Marketing Analysis PDF

14/10/2020 MARKETING ANALYSIS: Understanding your Environment Informing your decisions 1 1 Why study the Business environment? 2 1  14/10/2020...

14/10/2020 MARKETING ANALYSIS: Understanding your Environment Informing your decisions 1 1 Why study the Business environment? 2 1  14/10/2020 3 TO SURVIVE & THRIVE COMPANIES MUST: Evolve & Adapt Innovate Dare to be different 4 2  14/10/2020 EVOLVE & ADAPT Capacity to observe & analyse the Environment Capacity to anticipate changes Capacity to make decisions which: Reinforce your strengths Minimise your weaknesses 5 INNOVATE Innovation is the process of translating an invention into a good or service that creates value for a customer An innovating idea must be duplicable at an economical cost and must satisfy a specific need. http://www.businessdictionary.com/definition/innovation.html 6 3  14/10/2020 DIFFERENTIATE Process of distinguishing a company’s product/service from those of its competitors to make it more attractive to a particular target audience. Demonstrate the unique aspects of a firm's product and create a sense of value In a way that customers want… 7 2 How can we define Marketing? 8 4  14/10/2020 DEFINITION OF MARKETING “The science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit.” (Dr Philip KOTLER) Science = objectivity, methodology, data, observation, research, statistics Art = subjectivity, aesthetics, creativity, perceptions Value = usefulness, worth and importance of products / services in the mind of the consumer. Value increases if the product fulfils the needs and preferences of the customer Needs = (consumer perspective) A motivating force that compels action for its satisfaction; it comes from a feeling of lacking something. Need = (company perspective) an opportunity to deliver a benefit/product to a customer Target Market: measures and quantifies the size of the identified market and the profit potential. 9 ROLE OF MARKETING Source: Lumenlearning (2019): What Is Marketing?, Marketing Creates Value for Customers. Authored by: Lumen Learning; available at https://courses.lumenlearning.com/wmopen- principlesofmarketing/chapter/reading-marketing-defined/ accessed 19/07/2019 10 5  14/10/2020 1. 3 2.The marketing process 11 12 6  14/10/2020 Whoare the What products Howmuch customers? already exist? wouldthey spend? Howcouldwe What do they distribute? need? Do wehave the right skills? Wheredo theybuy? What makesus What product better? wouldsolve that need? What Do wehave enough motivates Is ourideasupported money? the by current trends? customer? 13 Source: https://courses.lumenlearning.com/wmopen-principlesofmarketing/ 14 7  14/10/2020 15 1. 4 2. Marketing Analysis 3. starts with the 4.Situation Analysis 1. (Internal / External) 16 8  14/10/2020 SITUATION ANALYSIS A thorough examination of internal and external factors affecting a business. That will lead to a better understanding of the factors that will influence its future. Situation Analysis External Analysis Internal analysis macro & micro Strengths Weaknesses Opportunities Threats 17 INTERNAL ANALYSIS Done by Key company stakeholders (managers, supervisors, customers) They review: Company culture Company expertise Unique qualities Company resources They identify: Strengths & Weaknesses Strengths: things that add value or offer your organization a competitive advantage Weaknesses: things that detract from the value of your offering or place you at a disadvantage when compared with your competitors. 18 9  14/10/2020 QUESTIONS TO DETERMINE YOUR STRENGTHS What qualities or aspects persuaded our customers to choose our product or service? What resources do we have at our disposal? What areas are we seen as being expert in? What advantages do we have over our competition? Employees, technology, machinery, know-how, patents, innovation, agility, speed to market, market knowledge..  A start-up needs to push its strengths to compensate for weaknesses linked to lack of experience and resources 19 QUESTIONS ARISING FROM WEAKNESSES What can be improved or altered? What do we do badly? How does our performance compare with that of our competitors? How do potential customers judge our performance or service? What do we lack? (money, employees, visibility, access to market…) If weaknesses are clearly identified you can start work on improving them 20 10  14/10/2020 EXTERNAL ANALYSIS MACRO Environment analysis – uncontrollable external trends which directly or indirectly affect the entire business environment (PESTEL) MICRO Environment analysis - descriptive statistics, volume, value, trends, accessibility, geographic location, competitors, distribution, actual & potential consumers Situation Analysis External Analysis Internal analysis macro & micro Strengths Weaknesses Opportunities Threats 21 1. 