In today’s competitive world products are designed in away to appeal to customers, encouraging them to buy these products. As a result marketers and researchers spend a lot of time understanding and focusing on the product attributes. However it is not only the product attributes that influence buying behavior but is the customer too. Thus in order to design appealing products a marketer needs to understand the customer’s psychology, lifestyle, demographics, sociology and changing trends. Understanding consumer behavior becomes vital if a company wants its products to satisfy a customer’s unmet and unrealized needs.
Though each person is different so are his/her needs and wants. A marketer must understand the needs of different set of individuals and target them rightly to gain success. Some companies have abundant funds whereas some don’t to support the product, but a right understanding of customer behavior helps companies to target the right segment at the right time with the right marketing mix. Companies today witness a very competitive marketplace where they have to sell not just the product but an experience to their consumers.
With the shortening lifecycle of customers marketers have to create a value, satisfaction to build a relationship with the customers. The Apple Iphone is just an ordinary cell phone used to make calls unless you add applications to it. Adding applications open an whole new arena of integrating, sharing, personalizing information that make the Iphone a more compelling and different product. From the ease of purchasing an Iphone, to using it, to the post purchase services is a value proposition that Apple is creating for its customers. As important as value is so is satisfying the customer and building trust.
Iphone has to make sure it’s satisfying most of it customers to gain their trust and benefit their loyalty. Not all customers get satisfied as they have different perceptions and expectations and studying customer behavior helps companies to mitigate some risk of having unsatisfied customers who would switch to other products. Customer satisfaction leads to building a relation of trust, which the companies have to maintain for gaining maximum customer loyalty and positive word-of-mouth communication. The internet and social media have changed the landscape of sharing information.
Customers can now speak their experiences online exposing it to millions of users each day. Thus a strong customer company relationship will help companies to leverage their customer experiences and attract new customers. For example Iphone has about 1. 5 million fans on facebook that share their positive experiences about the Iphone convincing others to buy one. Ch. 2 Market Research: So how do companies understand their customer needs and habits? How does a company figure out if a new product has a potential in the market or not or what are the unmet and unrecognized needs that can be catered to?
Market research helps companies to get answers to all these questions. There are different types of research and techniques in both quantities and qualitative methods of research. Qualitative Research: Qualitative research techniques are a function of the psychology of the customer. It helps find out the hidden and unrealized need and wants of an individual. The questions used in this method are mostly open ended and are designed to probe the respondent to express freely which help understand what an individual thinks about a brand or product.
It helps marketers to understand how the world views its products. Some techniques that facilitate this research are focus groups, interviews, projective techniques, etc. Quantities Research: Quantitative research often helps marketers understand the reaction of customers towards the product/brand or reaction towards different marketing activities. With this information marketers can find out any parts that are incomplete either in the product/ brand or communication. Unlike qualitative research the data collected are more statistical.
Marketers use observational, experimental and survey methods to carry out their research depending on the objective. With the changing and dynamic cell phone market Apple has to use market research to further improve the Iphone. Apple has to constantly stay close to its customers listening to their feedback, ideas and problems to keep the Iphone relevant to the changing trends and needs. Ch. 3 Market Segmentation and strategic marketing: Market Segmentation: Market segmentation is a way companies give themselves a direction.
It helps marketer’s better design marketing mix and differentiate their offering. Increasing competition makes it important for companies to strategically differentiate their products and keep their costs low. Though the investment in segmenting, targeting and positioning is not very low, it mitigates the risk that marketers would face if they used mass marketing. Market segmentation is a process by which companies identity a substantial set of individuals with similar needs and characteristics who can be targeted.
With market Segmenting companies can: •Appropriately use resources towards a towards a potential market •Design and develop a product that is in line with the market needs. •Can select the appropriate method of communication that is most effective fot the targeted market. •Marketers can understand and register changes and trends of targeted market and swiftly react to them. Basis of Segmentation: As a marketer might see many segmented markets as potential they must note that the market to be targeted should be sizable, stable, accessible, and in lines with the organization objective.
