Buyer and Consumer Behavior - Report Example

Buyer and Consumer Behavior Executive summary This report provides a discussion on the figures and patterns that appear in the Smith’s cereal brand market behavior tables. The essay focuses on outlining and explaining the figures and patterns with an aim of providing an explanation and creating an understanding the behavior of the consumers and buyers of cereal in the market. This is aimed at outlining the implications of the behavior with a purpose of enabling the development and creation of proper strategies for the expansion of the brand in the market to enable profit maximization. In the analysis of the behavior, the report utilizes the performance of the brand, consumer attitude towards the brand as well as the demographics and segmentation associated with brand marketing. Brand performance describes the desirability and profitability of the brand in comparison to the competitor brands. It considers several brand performance measures to compare Smith’s to other cereal brands. The brand was found to have a 34% market share and a 72% penetration, which are the highest values in the market. Being the largest brand in the market, Smith’s enjoys the best customer loyalty at 2.2 average purchases. This shows that the consumers tend to buy more and have greater loyalty to the bigger brand. If consumers have a high attitude towards a brand, they will tend to buy more of it as compared to the competitors. Since the data shows that Smith’s has the highest market share, the analysis found that it enjoys the best consumer attitude. In order for a brand to penetrate a market and have good volumes of sales, it is important for its marketers to understand the market demographics so as to segment the market and use different marketing strategies for different consumer demographic groups. As such, this report used the values of consumer penetration to establish the brand with the best demographic understanding and therefore segmentation. Smith’s had the best market penetration value at 72%. This find established it as the brand with the best understanding of consumer demographics. The findings of the report therefore found the brand to be the most established in the market which will enable it to expand its business volumes as the consumers and buyers’ behavior is shown to favor the biggest brand. Key words: Brand performance, attitude, demographics, salience, segmentation, market share, penetration Brand performance Brand performance refers to the behavior of the brand in the market due to the nature of the brand in terms of desirability and profitability. The performance of Smith’s depends on how much of the brand’s products are purchased as well as how many of the other brands in the market are bought. However, generally the performance is as a result of predictable buyer behavior patterns. The typical consumer pattern is to purchase a brand more times than others due to their split-loyalties repertoires. The result is the occurrence of specific purchases caused by loyalty to brands in a manner that may appear to be random. It may be repertoire (polygamous) loyalty or subscription loyalty where the consumers exhibit 100% loyalty to a brand (Swarc 9). As such the determination of the performance of the Smith’s brand in the market needs to take into consideration several brand performance measures (BPMs). A comparison between the brand’s BPMs to those of the competitors is necessary to determine its performance. The BPMs consist of; Size related BPMs –market share percentage and penetration Loyalty related BPMs – sole loyalty and average purchase frequency Switching related BPMs – share of category requirements and category buying rate Out of the 233 units of commodities purchased in the market, the Smith’s brand sold 80. This means that the brand had a market share percentage of 34%. This is the highest value in the market with the value decreasing over the next brands with Jumpy’s having the least value of 6%. The descending order of brands is also replicated in values of brand penetration with Smith’s having 72% market penetration as the highest in the market whilst Jumpy’s is has the least in the pecking order with a market penetration of 24%. This means that Smith’s, the biggest brand in the market not only has the largest number of buyers and consumers, but also has the highest frequencies of purchases as indicated by the penetration. This means that the buyers in the market exhibit a statistical selection model in their pattern of purchase that describes the double jeopardy property (Ehrenberg, Uncles and Goodhardt 4). This sees smaller brands be punished twice with reduced buyers attributing to a low level of market penetration. This pattern property is reflected in the other brand performance measures of the market. Over the period of time over which the study was conducted, the consumers of the Smith’s brand made a purchase of the brand at least 2.2 times on average. This value’s pecking order resembles that of the market share with the Jumpy’s brand having the least average purchase frequency at 1.2. In terms of category buying rate smith has a value of 5.6 with Jumpy’s having a larger value of 8.3. The translation of this is that Jumpy’s buyers have bought 8.3 units on average of the