5 2.A SWOT Analysis summarizes the key findings 22 11  14/10/2020 A SWOT is a snap-shot of the company in its market at a specific moment in time It summarizes a company’s Strengths & Weaknesses from its internal, controllable environment It puts them into perspective by integrating Opportunities & Threats from the external, uncontrollable environment (via the PESTEL analysis) 23 MARKETING ANALYSIS: Understanding your Environment Informing your decisions Now WATCH AGAIN And complete the learning exercises! 24 12  14/10/2020 The PESTEL analysis (Macro-environment) 1 1. 1 2.Describing the 3.PESTEL tool & its use 2 1  14/10/2020 WHAT IS A PESTEL ANALYSIS? The PESTEL is part of the Situation Analysis. The Situation Analysis is a thorough examination of internal and external factors affecting the future operations of a business. Situation Analysis Internal analysis External Analysis Strengths Weaknesses MACRO Micro (PESTEL) (Market) Oportuni Threats ties 3 DESCRIPTION OF A PESTEL ANALYSIS A Structured, systematic analysis of the external business environment- the macro-environment It sums up key forces of change in society under 6 headings: P olitical Factors E conomic Factors S ociodemographic Factors T echnological Factors E nvironmental Factors L egal Factors It reveals the external, uncontrollable factors of change within your business environment which affect you and your competitors… 4 2  14/10/2020 WHY DO A PESTEL ANALYSIS? 5 6 3  14/10/2020 The BIG PICTURE of the whole economy and its driving forces of change (MEGA TRENDS) 7 WHY DO A PESTEL ANALYSIS? 1. Understand the driving forces 2. Anticipate future changes 3. Adapt to those changes i.e. evolve 4. Make a diagnosis of main factors Opportunity = increases your potential revenues Threats = decreases your potential revenues 8 4  14/10/2020 1. 2 2.Applying the 3.PESTEL tool to inform your marketing strategy 9 HOW TO DO A PESTEL? 1. For each external Factor, collect information that is relevant to your business classifying under each heading 2. Use official sources (government/industry sources/ specialized press…) 3. Analyze your findings:  What is the factor (brief description)  What is its potential impact ? / why does it matter?  Is it an opportunity or a threat (diagnosis)? 4. Summarize your findings in a PESTEL table 5. Diagnose the key opportunities / threats 6. Use this diagnosis to develop your future strategy  You cannot control these external factors, but you can control your future decisions.. 7. Keep an accurate bibliography of all the sources using HARVARD referencing 10 5  14/10/2020 POLITICAL FACTORS Impact of next elections? Reforms Government subsidies / privatizations? Public spending cuts or increases? Taxation policies? Government Policies concerning your business area – eg education; tourism; food industry; transport; Health care provision; public services; agriculture, energy… Government support of key areas – eg Robotics, Silver Economy, Artificial intelligence, sustainable development 11 ECONOMIC FACTORS Employment figures Economic Growth Inflation rate Interest rates Cost of investing, borrowing Exchange rates Optimism / Pessimism Consumer spending 12 6  14/10/2020 SOCIO-DEMOGRAPHIC FACTORS Population growth / age profile Migration Cultural diversity Level of health / illness eg Obesity Mobility Attitudes / Aspirations Living standards Religious beliefs New consumption trends Sources of militancy / engagement 13 TECHNOLOGICAL FACTORS Information Technology Artificial Intelligence 4G / 5G / mobile technology Robotics / automation Dematerialization Teleworking Geographic accessibility to technology Obsolescence 14 7  14/10/2020 ENVIRONMENTAL FACTORS Climate Change Global warming Sustainable / renewable energy Deforestation / biodiversity Pollution Recycling Clean water / drought Collaborative consumption 15 LEGAL FACTORS The government creates / reviews legislation. As a company manager you must comply with the LAW - « Nul n'est censé ignorer la loi » Employment law (working hours, night shifts, holidays, temporary staff…) Contract law Consumer law (data protection..) Health and Safety laws National, European, International law New Quality Standards (Normes) 16 8  14/10/2020 1. 