Brand Performance, Buyers' Consumer Preferences Regarding Kit Kat and Twix - Case Study Example

Buyer and Consumer Behavior report Executive Summary Consumer behavior is the study of the procedures involved when individual buyers who are in a buying situation think, select, purchase and use or dispose products/ services to satisfy needs and desires. Keeler (2001 pp.4-5) noted that consumer behavior involves the mental and emotional process and the observable behavior of consumers during searching, purchasing and post consumption of a product or service. According to Guido (2001, pp.31-32) one of the most important aspects of consumer behavior is market segmentation. Here consumers are categorized using criterion such as, product usage, demographics which includes the objective aspects of a population, such as marital status, income, age and gender and psychological lifestyle characteristics. Sharp (2007, pp.56) states that emerging developments, such as the new emphasis on relationship marketing mean that marketers are much more concerned with the needs and wants of different consumer groups than towards sole loyalty. In this report, a market analysis research for fast food product is conducted for five brands that are in the same category in the market. In this research, it is noted that the difference in market share statistics is due to the fact that each product has a different level in market penetration. The ones with bigger share like Mars bar, Kit Kat and snickers have a great competitive advantage mainly because they have more customers than Twix and Nestle Gold who are lower share brands. The relatively small differences between brands in average purchase frequency and category buying rate are indicators that small brands have fewer consumers who might be less loyal to the product or are not loyal at all. Brand Performance. Keeler (2001) considers brand performance metrics as a tool to provide a measurable contribution towards the performance of a business with regards to the particular brand. These metrics determines whether the brand is of any value to the business or not as compared to other brands. According to table 1, Mars Bar has the highest market share with a huge variation in market penetration. As a result it has a significant competitive sole loyalty advantage over all other companies. Despite being the second in market share holding, Kit Kat has a poor category buying rate which is below the average. Comparing this rate with the companies that have a lower market share it is evident that customers prefer Mars Bar products much more than Kit Kat’s. Consumers buy this category on average 2 times in the observed period. It is notable that the higher the market share, the lower the category buying rate. According to the Double Jeopardy law Share of category requirements increases with penetration and market share and as expected, there is much greater variation in penetration as well as in the sole loyalty (Richard, 2000). Why is Category Buying Rate for Kit Kat being lower than that for Twix? In any time period a company might be sharing a large percentage of their customer base with other brands that are giving out discounts or have cut down their prices, such that those customers who are not solely loyal to Kit Kats products will go for the alternative. According to double jeopardy law, big brands lose a lot of customers but on the other hand, it is a small portion of their customer base. Consumers on the other hand and with perfect knowledge of the market will compare the prices that different companies are offering and buy from the company that is offering a product at a cheaper price. Kit Kat is operating in a repertoire market. Repertoire markets are characterized by buyers having a wide range of similar brands/products and thus an average share of category requirements is less than 50% and its customers are less loyal. In subscription markets, consumers have very small range of similar brands to choose from and thus an average share of category requirements is over than 50% thus brand loyalty metrics are high as it is noted by Quester, P et al (2007). Table 1 shows statistics of a repeat purchase that characterize a repertoire market, there are clear patterns of double jeopardy such as brands with low market share and less market penetration have a great market competition disadvantage in that they have fewer and very few loyal buyers. Also from the statistics no brand satisfied half of its average buyers’ category requirements. Andrew Ehrenberg’s noted that a company’s customers are really other people's customers who occasionally buy from the company because different buyers buy from a repertoire of brands. Subscription and repertoire markets have different customer behaviors and needs thus making brand performance to differ between the two markets. In a Subscription market, purchase frequency is predictable and needs to be defined, customer base is static, there are a limited number of competitive alternatives, the pricing of a brand is long term and insensitive and distinguishing characteristics of a brand are few. Customer satisfaction is based on the relationship between the buyer and the product and thus brand performance outcome is as or less the expectations. In a repertoire market the purchases pattern is less predictable and is not defined. Customer base is fluid and infinite with a large number of alternative products/brands, pricing is predetermined and is highly sensitive and the products/brands are highly differentiated. Customer satisfaction is based on the product itself on whether it fulfills the consumers needs or not. According Kit Kat marketing director light buyers are not important as they buy only once or twice in a given period is a bad idea.  This is not a good idea.  Keeler (2001) described your customer as somebody else’s customer who buys your product occasionally.  Thus the customer may have come to buy Kit Kats product because he/she might be requiring the same brand has no other option other than ours.  If the customer continues this way, in the near future, he will be a heavy buyer in Kit Kat.  Light buyers still manage to account for a lot of Kit Kat sales - simply because there are so many of them. In fact many of Kit Kat customers are light because the same customers prefer to buy other brands, because they are of the same category too.  Just because someone did not buy Kit Kat chocolate brand this period doesn’t mean they won’t buy next period.  