1. UNIVERSITY OF EASTERN AFRICA BARATON MASTERS IN BUSINESS ADMINISTRATION BUAD 601: CONSUMER BEHAVIOUR IMPORTANCE OF CONSUMER BEHAVIOUR, ITS ROLE IN THE MARKETING CONCEPT, CUSTOMER BEHAVIOUR AND THE 4Ps AND ROLE OF RELATIONSHIP MARKETING LECTURER: DR. W. TIENG’O DATE: 27/ 10/ 2009 BY DIANA GATUMWA J. SJUSDI0921

2. -IMPORTANCE OF CONSUMER BEHAVIOUR, -ITS ROLE IN THE MARKETING CONCEPT, -CUSTOMER BEHAVIOUR AND THE 4Ps -ROLE OF RELATIONSHIP MARKETING

3.  Consumer behaviour is an inter- disciplinary science that investigates the consumption related activities of individuals.  It describes the reasons for the development of how consumers behave and the importance of consumer behaviour to marketers through the understanding of the 5Ws:

4.  Who are the customers?  What do they buy?  Why do they buy it?  Where do they buy it?  When do they buy it? Consumer behaviour, therefore, is the behaviour that consumers display in searching for purchasing using evaluating and utilizing of products they expect will satisfy their needs.

5.  Consumer psychology is the study of human decision making and behaviour in the marketplace. In this area, researchers analyze the effects of advertising on consumers’ attitudes and buying habits.

6.  Consumer psychologists also study various aspects of marketing, such as the effects of packaging, price, and other factors that lead people to purchase one product rather than another.  Microsoft ® Encarta ® 2009. © 1993- 2008 Microsoft Corporation. All rights reserved.

7. I.Consumer behaviour towards a firm's marketing strategies has a great impact on organization success. II.It is vital in order to gain insight on the main factors that affect why, what, where, when and how consumers buy. III.By gaining a better understanding of the factors that influence consumer behaviour, a marketer is in a position to predict how consumers will respond to the company’s marketing strategy.

8. IV.To the customer, consumer behaviour gives insight inside their own consumption related decisions. V.Consumer behaviour studies make people better and wiser consumers.

9. MARKETING CONCEPT is the idea of business activity of presenting products or services in such a way as to make them desirable. Microsoft® Encarta® 2009. © 1993-2008 Microsoft Corporation. All rights reserved The consumer behaviour plays relevant roles in ensuring that products or services are presented in a desirable way.

10.  The following are the roles that consumer behaviour plays in the marketing concept:  It helps marketers recognize factors that come into play that influence consumers in making consumption related decisions.  Marketers can predict how consumers are likely to various marketing strategies they intend to use.

11.  It enables the marketers to develop a competitive advantage to their rivals.  Enables marketers know what internal and external factors influence consumers to act the way they do in their buying situations.  Understanding consumer behaviour provides clues for developing products, product features, pricing, distribution channels and other marketing mixes.

12.  Understanding consumer behaviour will enable a marketer to understand zones that ultimately get consumers to buy their product and come back again.

13.  Companies undertake marketing activities with the ultimate aim of getting consumers to buy their products and to come back again and again.  In the case of industrial buyers, there is need for the marketer to understand who are involved in the buying process and what procedures are followed.

14.  A buying process can be complex and may involve many people over a long period of time.  Marketers, therefore, need to understand changing consumer behaviours.  A buying process may also vary between products and individuals and the buying situation the customer is in.

15.  The classical view involves 4Ps, but it was expanded by Booms and Bitner to 7. There are now suggestions that there are a total of eleven (11) elements.  Though, we will discuss the 4Ps that are of the classical view.  If marketers are to be truly consumer oriented, they would need to consider the following:

16.  Marketing Mix; factors that help a company or firm sell its products. Four elements are normally distinguished:  Getting the right product to the market.  Selling the product at the right price.

17.  Ensuring that the promotion is right—that is, advertising and marketing for the product.  Placement- ensuring that the product is distributed to the most convenient place for customers to buy it.  Microsoft ® Encarta ® 2009. © 1993- 2008 Microsoft Corporation. All rights reserved.

18.  This approach means starting with the consumer when faced with any marketing question.  It shows that the market has people with different needs and interests.

20. 1. Pricing Strategies: There are many ways to price a product.  Premium Pricing- Use a high price where there is a uniqueness about the product or service. This approach is used where a substantial competitive advantage exists. Such high prices are charge for luxuries such as Savoy Hotel rooms, and Concorde flights.

