Strategic Marketing: Analyzing The Buyers Behavior - Term Paper Example

Running head: Strategic Marketing Strategic Marketing ___________ ________________________ ________________ Strategic Marketing Buyer behavior Buyers exert an all pervasive influence in any market. They determine the manner in which the various goods and services must be packaged by varying marketing efforts before they are presented on shelves for sale. In more cases than one marketeers discover such buyer behavior only through final acceptance or rejection of the offered products. However this tantamount to unwieldy risk assumption given the substantial downside loss in rejection situations. Therefore constant efforts must be devoted in any marketing plan to study the buyer behavior holistically and understand important buyer behavior dimensions such as buyer beliefs, motoves, intentions, income strata, desired product and services characteristics in terms of innovations etc before launching or extending the concerned products or services. Strategic marketing draws important inputs from buyer behavior studies and draws an overall marketing strategy based upon findings of the analysis of buyer behavior. Marketing of services is quite a distinct process from marketing of tangible goods due to peculiar characteristics of services. Therefore study of buyer behavior and marketing strategy formation has to be essentially aligned to these peculiar characteristics of the services. We examine the buyer behavior inputs in marketing strategy formation of a service industry firm viz. Singapore Airlines in following paragraphs adequately supplanting the write-up with theoretical constructs. Singapore Airlines (SAI) is in the airline travel industry and this industry provides a critical complementary support to the hospitality industry in terms of providing most preferred transport for reaching chosen hospitality destinations. Peculiarities of Services A service is an activity or benefit that one party can offer to another which is essentially intangible and does not result in the ownership of anything.Kotler (2000) states that that in the goods continuum there is no clear distinction between products and services as we move from tangibility dominance to intangibility dominance. The lack of distinction is particularly prominent mid way through this continuum where both physical goods and intangible services may be presented in a combined consumer package. However tangibility of the offering is an important distinction and can separate a good offering from a service offering. For instance in an airline travel once the ticket has been traveled upon nothing tangible remains with the passenger for further use hence airline travel is typically a service offering. It may be interesting to note that even a service offering such as an airline travel may have tangible dimensions like the food offered during journey and other physical amenities on offer inside cabin but it may be observed that most of these are 'consumed' and do survive subsequent to travel. Even if some tangible dimensions does survive the travel for e.g. some airline offer online auctions as a shopping experience and a purchase made in such shopping stint may remain for long with the customer;then the argument would be that airline industry or firm is not in the business of selling that product and it is the partner product firm which is making that offer. Thus services essentially retain their intangible and perishable character in most situations. Some peculiarities associated with services can now be stated as below: Intangibility -- it's not physical, cannot be "possessed," can't be seen, felt, etc. the ability to reduce consumer uncertainty through tangible signals is diminished. Consequently service marketers must determine how to effectively communicate the service process and final outcome the consumer will receive -- and the quality. (And By the way, quality is ultimately determined by the consumer, not you. They determine what quality they value, and you won't know unless you ask them. It's not about "zero defects" but client expectations.) Inseparability -- that is, the production of the services can't be separated from its consumption. For example, the production and consumption of a medical exam happen together. This means that the consumer often expects the service to be provided in a specific way or by a specific individual -- and that means a bigger burden on the image, knowledge, attititude, appearance, etc. of the person delivering the service. Perishability -- you can't store services for future use. When a client misses an appointment with his attorney, that time can never be recaptured. Empty hotel rooms, unsold theater tickets -- the value has vanished. It's supply and demand. Another issue has to do with performance -- which is what service marketers are really selling. When the demand fluctuates, it may be difficult to maintain the same consistency. For example, a CPA at tax time has difficulty giving the same level of attention/performance as at other times of the year. Variability -- sometimes called "heterogeneity," services quality and consistency is subject to great variability because they are delivered by people and human behavior is difficult to control. Because services are people based, quality can vary of time of day (people get tired), experience, attitude, knowledge, style, etc. Maintaining client trust during lapses (which will happen) is critical. And this is why it can be very dangerous to a client relationship to have one person make the sale and establish the relationship, and another person delivers the service. The original personal contact reduced risk in the