For instance non buyers in year 1 of a major ketchup brand contributed 14% of its sales volume in year 2 (Russell 1988). Awareness and salience Brand Salience is the extent to which a certain brand is thought of when a customer is in a buying situation be it the first time, a modified re-buy (buying an alternative brand) or a straight re-buy (buying the same brand) as compared to its competitors. Brand Salience and top of mind awareness are two different situations. Top of mind awareness is basically the brands that come within a customer’s memory when asked to name a brand within a specified category whereas brand salience is what brands come to memory when consumers are in a buying situation. The importance of brand salience Quester, P et al (2007) noted that brand salience involves the brand in memory of a consumers and its linkage to other essential memory composition. For example a consumer may opt to eat a cheap meal say a five dollar meal which is fresh and healthy. “Cheap”, “fresh” and “healthy” are memory composites of a consumer. If an organization product has these memory composites, the customer will definitely choose it. Thus Brand Salience does no only maximize the number of buyers who will consider an organization’s brand but also the number of times they remember the brand when they want to purchase. Brand salience patterns from table 2 show that brands with low market penetration are suffering a double impact. They have a low top of brand awareness and have low overall brand awareness. Also brands with a higher top of brand awareness have a higher salience rate and this result to a large number of sole buyers for their products. In addition, we can see that no single brand satisfied more than 50% of its brands average top of brand awareness. It is important to look at salience for brand users separately because, recalling a recently used product strengthens the associative links in memory, which then afterward maintains and increases the salience of the brand and its associative links upon future buying situations (Romaniuk & Sharp 2004). Comparing the average statistics in table 2, Kit Kat is performing as expected within the whole sample and within its customer base. There seems to be a slight variation in the average of Awareness & Salience Metrics. According to Quester, P et al (2007 Brand salience can be built and enhanced by working out a brand awareness campaign in depth and breadth. This involves ensuring that customers can easily identify and associate an organization brand with their specific brand/need. Depth of brand awareness will help to identify how possible an organization brand will be recalled in a customers mind (recognition and recall) and this determines how much the customer knows the brand when they see/hear about it. Breadth of brand awareness helps to improve situations whereby a customer is made to think about an organization brand, and the range of purchase situations in which the brand comes to their mind. A company should establish meaning to their brand so that when customers think of the brand, they strategically link both tangible and intangible brand characteristics with the brand. Informing potential buyers indirectly via external marketing communications, advertising, word-of-mouth and the like should be a key priority to organizations. In business, gausing customer responses about brand identification and brand meaning should be an intergral process and the platform upon which organizations knows whether thay have attained in reaching the consumer or not. Therefore, if the results are working in regard to the responses the customer has given out, then the organization should launch campaigns in the near future and re – launch campaigns if the results shows othersies. Ten 10 cues that I would expect to be included into an advertisement for a chocolate brand are; features of these products are it is that they are more smooth, crunchy, sweet and available in different shapes, has less fat, suitable for toddlers, costs less, are healthy, and fresh and that they are come in different flavors. Demographics & Segmentation. Kit Kat is not different from the others. The total average statistics for relationship status, total house hold income and gender for all the brands are all a slight above or lower the normal statistics of Kit Kat. Implications to Kit Kat Quester, P et al (2007) noted that customer's approach to purchasing a product or service is subjective by their needs and situation - how important, frequent, risky or urgent the purchase is to them in their situation what controls this need is salience. Thus Kit Kat ought to make sure that chocolate bar consumers are fully aware of Kit Kat bars. According to Peppers and Rogers (2004) customers make more of an effort, and become more involved, if the purchase is relatively important to them. Kit Kat need to penetrate the market further and show why their brand is more important than the rest. Customer’s behavior always looks for some extra benefit with purchasing. They insist for a reasonable price for a particular brand and gifts with each purchase. Kit Kat Company should make strategy to cater every income group customers. Upper income group are affordable to purchase but lower income group is not. So International Company should make policies to send their product and every home. The Kit Kat Company should give more emphasis on advertising to create market awareness and to make a brand image in the minds of consumers. The International Company should do more publicity through road shows, newspaper and advertisement. They should keep a close eye on competitor strategy. The economies of scale that operate in the market means that Kit Kat must strive to maintain and improve market share, which will impel it to compete intensely with its rivals. Kit Kat must sell in considerable volumes to make a profit. Brands compete practically ‘head on’ with everyone such that brands are not seen as terribly different but some are much more popular than others. Quester, P et al (2007) noted that buyers are loyal, but polygamous and hence one brand means little to most of them. Brand loyalty is predictable largely outside the direct control of managers. Managers can indirectly best affect loyalty only if they succeed in making the brand more popular in the largely un-partitioned market that the company is competing in. Kit Kat should not change their customer base of being more loyal and more passionate. The company should aim at enlarging the customer base because the more customers you have, the more you grow. References Sharp, B. 2007, Loyalty Limits for Repertoire Markets, Journal of Empirical Generalisations in Marketing Science, Vol 11, No.1 Keller, L. 2001, Building customer-based brand equity: A blueprint for creating strong brands', Marketing Management, Vol 28, No. 1, pp35-41 Guido, G. 2001, The Salience of Marketing Stimuli. An incongruity – salience hypothesison consumer awareness. Kluwer Academic Publishers. Peppers, D. Rogers, M. 2004, Roots of Customer Relationship Management, in. Managing Customer Relationships: A Strategic Framework, New York. John Wiley & Sons, Inc Quester, P and Neal, C and Pettigrew, S and Grimmer, MR and Davis, T and Hawkins, D 2007, Consumer behaviour: implications for marketing strategy. 5th ed. Consumer Behaviour . Sydney. McGraw-Hill. Russell W. 1988. "Possessions and the Extended Self." Journal of Consumer Research :15:2: 139-168. Bound, J. 2009, The Contribution of Andrew Ehrenberg to Social and Marketing Research, Journal of Empirical Generalisations in Marketing Science, Vol 12, No.1 Read More