21.  Penetration Pricing- The price charged for products and services is set artificially low in order to gain market share. Once this is achieved, the price is increased. This approach was used by France Telecom and Sky TV.  Psychological Pricing- This approach is used when the marketer wants the consumer to respond on an emotional, rather than rational basis. For example 'price point perspective' 99 cents not one dollar.

22.  Economy Pricing- This is a no frills low price. The cost of marketing and manufacture are kept at a minimum. Supermarkets often have economy brands for soups, spaghetti, etc.  Price Skimming- Charge a high price because you have a substantial competitive advantage. However, the advantage is not sustainable.

23.  The high price tends to attract new competitors into the market, and the price inevitably falls due to increased supply. Manufacturers of digital watches used a skimming approach in the 1970s. Once other manufacturers were tempted into the market and the watches were produced at a lower unit cost, other marketing strategies and pricing approaches are implemented.

24.  Premium pricing, penetration pricing, economy pricing, and price skimming are the four main pricing policies/strategies. They form the bases for the exercise.

26. 2. Product strategy- For many a product is simply the tangible, physical entity that they may be buying or selling. You buy a new car and that's the product - simple! Or when you buy a car, is the product more complex than you first thought?

27.  The core product is NOT the tangible, physical product. You can't touch it. That's because the core product is the BENEFIT of the product that makes it valuable to you. So with the car example, the benefit is convenience i.e. the ease at which you can go where you like, when you want to. Another core benefit is speed since you can travel around relatively quickly.

28.  The actual product is the tangible, physical product. You can get some use out of it. Again with the car example, it is the vehicle that you test drive, buy and then collect.  The augmented product is the non- physical part of the product. It usually consists of lots of added value, for which you may or may not pay a premium.

29. 3. Promotion- This includes all of the tools available to the marketer for 'marketing communication'. As with Neil H.Borden's marketing mix, marketing communications has its own 'promotions mix.‘ Think of it like a cake mix, the basic ingredients are always the same. However if you vary the amounts of one of the ingredients, the final outcome is different.

30.  The elements of the promotions mix are:  Personal Selling- it is an effective way to manage personal customer relationships. The sales person acts on behalf of the organization.  Sales Promotion- tends to be thought of as being all promotions apart from advertising, personal selling, and public relations.  Public Relations- the deliberate, planned and sustained effort to establish and maintain mutual understanding between an organization and its publics.

31.  Direct Mail- it is very highly focussed upon targeting consumers based upon a database.  Trade Fairs and Exhibitions- Such approaches are very good for making new contacts and renewing old ones. Companies will seldom sell much at such events.

32.  Advertising- it is a 'paid for' communication. It is used to develop attitudes, create awareness, and transmit information in order to gain a response from the target market.  Sponsorship- is where an organization pays to be associated with a particular event, cause or image.

33. 4. PLACE- is also known as channel, distribution, or intermediary. It is the mechanism through which goods and/or services are moved from the manufacturer/ service provider to the user or consumer.

34.  The offer you make to you customer can be altered by varying the mix elements. So for a high profile brand, increase the focus on promotion and desensitize the weight given to price.  In many ways the business has looked closely at all aspects of it markets and operations to remold the industry and customer expectations in a unique way.

35.  It has been applied since 1980s to date.  Emphasis is placed on the whole relationships between suppliers and customers.  The role of relationship marketing is to give the best possible customer service and build customer loyalty.  The customer is to be kept happy so that they may come back  Relationship building can be done through:

36.  Introducing loyalty cards.  Special reward cards.  Visiting the customer in their premises.  Well wish cards.

37.  The essence of relationship marketing is to find out which customers are going to be of the most long term value to the firm; which are most likely to remain loyal.  This approach has become possible due to existence of research tools and computerized systems by which consumers can be identified and categorized.

38.  Firms then seek to establish a longer-term rapport with the consumer to ensure loyalty.  Good examples are in the airline industry and in the networking marketing.  GNLD- the growth potential for such a network is huge and since it relies on the relationships between the consumers/agents in the network, it generates strong loyalty among consumers.

39.  The growth in relationship marketing is likely to be of benefit to consumers since companies are going to great lengths to look after them and help meet their needs.

40. 1. Microsoft ® Encarta ® 2009. © 1993- 2008 Microsoft Corporation. All rights reserved. 2. Blythe, J. (1997). The Essence of Consumer Behaviour. (London: Prentice Hall Inc.) 3. www.marketingteacher.com www.marketingteacher.com 4. www.bmighty.informationweek.com www.bmighty.informationweek.com 5. www.consumerpsychologist.com www.consumerpsychologist.com