Repeat Purchases, High and Low Involvement, Organizational Purchasing and Consumer Satisfaction - Assignment Example

? Week Four Questions BY YOU YOUR SCHOOL INFO HERE HERE Week Four Questions Repeat Purchases It is crucial for marketers to ensure repeat purchases for profitability reasons and for ensuring long-term loyalty to a particular brand. As it is related to profitability, when a consumer is willing to repurchase a product, it ensures that there will be stable revenues. Under business theory, there is always the threat of substitutes in a market, which means that other competing companies will often develop innovations that are similar to an existing product. One can take into consideration a technology brand such as a CD player. Substitute products in the market for this product include mobile smart phones that can sustain music selections or even Apple iPod. If the marketer is unable to get repeat purchases, then there is always the risk of defection to competing substitute products that will, over time, erode profitability. Additionally, establishment of brand loyalty is very important not only to ensure revenues from customer sales but also to outperform competition with similar product offerings and ensure that the life cycle of the product can be sustained. Under the product life cycle model, products move through an introductory stage, a growth stage, a maturity stage and a decline stage depending on how long the marketer can sustain demand for this product. When a product reaches the decline stage, as consumers no longer demand the product in high volumes, cash management and inventory control become a major strategic problem (Dooley, 2005). By being able to promote a desire to make repeat purchases, it has the ability to extend the life cycle of the product which gives the business opportunities to avoid restructuring its operations and marketing strategies, which can be very costly to the organization. Marketers can prompt repeat purchases in several ways. First, they can use psychographic segmentation and targeting strategies to create long-term connections with the consumer lifestyle, attitudes and behaviors. Some products are not easily differentiated because they have benefits and functions similar to other competing products. Therefore, they use positioning strategies to emphasize one unique characteristic that is different from competing products to let consumers know how the product can enhance their lives, such as focusing on premium ingredients in a food product. If the marketer illustrates to the consumer that its product has long-term benefits to enhance the lifestyle and it is promoted more effectively than competing products, there is a much greater chance that the consumer demand for the product will be sustained. For example, some companies will use celebrity endorsements as a means of promoting more interest in a product, using credible and attractive role models that fit the lifestyle characteristics of the target market. Under social learning theory in psychology, celebrity endorsements often promote repeat purchases when such lifestyle connections have been made (Pornpitakpan, 2003). High Involvement and Low Involvement Buying candy from the supermarket in the convenience section near the register represents very low involvement purchase decision-making. When making this decision, there was very little thought about what would be an appropriate product due to two specific factors. First, the time frame allowed while the checkout clerk is ringing up the product is very short and therefore, in order to get the product to the register in the allotted amount of time, a rapid decision must be made. Secondly, whether the buyer was hungry or not determines the size, flavor and ultimate choice of the candy product. A fast decision based on fast nutrition needs determines the volume of time selecting the product. A high involvement decision includes shopping for a new flat screen television set. I wanted to have specific features, resolution and was very focused on price as decision-making criteria in this high involvement purchase. During this decision-making process, I compared prices online with major retailers and independent online vendors, which took a great deal of time to determine which price would provide the highest value before even visiting the store. Upon getting to the store, I was also influenced by the salesperson’s experience and courtesy along with actual testing and comparisons, in-store, with many other similar products with similar features and benefits. Definitely, there were differences in these decision-making processes. When buying the flat screen television, it took about a week to go through social media websites, visit many different electronics retailers, and overall making many different features comparisons with other competing products in the market. For the low involvement purchase, I had to make rapid decisions due to realistic timeframes allowed while waiting in long lines and to satisfy hunger depending on the extent by which this was important. High involvement decision-making purchases, also including shopping for a new automobile, are usually aligned with pricing that is important to a person with moderate resources. Someone with significantly high resources, however, might make rapid decisions since there is little financial commitment. In my personal case, it meant 60 months of payments and therefore, I wanted to make sure that total value could be provided for the burden of cost. Organizational Purchasing My organization, Verizon Wireless, has made both high and low involvement purchases. The company required two new servers to replace outdated ones used for supporting business software and also to service consumers using high speed Internet access. The company contacted IBM and many other reputable server companies to get in-business demonstrations and sales presentations to ensure that value would be aligned with pricing, as well as to ensure that the life cycle of the chosen server would be sustainable for at least five years. In this case, the business wanted interaction with salespeople to browse through B2B catalogues, and also to consult with procurement about budgetary needs. This high involvement decision required multiple contacts with business leadership at Verizon as well as many salespeople as these servers cost well over $20,000. Organizational buyers collect information through catalogues, direct mailing literature sent to corporate leadership, and even speaking with other business representatives (word-of-mouth) to determine which server products would best serve Verizon’s interests. Organizational buyers sometimes also look toward trade shows where they can witness more printed literature on products and get demonstrations of their effectiveness in real-time. Consumer Satisfaction Consumer satisfaction is defined as “the measure by which consumers report positive experiences with a company or brand for meeting or exceeding their expectations” (Farris, Bendle, Pfeifer, & Reibstein, 2010, p.107). Consumer satisfaction is highly important for marketers, as negative experiences in either a product or service will reduce demand for the product, which will impact profitability and competitiveness. For example, a company such as Verizon provides promises that they will get reliable service with properly aligned pricing and excellence in support services. If the customer buys Verizon products but receives inferior service over the telephone or when dealing with in-store representatives, they will likely not buy the product again. Furthermore, negative word-of-mouth about these experiences can turn potential new markets away, which leads to revenue losses. This is why consumer satisfaction is so important because marketers want to retain customers and build loyalty which can often translate into extensions of the product line using the same brand to link quality with a new product offering. If customers are not happy and satisfied with their experiences, long-term growth problems can occur when trying to innovate or diversify. Negative experiences with product or service have many consequences to the business and might even shorten the expected life cycle of the product or service, putting many new costs into the business operations model. References Dooley, F. (2005). Logistics, inventory control and supply chain management. Choices, 20(4). Farris, P. W., Bendle, N. T., Pfeifer, P. E., & Reibstein, D. J. (2010). Marketing metrics: The definitive guide to measuring marketing performance. Upper Saddle River: Pearson Education, Inc. Pornpitakpan, C. (2003). Validation of the celebrity endorsers’ credibility scale: Evidence from the Asians. Journal of Marketing Management, 19(Spring), 179-195. Read More