Segmentation of industrial markets - Essay Example

Consumer Behavior A1. Identify THREE bases for segmenting industrial markets and list one example each. Bases used to segment industrial market include demographics. In demographic segmentation, the market is divided into groups based on gender, age, income, education, or religion of the target population. Example, Consumer need change with age, thus marketers design packages and designs and then promote them differently targeting different age groups. I.e. the marketing of toothpaste – branding is different for both adults and children. Segmentation based on product. End use of the product, products is classified according to customer needs. It involves categorizing your products as per the user or industry standards and requirements. It may include tailoring or changing your products to meet the user or industry requirements. Product segmentation helps the company to distribute risk of selling high cost products in different markets. This basis helps to improve service delivery standards and understanding customers’ needs and wants. For example in the phone industry, mobile phones come in different models, storage capacity, features, and different prices. Geographic location is also a basis for industrial market segmentation; the market is divided into locations, regions, cities, and countries. The philosophy behind this is that people living in the same area share similar needs and wants. For example people in a country show some similar characteristics i.e. speak same language, similar religion or the design and quality of clothes they were is similar A5. Identify and describe SIX typical criteria for consideration of choice of Research Company for the firm. It’s is important to pick the right company for a research company, i.e. before launching a new product, it’s important to know the market and thus a good research company helps in accessing the level of demand. Criteria for consideration of choice of Research Company are: 1. The reputation of the company, is good? Check for references and ask for or is recommended by a business colleagues. 2. Establish the company’s success in conducting business research especially in your area of business. This can be done by asking the company for the successful projects similar to your own. 3. Create a harmonious relation with the company; you can invite the company for a meeting or assessment. See if their representatives can listen to what you say. Identify the person you will deal with throughout depending on the responses to your needs. 4. Check if the price is competitive. Get a number of proposals to compare especially if you have met with several companies. Quality is off course very important. Choose an offer that offers most for your money. 5. Evaluate the Research Company’s responsiveness. They should be proactive in relation to changes in the market. 6. Consider the Company’s approach to market research. The company should be willing to understand my needs and help me achieve my goals. They should adhere to market research standards i.e. professional data collection. The Company must be focused on giving practical and actionable results. B1. (a) Select a product that would be categorized as discontinuous innovation and one that would be dynamically continuous innovation. Describe and justify your product selection for each of them examples. Listening music on a CD player is an example of discontinuous innovation. Moving to the latest technology will result in one significantly changing his or her behavior. For the CD player, you could select the track you want or even let the player randomly select the tracks for you. The new technology of MP3 players has excellent track selection features. Music collection is stored on one device and sort music by genre, albums, and other categories. An example of dynamically continuous innovation is the disposable lighter. It has both the concept of a lighter and the concept of matches providing the combined benefits of both. The consumer can understand the product easily. (b) Identify FIVE factors and explain how each factor affects the diffusion rate this innovation. Innovation attributes are important considerations for potential adopters. These attributes include relative advantage, complexity, trial-ability, and compatibility. Lead users and the innovation process is factor that affects the diffusion rate of innovation. Lead users are advanced in the market in terms of their motivation qualifications and needs. They have unique characteristics in comparison with the normal customers, example of use experience. They have the tendency to spread positive information or word of mouth about the innovation that results in increase in the rate of diffusion. Opinion leaders are the main players that accelerate diffusion process. Opinion leaders have greater access to mass media and interpersonal networks. They have higher socio-economic status and adopt new innovative ideas before their followers, thus they influence the consumer decision-making process by positive word of mouth. Culture also has a role in innovation acceptance and the rate of diffusion. The rate of diffusion is higher in high-context cultures. The value system of the individual is usually critical to innovation adoption. Individualism and collectivism affects innovation adoption. An Individualist society relies on personal beliefs in decision-making. Individualism suppresses innovation diffusion. Collectivist societies rely on group consensus in decision-making. Collective societies are involved in “in -group” which in turn affect their decisions in the short term. B3. An important component of post purchase evaluation is the reduction of any uncertainty or doubt that consumer might have had about the selection. How do consumers go about reducing their post-purchase cognitive dissonance? Give FIVE examples. Consumers reduce post-purchase cognitive dissonance in the following ways: 1. Reevaluating product alternatives. The consumer enhances the attributes of the products selected and decreases the importance of the unselected products and their attributes. Alternatives are polarized to reduce their dissonance. 2. Consumers seek information to support their choice. This reinforces the consumer’s decision for the preferred alternative. Advertisements may change the information to emphasize on the positives of the brand and minimize the negative characteristics. Consumers not only evaluate an advertisement, but also online reviews. 3. A consumer can change his/her attitude. Consumers can sometimes purchase a product he/she had attributed to negatively in a bid to promote it and a change of attitude reduces dissonance. Another form of attitude change is motivation to achieve consonance for it is easier than renouncing the product. Consumers are not carried away by their expectations. 4. A consumer can reduce any uncertainty and doubt they might have had about their selection. Consumers reassure themselves that their choices were wise. 5. Consumers may attempt recommend the chosen brand to friends and others by building up the brand’s good points. By convincing others that you made a wise decision, the consumer reinforces the wisdom of the choices they made or the one in their mind. Read More