Consumer Buying Process
The process starts with Problem Recognition - “I need a way to be able to check emails or read documents on the go, I need a large enough cellphone or tablet to be able to read comfortably.” Once the problem is identified, the individual will Search for Information both internally (from past experiences or memory of a billboard or an advertisement) and externally (asking friend’s and family’s opinion). The third step in the process is Evaluation of Available Options. Going back to our example regarding checking emails and reading documents, the customer will decide, is the specs of an Android phone better than an iPhone - of course Android is always the clear winner :)This is when customers search for feedbacks from other users. How was their experience? What are the pros and cons of the product? This process will vary in time depending on how expensive the solution is. Buying a car for example will definitely take more time compared to buying food. Once data have been processed and all alternatives evaluated, the Decision To Buy is executed. The fifth and final step is Post-purchase Behaviour. At this point, the customer is using or have used the product and he is either satisfied or dissatisfied. Post-purchase behaviour defines loyalty. If the customer is satisfied and the same problem arises in the future, he will remember your product during information search and evaluation and even spread his positive experience with others.
Application
Companies can consider consumer buying process to analyse if their product is not getting enough sales. Is the product not being seen during customer’s information search? Are the features and benefits not being clearly communicated or highlighted? When they google the product, are they seeing a lot of negative comments that is why it does get past consumer evaluation step? Are the products too hard to get even if customers want to buy they don’t know where to buy it? Are the positive post-purchase experience being clearly communicated to other customers? Understanding the process will helps companies design their marketing activities and strategy more effectively.
Market Segmentation
Market segmentation is the process of grouping customers according to location, demographic, psychographic and behavioural information. The defined segments needs to be measurable, substantial, differentiable, actionable and profitable.
Application
Segmenting customers helps companies clearly identify who their target customers are. It can be used in multiple ways such as identifying how to focus marketing resources and formulation of marketing mix. One very simple example is if the target customers are aged 50 to 70 then advertising in radios or TV may be more effecting than internet advertising. Having a clear market creates a more targeted campaign and prevents wastage of resources.
Another use of market segmentation is for business development or conceptualisation strategy. By segmenting the market, business owners can clearly see which segments of the population remains untapped.
Note that there is such a thing as undifferentiated strategy for market segmentation. These can be products or services that have very wide appeal that it is applicable to any audience. One example we can think of are wealth creation services or products.
Product Lifecycle
Product Life Cycle plots where the product is in terms of sales and time. The first stage is the Introduction where companies should be focused on brand awareness and promotion innovators and early adapters. At this stage, revenue are expected to negative or breakeven.
The next stage is Growth. At this stage, products are already accepted by the market and is poised to have more sales. Companies should be focused on customer conversion, expansion of distribution network, increase in production capabilities and fine tuning of service and support.
The third stage is Maturity where it has reached a point of market saturation. Companies should be focused on product improvements doing regular upgrades and facelifts to stay relevant.
The last stage is the inevitable Decline where customers are looking at alternatives due to aggressive competition or the desire to try something new or technology obsolescence. Even the mighty Yakult who has been in maturity stage for so long is now experiencing decline due to threats from competition.
All products undergo a certain life cycle but not all will follow this exact same trend. Most products will not undergo significant sales growth and will simply go on decline. This can be due to a lot of reasons such as failure of marketing or simply deficient quality. Note that all products will go to a stage of decline.
Application
Knowing where the product is in its life cycle can help companies forecast sales, determine pricing, formulate marketing strategy and allocate R&D resources. Product life cycle is usually used as a strategic marketing tool.
Relationship Marketing
This marketing approach puts priority in building a sustainable relationship with customers rather than simply pushing products to them such as in the case of traditional transactional marketing. It starts at awareness or the attraction phase. Traditional marketing employs mediums such as billboards, TVs, and radios whereas relationship marketing uses influencer marketing, affiliate, partner, employee advocacy and referral marketing all of which require some prior degree of relationship or familiarity.
Relationship marketing prioritizes building high-quality products that will provide a solution to a problem faced by the customer. It focuses on retention and repeat buying by existing customers rather than simply acquiring new ones. It focuses on developing a long-term, mutually beneficial relationship with customers with the goal of creating brand ambassadors.
Organizations that focus on building relationships have a great customer service team. They invest a lot in employee service training. They employ key account managers to handle VIP customers. They make use of technology such as CRMs, apps, and other tech services to provide extra value to their customers. They use data analytics to tailor services to individual customers.
Application
This is one of the concrete ways to practice Pareto Principle of 80/20. Identify the 20% of customers that bring in 80% of the revenue and focus on them, build a lasting relationship with them.
4 P's of Marketing
To effectively market a product, companies need to get the 4 P’s of Marketing right.
Product includes features, design, value to customers, branding and competitive advantage.
Place are the distribution channels, stores, supermarkets or online, storage and transportation to customer.
Pricing includes accounting, comparing prices with competitors, discounts and customer price sensitivity.
Promotion includes advertising strategies, radio, billboards, google, social media, TV, how your competitors do it, when is the best time or season to promote.
Application
The 4 P’s can be used during product development to create a well targeted marketing mix. It’s about putting the right product at the right price, at the right place and at the right time. When using it for developmental stage, start from the inside out - identifying the target market first then developing the product features, pricing, promotional and release strategies. When using it post-developmental stage, consider the outside and your target market making sure that product features to be emphasized, pricing, location and promotional strategies would have maximum effect on your target market.
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