the consumers are well addressed with the Meixian as it provides the best possible options for the using the internet as the broadcasting medium and is ultimately the HD TV. Customer decision making Many factors influence the consumer’s decision making process, including individual differences, environmental influences and psychological processes (Engel, 1995). In marketing management the importance of analyzing the buying behavior of consumers proposed by (Kotler, 1988) indicated on the concept of price, product, place and promotion for marketing strategy. The customer decision factors and mainly based on the following (Chiu, Chi Chen, Hshiung Tzeng, & Shyu, 2006) Table 1 Dimensions and Decision Factors of Customers From the marketing point of view, the marketer needs to understand the specific decision making strategy to be utilized by the consumer segment that will acquire the product. This would help in the right positioning of the product (Richarme, 2005). Meixian adopts the utilization of non-compensatory strategies (Richarme, 2005) where each attribute of the product is evaluated irrespective of the other attributes as it helps in the evaluation of decision-making process of the consumer and right position of the product. The consumer decision making process includes different steps (Kotler, 2001) and Meixian ful-fills the requirements of each stage in the following way: Problem recognition In this stage the consumers often form a difference between the actual stage and the desired stage. The advancement in the technology and the need for HD digital TVs has raised the need for TVs that have a blend of both. In this stage Meixian is believed to be the gap filler that would serve as a necessity for today’s consumer by giving access to all media at one place. The consumer won’t have to use the PC or laptop to access the internet and compromise on the screen resolution. Information Search In response to the recognition of the problem the information search begins and different mediums are explored to gain the necessary information pertaining to the required product. In this search different sets are involved such as the awareness set exploring different brands, the consideration set- focusing on the buying criteria and the choice set where the decision is to be made (Matsuno, 1997). In this category Meixian will be seen as brand that is committed to innovation and technology, providing cost-effective LCD TV experience. The biggest advantage would be of being a British manufacturing company. Evaluation and Selection Alternatives In this stage the consumer looks for the problem solving benefits from the product and considers the product as a bundle of attributes (Matsuno, 1997). The Meixian TV along with satisfying the need of the consumer provides additional benefits of after-sales service as well as technical support, thus giving the most benefits to the consumers. Decision implementation The decision implementation phase tends to focus around the availability of the product in terms of the places to buy. The Meixian is a high-tech TV thus its accessibility of buying would be kept at the maximum where majority of the consumers can have access to it. Post-Purchase Evaluation This stage sets the motion of the buying decision for the future. Meituxian is fast mover in innovations in TVs thus, capitalizing on new technologies would serve as an added advantage for the Meixian TV as with technological advancements the product would eb upgraded. Low-Involvement versus High-Involvement Buying Decisions Low-involvement products – are those products which are inexpensive and pose lower risk to the buyer if he or she feels the purchase of the product has been a wrong decision. The purchase decision is based on limited information. However in the high-involvement productshigh-involvement productsProducts that carry a high price tag or high level of risk to the individual or group making the decision. there is a risk to the buyer if the product fails to meet their expectation. The prices are high and the buyers don’t consider this buying as a routine buying and hence require more information in order to compare the features of the products so as to make the best buying decision (Tanner & Raymond, 2010) Meixian TV is the high-involvement product and hence to be able to capture the interest of the customer and provide the satisfaction, extensive information about the product would be floated across about the unique specifications, technology, environment friendly technology etc. Considering these factors to capture the market for Meixian TV, Meituxian’s 4P’s (Product, price place and promotion) is essential, which has an influence on the consumer’s decision making: 4P’s Analysis Product Each model of the Meixian LCD TV comes with the following integrated features; Digital Freeview channels 16:9 widescreen Full DVBT specification with Stereo sound (DTG approved tick mark) Full 'Red button' function (MHEG5) Direct access to BBC iPlayer, YouTube and various other web TV channels including Disney Movies Preview, Movie Rush, Autocar Magazine, Sky Sports Boots and All, the CNN daily video podcast, Jamie’s Ministry of Food, Delicious TV Veg, Revision 3 Diggnation and the Larry King video podcast. Ability to access home computers USB multimedia input Two HDMI sockets Connects to the internet via an Ethernet cable (included) or Wi-Fi dongle (optional extra) RJ 45 (ethernet) WiFi adapter connection Two scart sockets VGA + audio stereo jack (for PC monitor use) Component video (Y Pr Pb) Common interface AC 100-240V 120 minute sleep timer Audio, PC Analogue, PC Stereo, Scart and S Video connections Separate bass, treble, balance controls Nicam Stereo Fast channel search Program now & next display Pal I, Secam, BG, DK Multi Standard TV System 7 day electronic programme guide 10 page memory teletext The 32” version is full HD (1080p) and the 26” model is HD Ready. Each Meixian TV comes with a table stand and a user-friendly remote control that is compatible with most satellite boxes (iviewer) Price Pricing decision involve complex methodologies for calculations however it should be based around the product, the customer demand and the competitive environment in