brand from the whole category which means that they had the least loyalty as they had the highest propensity to choose other brands. Relating these two values by dividing APF with CBR we get the share of category requirements for the brand with Smith’s having the highest value at 40% while Jumpy’s has 14%. With the average of this value in the market being 28%, the interpretation is that larger brand consumers mostly buy that brand that is Smith’s while small brand consumers mostly buy other brands illustration the double jeopardy property of their patterns. The effect of a natural monopoly in the making comes out clearly as even consumers of a certain smaller brand buy more of other brands. The Smith’s monopoly affects the buyers’ behavior in a manner that is beneficial to the organization as it enables the organization to sell more units as its customers are the most loyal. This is evidenced by the sole loyalty values where Smith’s has 22% percent of its customers loyal to their product while Jimmy’s, the small firm has only one percent of its buyers as being loyal. Therefore the market numbers associated with the brand performance measures discussed above illustrate that Smith’s is performing well in the market and is in fact the best performing brand. The customers are loyal to the brand and the organization should endeavor to increase sales that will see the loyalty sticking and growing. Brand attitude An attitude refers to ones construct of the mind towards something as a result of personal evaluation. Brand attitude refers to the opinions that consumers may have share towards a product brand. This incorporates how much consumers want the product, what their thoughts are on the brand as well as whether it fulfills the needs of the consumer (Wang and Jiaxun 263). In addition to this valence of thinking about the product, brand attitude encompasses the conviction of the consumers regarding their thoughts on the brand. This regards to the how much the buyer thinks that his or her thoughts on the brand are accurate. These thoughts and therefore brand attitude are quite stable with limited possibilities concerning their change. The methods for determining the attitude consumers have concerning a brand are diverse and include filling out questionnaires or just using a ranking and rating system. Rating and ranking involves giving an attribute score for each brand in a market and ranking them to determine which product receives the best attitude from consumers. Brand salience on the other hand is the propensity of a brand to be remembered when one is making a product concerned with the category. The human mind gathers information all round and stores it permanently. However, we find at times that we cannot remember the information which is faulted at the methods the brain uses to remember. As such, it is necessary to have cues that prompt the reach of the information in the brain so that we remember it (Hantula and Wells 34). This is called creating salience. The effect of this is shown by the ability of customers to reflect on the quality and quantity information regarding the brand. Compared to attitude, brand salience measuring is more important as the attitude customers have towards a product will not matter when they do not even remember it (Weiner and Craighead 398). One’s attitude towards a brand does not have a unit of measurement. It is either positive or negative. However, if the attitude one has for two brands is positive, there may be a slight difference with one having a greater opinion of one brand therefore this brand will be higher on the ranking. While conducting studies on consumer attitudes, one is likely to get the opinion as of users of a brand compared to non users. Using the information of the first assignment, we realize that we can use the brand market share to rate and rank the brands in descending order of consumer attitude towards them. Suppose one’s attitude towards a brand is the best he shares in a market that consists of several brands, he or she is more likely to utilize the product more often than the others. Therefore, the product with the highest market share and hence sales, is the one that gains the best brand attitude from consumers. In this case the ranking would have Smith’s as the highest and Jimmy’s as the least. However, since Smith’s has the largest customer base, it will have the most varied response. Since the attitude ranking goes hand in hand with the market share ranking, it is possible to predict the pattern and behavior of consumers. This is because people’s behavior plays along to their attitudes (Consumerpsychologist.com). A behavioral change in the purchase of a brand will result in a change of the brand attitude in the direction of the changes in sales. However, even if 50% of the consumers change their attitude towards a product, the stability of the aggregate patterns ensures that percentage of those with a positive attitude to wards the brand will stay same in future surveys (Consumerpsychologist.com). The stability is weaker for negative attitudes. It is important to note that although using a brand most likely means that one shares a positive attitude, there are some people who hate products but still use them. The development of a positive attitude among the customers results