Segmentation could be on the basis of demographics (age, gender, sex, marital status, income, occupation), geographic, psychographic (personality traits, lifestyles) and socioculture which are the function of consumer rooted features or can be done by consumption specific features like usage rate, usage situation, benefit segmentation and brand loyalty that are based on the consumption behavior of consumers. Consumer lifestyle and values are an important basis for segmenting as the consumer buying motives, attitudes, interests can be identified.
VALS segmentation that divides population into 8 distinctive groups based on their motives, resources and innovativeness is an widely used method. The 8 segments are innovators, thinkers, believers, achievers, strivers, experiencers, makers and survivors. Segmentation can also be based on the benefits a consumer seeks from a product or service. Iphone Target Market: Benefits that a consumer can seek from the Iphone is compatibility, easy to use with multi touch screen, style, easy web access, and one multifunctional device with ipod, internet and camera.
Usage: could be used to access emails, official documents, access bank account, chat on the go. Segments: (Innovators) middle-upper income professional with high resources most receptive to technology that need one portable device to coordinate their busy schedules, access the web for official use, communicate with colleagues, friends and family via email and chat. The other target market are high school, college and graduate students that are trendy and fun loving with limited resources and who need one portable multifunction device.
According to, The Apple Iphone: Successes and Challenges for the Mobile Industry, by Rubicon, 2008, 50% of the Iphone users were 30 or younger, are technologically sophisticated, 16% are college students and 80% pay for their own billing. Positioning and product mix: Considering the target market profile, their usage patterns, the benefits they seek from the product the positioning should be created. The Iphone should position itself based on its differentiation. The Iphone should achieve being viewed as a versatile, convenient, value-added device for personal and professional use through its positioning.
For the upper class middle professional it should position being a convenient device for communication, official use as well as device for music, pictures, and video, and internet access. Chap 4: Consumer Motivation: Motivation is the behavior that drives individuals to any particular action. Individuals have a range of needs that must be satisfied in order to live thus needs are at the root of all motivations. These needs and wants give rise to constant tension which is the base to any motivation. By satisfying needs and wants individuals reduce the tension.
There are needs that are basic like the psychological needs that are required to be fulfilled and are referred to innate needs. On the other needs that are psychological, influences by society, culture are considered to be acquired needs. Goals and Needs: Individuals might have goals that are generic or product specific. A person might take a particular step to satisfy one need but soon there is another need that gets the individual busy. Satisfaction of one goal leads to another goal or an unfulfilled goal might lead to substitute goals making it an ongoing process.
According to Maslow’s hierarchy of need theory there are needs at each stage that an individual needs to satisfy before going to the other stage. The basic being psychological needs like food, clothing and shelter that must be satisfied before he can proceed to complex need like security, love, friendship and self-actualization. Marketers often create more tension for consumers at each level so that they can push them to need more. There are a lot of internal and external factors that affect our motivation and influence them to increase or decrease.
Factors like experiences, societal pressure, desires, personality traits and other influences an individual is exposed to. The motivation that drives the consumers to buy the Iphone is the need to affiliation and esteem. They use the phone to be accepted in their social groups like friends, business setup where they can put up style and the latest technology to be accepted and different. The Iphone has built its own community of innovation, different and style that people resonate with. Even though the price of the basic Iphone is $200 they don’t mind paying it for the Ipone speaks for their personality.
Chapter 5: Personality and Consumer Behavior: Personality of a person is his inner psychological characteristics that determine the persons response to the environment. These inner characteristics distinguish one person from other. It also determines how and why a consumer behaves in a particular way. As marketers it becomes important to understand personalities and their influences on a product. Though no two people are alike, personality helps marketers to categorize individuals on the basis of a few traits that might be similar.
Personalities are consistent but can change over time which can help explain consumer’s behavior. There are many theories to identify how customers view themselves and react to the environment. These insights help marketers to take a different approach into product and promotion options. For example, Apple might build Iphone’s marketing strategy around obvious clues like consumer’s demographic indicators (e. g. , age, occupation, income), but a deeper study of the personality might yield information related to why an individual buys it, and what self objectives does he satisfy.