mind of the consumer and they may become agitated when someone else must deliver the service (marketingprofs). Two more important peculiarities of the service offerings may be observed as below: First, the satisfaction criterion is different. With a hard good, the consumer can access the product (a car, washing machine, etc.) and see/test it. A consumer will never know how good the service is until after he gets it! This can be unsettling for the consumer. Second, with a service, the consumer is, essentially, "in the factory," watching production all along the way. It is very important for a service provider or consultant to carefully manage the "production process" as the client is able to observe it and make judgments about quality and value (marketingprofs). Theory Behind Marketing of Services Philip Kotler's book Marketing Professional Services describes ten distinctive problems faced by marketers of services:third-party accountability,client uncertainty,demonstrating experience,limited differentiability,maintaining quality control,making the "do-ers" the sellers,allocating time to marketing,pressure to react rather than be proactive,conflicting views about advertising and a limited marketing knowledge base. While Kotler's focus is on professional services (lawyers, architects, doctors, CPAs), it is invaluable for technology and other service sectors as well. All of the above problems can be taken care of through an extended model of service quality which essentially aims at identifying gaps between expected service and perceived service. It is essentially an extension of buyer behavior in determining what buyers thought was going to happen versus buyers' perception of what happened. This gap analysis must begin at the root of the service marketing plan and reckon gaps in marketing research orientation and its upward communication through all layers of management; management's commitment to service quality, goal setting for service quality, task standardization and measuring feasibilities of the same; in ensuring smooth teamwork by having job-employee and technology-job fits, devising appropriate supervisory control systems to reduce role conflicts and ambiguities with an objective to achieve targeted levels of control; in ensuring perfect horizontal communication while checking tendencies to over promise the customers. These would make the service delivery not only more responsive, reliable, assured but would also tend to increase empathy with the customer. A gelled empathy with customer perceptions is core of service quality. At each stage in this extended model buyer behavior analytical inputs would be primary and contribute to reduction of gap. Various theoretical constructs can be used to study buyer behavior. There is a five step process in the consumer buying process: need recognition, information search, alternative evaluation, purchase decision, and post purchase evaluation. Consumers may search for brand and outlets in combinations (Hawkins et.al, 1983). Most consumers are influenced by various groups in the decision-making buying process. Consumer choices are nested and interlocked across the assorted contexts of daily life (e.g., First and Dholakia 1982; Huffman, Ratneshwar, and Mick 2000).These contexts can be classified as demographic,socio-cultural,motivational,learning and family contexts.One can examine and analyze buying roles in complex buying situations by breaking them into smaller questions like: who first suggests buying the product or service, who uses the product, who advises on the buying decision, who makes the actual purchase and who makes the choice on a component of the buying decision (whether to buy, what, how, where from).Similarly one can study buyer behaviour using two criteria of buyer rationality and buyer involvement in the purchase decision. While rationality can be 'low' or 'high' the involvement can be 'low',' medium' and 'high. This gives out 6 types of behaviour when organized in a matrix form. It would be easy to observe and place buyers in one of these categories. These six types of buying behaviour can be categorized as sensual, image, routine problem solving, impulse, limited problem solving and extensive problem solving. Any service provider can aim to build customer value by identifying elements of customer value and deducting there from elements to customer cost to arrive at customer delivered value. As Michael Hammer puts it, "MVA (More Value-Added) means that you give the customer more, perhaps far more, than you ever have before. It goes beyond simplifying your customers' interactions with you to delivering solutions to your customers' problems, of which your products and services in their native forms are but small pieces... You can visualize the principle of MVA as a ladder with your product at the bottom and the solution to your customer's problems at the top. The more help you provide your customers to fill that gap, the more value you add to them, which, of course, differentiates you from your competitors who are still scrambling around at the bottom of the ladder. Also, it is to your advantage to control as much of the ladder as you can - customers will be less likely to abandon you in favor of someone else, lower down the ladder, who offers less value. At the same time, your opportunity for margin and profit increase"(Hammer, 2001).These aspects can contribute effectively to the overall build up of the marketing strategies like overall Low-Cost Leadership Strategy, broad Differentiation Strategy, focused Low-Cost Strategy, focused Differentiation Strategy and Best-Cost Provider Strategy. Case of Singapore Airlines Till the turn of 1990s airline travel industry