The Concept of Buyer Behavior and How It Affects Marketing Activities - Essay Example

MARKETING al Affiliation) Key words: utility, rational, cognitive approach, segmentation, targeting. 6. Explain the concept of buyer behavior and how it affects marketing activities. Buyer behaviour refers to the factors that influence the selection, purchase, consumption, and disposal of a product. This behaviour originates from the urge to satisfy desires. For many years, economists have examined the basis on which buyers make decisions. Their decisions influence the marketing strategies employed by different companies. Companies engage in healthy competition through different marketing communication tools. Each company tries to outdo each other, in terms of having the largest market share. They engage in various marketing activities, which are responsible for ‘selling-out’ the product or service offered. The most prevalent theory of buyer behaviour in respect of marketing activities is the ‘Utility Theory.’ This theory proposes that; buyers make decisions based on the expected result of their decisions (Bray, 2012). Buyers employ a rational behaviour when choosing commodities to consume; that is, they are concerned with self interest. Marketers are always aware that buyers will only consider the products and services that achieve the highest level of satisfaction. With this knowledge, companies produce products that meet the buyers’ needs. This theory views a buyer as ‘a rational man.’ Companies are influenced by this behaviour to design a product or service that will be desirable to the buyers. Marketing activities tend to focus on research and pricing domain of the product or service. There are various factors that influence consumers; according to contemporary research on buyer behaviour. Buyer behaviour arises from the objective of satisfying a need. This stage advances in information search; on a product that satisfies the need. The buyer then evaluates various alternatives obtained from information search. A purchase intention arises from the evaluation of alternatives. The purchase intention triggers the buyer to buy the product or service, consumes it, and then disposes it. This is the complete view of buyer behaviour. Marketers are aware that buyer behaviour advances from; a need to the actual transaction. Marketing activities will tend to focus on promoting their products and services. This promotion creates awareness; that is, it sensitizes the potential buyers about a particular product or service being offered. Buyers tend to apply a cognitive approach when deciding on which products or services to consume. This approach focuses on the buyers’ observed behaviour to intrapersonal cognition. The experience achieved from the previous use of a product or service determines its influential role. Most buyers are inclined towards a particular brand. The market place is laden with numerous products. Buyers are selective in terms of the experience achieved from using a particular product or service. They will tend to make their consumption decisions based on a specific brand. Marketers need to conduct public relations as a marketing communication tool. Public relations refer to the creation of positive publicity of a certain product, service or company. A new product may not have buyer preference, since buyers have no previous experience about it. Marketers should employ public relations, to create a positive impression of their product or service. Marketers understand that buyers apply a cognitive approach when selecting goods and services. They tend to apply a marketing strategy that enhances the product publicity. An important aspect of buyer behaviour is based on information searching techniques. The urge to satisfy a need triggers potential buyers to search for sufficient and reliable information. Marketers realize that marketing activities involve the promotion of a product. In the modern world, marketing activities employ a different approach to create awareness and promote a product (Ryan, & Jones, 2009). Potential buyers use the internet to search for information. Sales transactions have shifted from physical to online transactions. Marketing activities have also shifted from direct marketing to online marketing. Companies should focus on the following areas for effective marketing activities; web design, search engine optimization, social media, and content creation and promotion. These areas create a platform for posting relevant information about a product. Buyers appreciate the availability of online information. It saves them time and money. Marketing activities have shifted from direct marketing to online marketing. This shift is attributable to the availability of sufficient and reliable product information. This marketing strategy is readily available and cost-effective. 7. Discuss the process of ‘segmentation’. List and discuss the major bases for segmenting consumer and business markets. The forces of supply and demand have a significant influence on the marketing mix that an entity employs. These forces define the general acceptability of products to different types of consumers. Basic needs are consumed and used for different customers and different reasons. This means that every consumer is different. Marketers put consumers into different groups. Consumers who have common interests are grouped together. There are other factors which influence the criteria used to group consumers: age, sex, spending power, and buying attitude. The process of splitting a particular market into groups is referred to as ‘segmentation’. Individuals in the same group tend to have similar preferences; that is, they purchase or react in a similar manner. Segmentation is an important marketing technique, whereby marketers combine prospective buyers into segments. These segments are characterized by common needs and responses. For instance, an athletic footwear company may group long-distance runners and basketball players. These two categories of athletes have a common need; spending power. Athletes have a high spending power, meaning that they will respond to various advertisements. It would be impossible for a company to target the whole market; attributable to cost, time, and effort constraints. The process of segmentation begins with defining a group of prospective buyers, who can be identified and targeted with reasonable cost, time and effort. Once the group is identified, it is evaluated to establish whether it can be targeted with the available resources. A company needs to consider whether the group can respond to marketing actions such as; prices, promos, schemes, and advertisements. If this step is successful, the company should consider whether it will be profitable to sell to the individuals in that group. The final step is; considering whether the value and number of the segment will grow. This final step is an important point of consideration in market segmentation. Companies should consider whether its product will grow in sales and profits, in line with an increase in the number and value of the group. A common challenge that most companies face in market segmentation is; different segments may forward conflicting demands. This challenge presents itself after the process of segmentation. It can be overcome by evaluating the demands of the different segments and relating them to the company’s strengths. The company may select one or two segments on which to concentrate all of its efforts. This selection process involves collecting information about a particular segment, its prospective performance, the strength of the market competition, and the company’s strength. This selection process is referred to as ‘targeting’. Segmentation is successful if a company can make a specific segment the main target. Companies adopt detailed criteria for segment classification: It should be measurable, It should be accessible through different channels of distribution and communication, It should be durable, that is, changes should be minimal, It should be substantial: it should be large to for it to be profitable, It should have unique needs: segments should have different responses to a marketing mix. Business and consumer markets cannot be grouped on the same bases (Richards, 2009). Bases for segmenting the consumer market 1. Geographical variables: The consumer market is partitioned into separate geographical units such as; by population density, by climate, and/or by regions. 2. Demographic segmentation: the market is partitioned into small groups based on variables such as; age, religion, gender, occupation, income, social class, and education. 3. Psychographic segmentation: The consumer market is classified on the basis of personality characteristics, social class, and lifestyle. 4. Behavioural segmentation: The market is partitioned into groups based on consumer knowledge and/or response to a product. Variables in this category include; brand loyalty, user status, and usage rate. Bases for segmenting the business market 1. Company size: Business markets are grouped in terms of their size. Company size variables include; floor space area, annual transactions, and/or market share. 2. Industry: The industry in which a business serves determines its segmentation. Preference lies on industries that produce priority goods (such as agriculture) to industries that produce luxury services (such as tourism). 3. Geographic variables: Businesses that have a high industrial growth rate, a high customer concentration, and/or favourable international macroeconomic factors are grouped together. 4. Purchasing approaches: variables in this category include; the nature of previous relationships, purchasing-function organization, and/or the purchase policies adopted. Despite the different approaches of segmenting consumer and business markets, there are inherent characteristics evident in every segment. Individuals in a particular segment are homogenous (have common needs), distinct (unique from other groups), and respond to the market in a similar way (Lannuzzi, 2013). Reference list Bray, J. 2012. Consumer Behaviour Theory. Approaches and Models, 1, 2-33. Lannuzzi, A. 2013. Market Segmentation Criteria. Five essential criteria, 1, 1-6. Richards, L. 2009. Small businesses. What Are the Basis of Segmenting Consumer Markets?, 1, 1-5. Ryan, D., & Jones, C. 2009. 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