Consumer Innovativeness, dogmatism, social character, need for uniqueness, sensation seeking and novelty seeking are all personality traits that help marketers to understand their target market. For Iphone marketers need to know the consumer’s willingness to adopt innovation, their need to possess something new and unique which will help them understand and segment consumers that will respond positively to the product and communication. Cognitive personality factor – Visualizers: The consumers of an Iphone tend to be visualizers as they tend to prefer products and information that stress on visual.
Iphone is an interactive product with a touch screen, bigger display and stylish which is visually strong to attract visualizers. Thus the Iphone should be communicated with strong visual dimensions to attract its target audience. Chap 6: Consumer Perception: Any individual makes a decision or takes an action based on what he or she thinks id realty, and this realty is based on the individuals needs, wants, values and experiences. An understanding of this personal phenomenon would help a marketer to create communication that will shape consumers perception towards the product or service.
Sensory Adaption: Along with Iphone versions the Iphone advertisements are changing as well. Being a breakthrough innovation in technology and a new product in a relatively new product category the Iphone constantly needs to keep its target market engaged. Along with new ad campaigns it is important for Apple to implement experiential marketing techniques to give consumers a feel of the product. Perceptual interpretation: First impression – As Iphone has been successful among its consumers it is very critical that it maintain the standard.
Any new idea or product extension should be tested and be made sure off before it is launches. For example the Iphone 4 and its technical antenna defect should have been rectifies before the launch to avoid damage to the brand. Chap 7: Consumer Learning “Consumer Learning is the process by which individuals acquire the purchase and consumption knowledge and experience they apply to future related behavior” Behavioral Theory and Cognitive Theory are two theories that help understand how individuals learn.
In behavioral learning, learning is sad to happen when there is a measurable response to any external stimuli. There are two form of behavioral learning classical conditioning and instrumental conditioning. The classical conditioning includes concepts like repetition, stimulus generalization and stimulus discrimination. When Iphone launches further extensions like the Iphone 4 or any other products they might associate it with the previous one or use Iphone to relate to the new product for example “from the makers of Iphone” or “the Iphone now with live video calling”.
Cognitive learning on the other hand emphasizes on learning through thinking and problem, solving. Instead of repetition and reward there is certain processing of information that is involved. The information processing starts with an input leading to the message storage and interpretation and retained. As a marketer it is important that the messages need to be decoded by the consumer and understood instead of being lost. Thus right amount of information avoiding information overload is recommended. As a marketer it is important to know whether the messages communicated are learned effectively.
This not only helps marketers understand if message is effective but also weak links which will help them improve. Iphone has been advertising successfully to its consumers but measures like recognition and recall would help them know how effective their messaging is and how to improve it further. Chapter 8: Consumer Attitude Formation and Change “Attitude is a learnt predisposition to behave in a consistently favorable or unfavorable way with respect to a given object”. As attitudes are learned they can be results of an individual’s personal experience or external sources like friends, advertisements, etc.
Attitudes are consistent but can change over time. Situational Attitude: Attitudes can change depending on the situation of an individual. Two people might buy the very same brand but might he in different situations. It is important to know understand the situation influences that might influence consumer behavior on an Iphone. This would help device better communication for the brand. Attitude Toward the Ad Model: Product advertisements that consumer see might influence and change their beliefs toward s the brand which might influence their buying behavior.
Iphone has been successful in emotionally appealing to its customers through its advertisements but must make sure that they continue to do so by not creating ad’s that contradict, or negate prior positive feelings about the product. Chapter 9: Communication and consumer behavior Communication is a process through which marketer expose their offerings to the market to create a positive attitude or provide consumers with solutions. This process of communication can be formal (through the company) or informal(via non-for-profit sources like family, friends, etc).
Consumers today are knowledgeable which is why companies need to communicate honesty and objectivity without disrespecting consumer’s knowledge. A right message through a right source is a key to any messages success. For example a message communicated by Steve Jobs about the Iphone 4 antenna problem would be very credible and effective as it is coming from a source that is influential and reliable. Messages are also communicated informally by opinion leaders. As discussed earlier 80% of Iphone users are under 30 year social media, char rooms, etc comprise the major source for their information.