was considered just to provide travel services and classified as a mature industry. Competition was more in terms of price wars then on differentiation or service quality variations. Well into 1990s the buyer behavior in airlines industry changed remarkably. No longer were airlines considered just to provide an 'air taxi ride' which was more concerned with filling standard passenger seats and ferrying them across .It was now accepted that passengers had a distinct preference for providing them ' a traveling experience'. The environmental studies (current situational analysis) revealed that a substantially large niche/segment of new breed of affluent and professional air travelers (buyers) had emerged which could be targeted for air travel products -quite non-standardized and substantially differentiated and almost customized. These included investment bankers, corporation lawyers, entrepreneurs, real-estate developers and entertainment moguls of today's business and professional elites who tended to be in constant and paced motion with little time to spare. With passing days this niche was growing in size. In other words there was a large potential to create MVA(customer delivered value) for such niche and charge them appropriate premium to raise revenues and profits. Focused differentiation was the strategic need of the hour. Major global airlines were competing across countries for this meaty clientele. SIA was perhaps first to catch up with the changed direction of the wind. SIA was already enjoying reputation as one of the very best airlines in the world. Its beaming, lithe flight stewardess, outfitted in tight batik sarong kebaya marketed as the Singapore Girl, is a globally popular international service icon. It not only serves as an effective unique selling proposition for the airlines but has also earned substantial legacy differentiation leverage over similar icons of competing airlines. SIA is strategically positioned in the premium segment of the global airline industry on service, quality and value market parameters. "The airline industry is, by its very nature, a service industry. In a free market, the success or failure of an individual airline is largely dictated by the quality of the service it provides" (Harvard Business School, 1989).Its differentiation strategy began with the immense popularity of The Singapore Girl marketing icon. This icon evoked an awareness of warm Asian hospitality and courtesy's backed this up with its very efficient service standards and already had a winning combination on hand. However it ventured into a fairly elaborate differentiation strategy to address the changed needs of new clientele. This differentiation took the form of: the introduction of gourmet cuisine in-flight dining with vastly improved servings for economy class passengers as well, hiring top of the line culinary experts' panel to train chefs and execute quality checks with a future vision to make its in-flight food an industry benchmark, multi million dollar cabin revamp with first-class cabins coming with an ambience of a mini-suite in a luxurious hotel and details covering the entire distance from custom-built seats to cashmere blankets, launch of its Frequent Flyer Programme(FFP), KrisFlyer, as the bulk of SIA clientele are non-Singaporeans specific trainings were organized for SIA crews to enable them to be conversant with and make announcements in the languages of the countries to which they flew, a valet and porter service for passengers on ground zero, special lounge for its passengers at Changi airport, only steps away from immigration, wider and more reclining seats for business class passengers on the house champagne for economy class passengers-an industry first, The above quoted were the few attributes touched upon in niche differentiation introduced by SIA and they were consciously built on the premise to exclude cost cutting strategy and focus on improving service so as to quench all clientele needs. This conscious service orientation via differentiation helped SIA to withstand and browbeat even US competition post deregulation of US airline industry's has shown that it competes not on the basis of costs and prices, but by differentiating itself on premium-quality service. Thus a timely buyer behavior analysis through SWOT brought about realization of a new emerging client segment where clients were highly involved with the purchase decision and were less rational and more of comfort seekers. These clients had high paying capacities for the customized comforts.SAI categorized this segment in impulse and sensual category and reoriented marketing plan with a focused differentiation strategy to maximize customer delivered value. Works Cited Kotler, P. Marketing Management, Millennium edition. Prentice Hall. 2000. Retreived on May 12,2006 from:http://www.marketingprofs.com/ea/qst_question.aspqstID=8976. Hawkins, Del I., R. J. Best, and K. A. Coney .Consumer Behavior: Implications for Marketing Strategy. Plano. Texas: Business Publications Inc. 1983. First, A. Fuat and Dholakia,Nikhilesh. Consumption Choices at the Macro Level. Journal of Macro marketing.Fall.6-15. 1982. Huffman, Cynthia, S. Ratneshwar, and David Glen Mick .Consumer Goal Structures and Goal Determination Processes: An Integrative Framework. in The Why of Consumption: Contemporary Perspectives on Consumer Motives, Goals, and Desires, eds. S. Ratneshwar, David Glen Mick, and Cynthia Huffman, London: Routledge, 9-35. 2000. Hammer, Michael. Agenda, Retrieved May 12, 2006 from http://www.1000ventures.com/business_guide/differentiation_strategy.html. 2001. Harvard Business School, Singapore Airlines (A), 9-687-022, Rev. 3/89.1989. Read More