which the product is launched also keeping in view the other products the company offers (Ehmke, Fulton, & Lusk, 2005). In order to strive and make MEIXIAN a world-competitive brand, the price of the product is ought to be more competitive as compared to the market (MEITUXIAN). The pricing strategy for Meixian TV is both value-based as well as competitive pricing and is subject to the screen size 32-inch (A?599) and 26-inch (A?499) models. The pricing is also psychological thus attracting the customers towards the buying of the product. Place Meixian would be sold using a reseller who will serve as an intermediary to sell the product. This gives a unique opportunity to have a wider distribution of the product and decreases the pressures of using own distribution system. Moreover keeping in view the exclusivity of the product it would be placed as Exclusive distribution (Ehmke, Fulton, & Lusk, 2005) with the biggest outlet in UK Marks & Spencer (iviewer) Promotion Meituxian would make a high profile PR launch of the product that would: • Create awareness of the Meixian and its capabilities • Establish Marks & Spencer as the exclusive stockist of the Meixian • Position Meituxian as a cutting-edge TV manufacturer that brings innovative products to the marketplace first (Brand8) Using promotional media as short film on the TVs benefits and functionality as well serving as a customer demonstration tool will create much awareness about the product. Also a dedicated website would be maintained featuring the video along with the detailed information on the TVs capabilities. External Influences The external factors that affect Meixian TV include: 1. Legal Environment The legal framework for electronics in UK is quite complex and a lot of licensing and business regulations are applicable to the electronics industry (BuisnessLink) 2. Environmental Factors Consumers are more concerned with the Eco-friendly products and hence the companies aim should be in having environment friendly product, to gain customer satisfaction 3. Competition The introduction of the new product will accelerate efforts of the competitors thus the price erosion will come into play. The duplicate products will also come into the market and this would require efforts to compete. Multimedia Strategy The multimedia strategy for consumer electronics is very critical and has to be set with due diligence on the entire factor effecting it. For Meixian the multimedia strategy corresponds to creating awareness around the product hence the advertising process would be followed in order to better utilize the appropriate multimedia approach: Advertising process The advertising process includes the following steps (Trehan & Trehan, 2010-11): 1. Study of the target customers The customers of Meixian are the high-tech, technology savvy customers who want the dual benefit of watching the TV on HD and access to the internet at the same time. 2. Study of the Market Environment The study of the marketing environment includes the study of all the factors internal and external that can influence the business. These include the economic conditions, socio-cultural environment, demographic environment, technical, legal environment and the competition. The UK market for Meixian is already high-technology savvy market; the economic conditions compliment the consumer’s purchasing power. However the competition is intense. To be seen as a differentiated product Meixian’s advertising has to focus on providing awareness to the consumers on the functionality of the product by advertising in gadgets and home electronics magazines and journals high-lighting the functionality ease and convenience, along with aesthetics which would complement their decor. (Media, 2010) 3. Defining Advertising Objective Advertising objective serve as a medium to actually evaluate and assess the product. Hence for Meixian the marketing objective is to create awareness among the consumers about the product, quality and benefits associated with it. 4. Selecting Media for Advertising The next big step is to select the appropriate media for advertising; the Meixian in order to spread the word would initially make a grand launch for the advertisers and journalists and then develop a dedicated website to give the complete outlook of the product and its features (Brand8) 5. Evaluation of Advertising Effectiveness It is also important to evaluate the effectiveness of the advertising media selected to gauge how well it had performed in creating the awareness about the product. The grand PR launch will allow spreading the word immediately on websites and blogs thus online coverage would help in evaluation by showing the increase in the website access by the consumers. Branding Strategy Branding strategy is one of the most important product decision tools that allows the combination of name, symbol, term or design that helps in the identification of the product (O. C. Ferrell, 2008). Brand allows building a relationship with the consumer and the competitive “right-to brand” (Leventhal, 1996) thus giving the product a distinctive brand and approach to the customers. In this context Meixian TV will be branded as the high-tech, eco-friendly TV servings a bundled offering of the TV experience and the internet. The approach Meixian TV would adopt for branding would be that of the Inducer, whereby the customer attention would prominently be achieved with the “newness” being offered in the product. Thus being the leader in the technological and innovative aspect Meituxian will brand Meixian TV as a refined product to create the replacement demand. In this approach the advertising is usually "the medium is the message" (Leventhal, 1996). Advertising will be used just to announce the product and create awareness about its features and functionality however the product itself will give the message by capitalizing on its newness By the use of a celebrity endorser in the advertisement, the consumers tend to gain more information as compared to those advertisements that are without an endorser. As a result of this the customer perceives value in the product and sees it as a differentiated product. 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