For any message it is important to know who the receivers are, and what should be conveyed to them. Marketers can use different appeals to convey their messages like: Comparative Advertising – is widely used by marketers to communicate their brand superiority over other competitive brands. Considering the target market profile for Iphone I believe that now is the time that Iphone should comparatively prove its advantages over other smart phones considering the increasing competition. As this product segment is relatively new Iphone can heavily differentiate on it application store, innovation and style.
Iphone currently is doing a wonderful job as far as traditional methods of communication are concerned. They know their target market, their needs and how to apple to them. For example the new Iphone 4 advertisement appeals to its customers by transcending functionality and depicting emotions through the face time feature. Chapter 10: The Family and its Social Class Standing According to me family is most influential on a consumers buying behavior. A consumer acquires values, beliefs, orientation toward religion, politics, economics from his or her family.
Different family stages and forms influence a buyer’s behavior towards product and services. The structure of a family, family lifecycle and decision making process can directly affect family and individual consumption which is important for marketers to know for appealing to the customers and their needs accordingly. Parents, friends, coworkers can have a considerable amount of influence on an individual’s need for style, fashion, fads and acceptance. A family environment with higher spending practices or the fads and fashion among friends might influence an individual to buy an Iphone for the purpose of socializing.
Family life cycle: As each life stage from Bachelorhood to Dissolution involves different challenges in consumption patterns it makes it easier for marketers to understand their consumers. For Iphone is a luxury item, it has to be targeted to the young individuals falling under bachelorhood or honeymooners as they are independent earning individuals with more disposable income and looking for recognition. Social classes are important for a marketer to understand as they exist everywhere. Social classes form consumer’s beliefs, values, attitudes, lifestyle and buying behavior.
The wants of a high class CEO would not be similar to a working class employee. The factors like income, education, occupation that form the basis of social segregation play an important role in consumer decision making. Marketers need to understand these differences to create right positioning. The social classes that apple Iphone targets are the middle and upper class. Considering choices in the cell phone market today Iphone is an object of desire for young successful individuals. As the product is innovative and marginally expensive it does not target lower class group.
Iphone can be targeted to early professionals who have freshly graduated from business schools and earning a good salary. The Iphone is a high end device requiring 3G connectivity for optimal use, which makes it expensive and a product of the higher classes. The middle and upper class like having products that are innovative and new to match up to their status. Chapter 11: Influence of Culture on Consumer Behavior As an innovative, luxury and different product the Iphone needs to be communicated differently to different cultures. Being a global product Iphone has to understand and keep up to the changing cultural trends.
Marketers need to understand the values, beliefs and norms of the targeted market as different markets might have different cultures. For example what is acceptable in USA might not be acceptable in India. Individuals acquire beliefs, values and customs from their social environment that form their culture which can be learned formally, informally through observation or technically. The Iphone being an visual and noticeable product should influence the informal learning where friends, family, coworker or mentor influences can play an important role through their marketing communication.
Values: Core values differed from culture to culture. Since the Iphone reflects consumer need for recognition, self actualization, etc understanding customer values is important as American culture might embraces values like individualism, freedom whereas the Indian culture may not. Thus being a global product such cultural differences are important for a products success. Chapter 12: Subculture and Consumer Behavior: Just as culture has its implications on a consumers buyer behavior so does subculture. Subcultures are specific groups within a culture that have specific set of beliefs, values and lifestyle that set them apart.
Thus people from different subcultures might have different buyer behavior. Nationality Subculture: different cultures exist in many nations and so do subcultures within them. The population of Hispanic and Asian in US are increasing comprising of a large amount of consuming population. The same goes for religious and geographic subcultures. If Iphone was to target the upper middle class Indians in the US they would need to know the religious differences in Indian Subculture as it influences their buying decisions and needs.
Thus if Apple want to market the Iphone 4 with the “Face time” feature it would target it to consumers of subcultures who are very family oriented and want to stay connected by seeing each other like Indians or Chinese or could be offered to consumers with impaired hearing which it is currently doing with its advertisements. Thus a thorough understanding of subcultures can help marketers position their offerings to their target markets in the right manner. Chapter 13: Cross Culture Consumer Behavior an International Perspective Like mentioned earlier different cultures exist in different nations.