in the increase in purchases that most likely result in growth of the brand. A positive attitude means that the brand will be marketed further through the word of mouth means which serves as the most important aspect of marketing (Word of mouth 1). Changing negative attitudes into positive ones will most likely see the brand grow with the consumer base also growing. Demographics and Segmentation Segmentation involves the realization of a variation in the needs and preferences of different customers and analyzing the variations as well as similarities among the buyers as a means of identifying different customer target segments (Berry n.p.). These include culture, social class, demographics, geographics and geodemographics. All these determine how consumer bases are divided into segments that adopt different marketing strategies. Culture is the values, symbols, artifacts and ideas that serve as tools of evaluation, communication and interpretation between society members. Different cultures view advertisements, business approaches and symbols of communication in different angles. This means that it is necessary to edit the marketing tools to suit each culture especially in a global company. Demographics on the other hand refer to the different customer characteristic variables like gender, occupation, gender, income levels and education. These variables determine the utility that a customer will want to derive from a brand. This means that one needs to understand these variables if he or she is to adopt a marketing strategy that addresses all components of the customer base (Franzen and Moriarty 153). The variables do not stand on their own with the propensity of consumer segmentation being determined by a number of variables. The cereal market is one that consists of a diverse consumer base in terms of age gender, income levels as well as education levels. This means that the marketing of the different cereals needs to allow consideration of the different consumer groups if it is to create improved brand attitudes and salience. This means that the company that will have the best segmentation and marketing structure will sway the different consumer groups resulting in the best sales across the groups. In the table data concerning the cereal market, there is no specific information that talks about how the different cereal brands have segmented their consumer bases with corresponding values of sales. However, the values of market share and penetration may be interpreted to show which brand has the best segmentation. Brand MS (%) Penetration (%) Smiths 34 72 Kettle 24 50 Doritos 21 48 Red Rock Deli 15 44 Jumpys 6 24 Average 100 48 From the table, Smith’s has the best value of market share and market penetration at 34% and 72% respectively. This is followed by Kettle, Doritos, Red Rock Deli and then Jumpy’s that has market share at 6% and penetration at 24%. The closest competitor comes in at 24% MS and 50% penetration. Since the values are not specific to any segment, the assumption is that the order of market shares and penetration is similar across all groups in the customer base. This means that Smith’s Customer base consists of a diverse consumer population that is able to create such numbers for the sales. The same can be said for kettle and Doritos that market shares that can be said to compete with Smith’s. However, Smith’s seems to adopt a segmentation and marketing structure that targets all groups of consumers which has resulted in the large penetration value. The implications of this structure of the marketing strategy is that there will be improved customer attitudes concerning the Smith’s brand as the strategy shows the consumers their needs and preferences are in line with the product (Kapferer 397). The other two firms, Red Rock Deli’s and Jumpy’s, have such small values of market share and penetration that they do no pose any major challenge to Smith’s. The small values of penetration can be blamed on the firms targeting specific consumer groups and not the market as a whole. This is because segmenting would see the groups have a wider target market that could have seen the market shares rise alongside penetration values. Work cited Ehrenberg, Andrew SC, Mark D Uncles, and Gerald J Goodhardt. Understanding Brand Performance Measures: Using Dirichlet Benchmarks. Journal of Business Research 57.12 (2004): 1307--1325. Print. Franzen, Giep, and Sandra E Moriarty. The Science And Art Of Branding. Armonk, N.Y.: M.E. Sharpe, 2008. Print. Hantula, Donald A, and Victoria K Wells. Consumer Behavior Analysis. London: Routledge, 2013. Print. Kapferer, Jean-Noël. The New Strategic Brand Management. London: Kogan Page, 2008. Print. Wang, Chenglu, and Jiaxun He. Brand Management in Emerging Markets: Theories and Practice. , 2014. Print. Szwarc, Paul. Researching Customer Satisfaction & Loyalty: How to Find Out What People Really Think. London: Kogan Page, 2005. Internet resource. Weiner, Irving B, and W E. Craighead. The Corsini Encyclopedia of Psychology. Hoboken, NJ: Wiley, 2010. Print. Consumerpsychologist.com,. Attitudes. N.p., 2014. Web. 24 Oct. 2014. Berry, A.W. Consumer Behavior And Market Segmentation By A.W. Berry | Inside Business 360. Insidebusiness360.com. N.p., 2014. Web. 24 Oct. 2014. Word of mouth lecture notes. Read More