Cross culture marketing is an effort to understand the extent to which two or more countries are different or similar to design effective marketing campaigns. Culture, religion, values and belief differ from country to country. Something acceptable in USA might not be acceptable in India or vice versa. Thus one particular approach to marketing might not be effective in all the countries. Iphone is positioned as a different, stylish and innovative product in the US and many other countries but needs to address to the local culture to get through the consumer effectively.
Though the message and positioning remains the same the advertisements have to have the local touch to resonate with the market. Iphone has been doing so which can be seen in it advertisements. (www. youtube. com/watch? v=UgSxFyaeUZg&feature=related, http://www. youtube. com/watch? v=6lZMr-ZfoE4&feature=related). Apart from Iphone’s success in many countries Iphone has not succeeded in penetrating into the Indian market the reason being the vast difference in the two cultures. Though the target market for the Iphone is similar the approach toward them has to be different.
Iphone need to adopt to local culture to communicate successfully. Chapter 14: Consumers and the Diffusion of Innovation Every product or service has a process by which it is accepted into a market. The adoption time varies from products to product. The study of this process becomes important for marketers to understand so that they can mitigate the risks involved in marketing the product. Adoption Process: The acceptance of a product is influenced by certain characteristics of the product. For the Iphone its advantage over other Smartphone’s apart from taying connected with family or using the internet would be innovative in style, touch screen, video calling which give it a relative advantage over other competitors and a reason for its fast acceptance. Compatibility in terms of consistent to consumer needs, degree of Complexity in usage and degree of Trialability would influence the adoption of the Iphone in the targeted market. Another important element in the process of diffusion is the adopter categories that influence the product to be marketed. The categories of innovators and early adaptors are most likely to buy highly innovative products like the Iphone.
The percentage of adaptors in each category would help marketers know the rate at which the product would be adapted in the market. This also helps marketers design marketing mix based on these analysis to meet their market objectives. Consumer innovators being the most likely to adopt and promote new products are mostly targeted by companies. As the Iphone is a relatively new product it should look at targeting not only the innovators but also early adaptors and other consumers that fall in their target segment. Chapter 15: Consumer Decision Making and Beyond
As discussed earlier there are many reasons why someone would buy an Iphone but there are 4 factors that might depict a consumer’s decision to buy it. According to me Emotional view is the reason why an individual would buy an Iphone. I just saw a cab driver with his new Iphone4. What would have been his motivation? Does he not have any limitations to influence him to think rationally before buying a $200 cell phone? According to me one major reason for purchases that are associated with style, innovation, cool factors are to do with consumer emotions.
Buying an Iphone might not be rational too everyone but they might buy it because it makes them feel better, the can be superior or at par with his friends. There are many Smartphone’s in the market most of them just like the Iphone but Iphone consumers choose it because they feel good and are emotionally involved with the product leading to the Iphone into the evoked set of decision making. Chapter 16: Marketing Ethics and Social Responsibility Understanding consumer behavior reinforce the marketing activities to address consumer needs in the right way, but mostly ignorant of the society’s well being.
As a part of marketing, ethical issues should be considered while designing marketing strategies. There are many products available in the market, that contribute to society issues like carbon footprint, global warming, advertising to children, etc which need to be addressed. Iphone being a hi-tech product is produced releasing a number of toxins in the environment. Cell phones have been considered harmful for their radiations and many other reasons and this issue has to be addressed. Since Iphone is an world recognized brand it needs to address to these issues.
Like the green marketing campaigns for the MacBook, Apple should concentrate on communicating the Iphone as a environmental friendly product. Research proves that more that 80% of consumers are willing to switch to a different product that supports a cause or the environment. Iphone has been a successful product in the new product category that has managed to keep away maturity and grow through constant innovation and efforts to understand its consumers. As it continues to do so Iphone would soon change the landscape of marketing in the Smartphone category.