3 2.Concrete example & pitfalls 17 P – Tourism policy / promotion of France as a tourism destination / Public holidays / security / terrorism / culture / future events (Olympics) E – Interest rates, exchange rates, unemployment rates, consumer spending habits S – population trends / experiential economy T – real time information / online booking / virtual reality E – energy / accessibility / packaging / impact on environment L – Opening hours / seasonal contracts / working conditions (Opportunity or Threat?) 18 9  14/10/2020 KEY MISTAKES TO AVOID The PESTEL is about documenting EXTERNAL, UNCONTROLLABLE FACTORS You must state why these factors will influence the decisions that you will make (i.e. your future strategy) You must NOT describe your future STRATEGY (Your strategy is INTERNAL & CONTROLLABLE and forms your Marketing plan) You must stay at MACRO level - BIG PICTURE! You will analyze your specific Market (Micro level) in detail in your future research (Market Study) You must formulate a diagnosis Opportunity or Threat? 19 The PESTEL analysis (Macro-environment) Now WATCH AGAIN And complete the learning exercises! 20 10  14/10/2020 ACADEMIC REFERENCING WHAT, WHY & HOW to reference your sources according to academic standards 1 1. 1 2.What is Academic referencing? 2 1  14/10/2020 WHEN WRITING ACADEMIC / PROFESSIONAL ASSIGNMENTS YOU WILL CONSULT MANY SOURCES TO DEVELOP YOUR EXPERTISE. Referencing means that you highlight your use of other authors’ ideas & words to: 1. Prove to your professors that you have done extensive reading to develop your expertise 2. Show that you understand by explaining the ideas in your own words 3. Give the original author credit for their ideas and work 4. Enable the reader to locate the original work if they wish to read it themselves 5. Enable the reader to see how dated / recent the information might be 6. Avoid plagiarism Source:https://www.skillsyouneed.com/general/referencing.html 3 4 2  14/10/2020 ACADEMIC REFERENCING: 2-PART SYSTEMS 1. An in-text citation (in the body of the report) 2. A reference list (at the end of the report)  In-text citations: indicates you have directly quoted / paraphrased a source includes author’s surname & year of publication Eg Xerfi (2019)  Reference list: Outlines all of the sources directly cited in your work Presents all sources in alphabetical order Provides full details to enables the reader to relocate each source easily Eg: Xerfi (2019): Le marché du vélo, étude 9MTR02; available at www.xerfi.com; accédé le 16/07/19 5 1. 2 2.Why learn academic referencing? 6 3  14/10/2020 REFERENCING IS A KEY ACADEMIC COMPETENCE FOR HIGHER EDUCATION It is key to competent academic writing It forces you to do research and deal with large volumes of information It helps you to think critically about the ideas. It imposes structure / rigour It is professional behaviour! It is ethical behaviour! 7 MOTION PICTURE ASSOCIATION OF AMERICA (MPPA) ANTI-PIRACY 8 4  14/10/2020 IF YOU DON’T REFERENCE CORRECTLY THEN YOU ARE PLAGIARISING 9 WHAT IS PLAGIARISM ? Presenting another's ideas as if they are your own Copying or pasting text and images without saying where they came from Not showing when a “quote” is a quote Summarizing information without showing the original source Changing a few words in a section of text without acknowledging the original author Plagiarism is ACADEMIC FRAUD and can lead to DISCLIPLINARY ACTIONS Source: https://www.skillsyouneed.com/general/referencing.html 10 5  14/10/2020 PLAGIARISM DETECTION SOFTWARE 11 1. 3 2.How to do academic referencing? 12 6  14/10/2020 TYPES OF SOURCES Copying & Pasting an internet address is NOT academic referencing! 13 IN-TEXT CITATION 14 7  14/10/2020 REFERENCE LIST AT END OF REPORT Book Journal Website Website 15 USING MICROSOFT WORD TO CREATE REFERENCES 16 8  14/10/2020 USING TO CREATE REFERENCES 17 1. 4 2.CRITICAL SUCCESS FACTORS? 18 9  14/10/2020 3 STEPS TO ACCURATE REFERENCES Step 1: RECORD accurately (eg into the Word Referencing tool)  -Author(s)/editor(s)  -Title  -Edition (1st, 2nd, reprint ed. revised ed. etc.)  -Page numbers for direct quotations  -Place of publication  -Publisher  -Date of publication  -Web address if online resources and Date Accessed Step 2: MANAGE carefully Share the master list and keep it consistently up to date with new references Step 3: Be CONSISTENT! 19 IF IN DOUBT ASK OR FOLLOW THE GUIDE ! 20 10  14/10/2020 ACADEMIC REFERENCING WHAT, WHY & HOW Now WATCH AGAIN 21 11  14/10/2020 MARKET INTELLIGENCE Using Market Research To develop expertise 1 1. 1 2.What is market intelligence? 2 1  14/10/2020 3 « MARKET INTELLIGENCE » DEFINITION “The practice of collecting and analyzing external data about a specific market which a company wishes to enter, to make decisions.” It is the first set of data which the company analyses before making any investment decision. It can also be called:  competitive intelligence  consumer insights  market research 4 2  14/10/2020 IF YOU WERE PLANNING A HOLIDAY IN THE NETHERLANDS WHAT WOULD YOU DO? You have limited budget, only a week’s holiday, so you want to optimise your trip… 5 6 3  14/10/2020 OBSERVATIONS? Many of your questions can easily be answered by consulting information sources that already exist and are easy to find (eg on the internet) You benefit from other people’s research Some questions are more specific and you cannot find answers that satisfy you, so you need to speak personally to knowledgeable people to get answers  You have to conduct your own research 7 DIFFERENT TYPES OF MARKET RESEARCH Secondary research sources (or desk research) journals, articles, newspapers, commercially published market studies, government statistics, Internet … Primary Research sources (or Field research) Personal, online, phone, self-administered, postal questionnaires, interviews, experiments, product tests… 8 4  14/10/2020 1. 2 2. Always start with Secondary research! 3. AKA « desk research » 9 SECONDARY RESEARCH OR « DESK » RESEARCH  Before creating new information by doing an expensive study, it’s better to use existing information to get an overview of the problem. Secondary research uses already existing data that has already been compiled, gathered, organized and published by others. It includes reports and studies by government agencies, trade associations or other businesses in your industry 10 5  14/10/2020 ORGANISING YOUR SECONDARY DATA COLLECTION Overall objective = Become an EXPERT ! Macro Environment (PESTEL) - Uncontrollable factors! Micro Environment - Uncontrollable factors! Market-specific Information (market structure / descriptive statistics, trends) Identification of Trade Organisations/Federations / Unions / Specialized Press (they do a lot of work in collecting data for their members) Competitor analysis (via press / internet sites) Distribution Channel Analysis Indepth Analysis of consumer needs , behaviour and buying process (Crédoc; Observatoire Cetelem, TNS Sofres) Available via Learning Centre / Data bases / Xerfi / Search Engines (key search words) 11 … 12 6  14/10/2020 ADVANTAGES /DISADVANTAGES OF SECONDARY RESEARCH Rapid understanding of the market dynamics before spending money Helps to define the problem It is fast and easy as data is already available (couple of weeks) It is free or cheap It can be done at your desk! Ideal for small companies with no budget The same information is also available to your competitors Reliablity of some sources (fake news)? Up to date? Relevance to your particular product? Your problem? Your geographic location? 13 1. 3 2. After secondary research comes 3.Primary research 4. AKA « field research » 14 7  14/10/2020 PRIMARY RESEARCH OR « FIELD » RESEARCH Primary research is research you do yourself (or hire someone to do for you.) It involves going directly to a source — usually customers and prospective customers in your target market — to ask questions and gather information directly It fills the gaps in your knowledge 15 Doesanother Have I included Will the consumer product givea better the featureshe likemyproduct? experience? wants? What otherbehaviours Howmuchishe / attitudesexist? preparedtopay? What doesn’t helike about myproduct? Doesthe consumer understandmy Howdoesthe advertising? Howtypical isthis consumer? consumer choose hisproducts? Doeshelikethe Is hesatisfied Howimportant brand name? whenheuses the isprice? product? 16 8  14/10/2020 PRINCIPLE USES OF PRIMARY RESEARCH 1. Consumer attitudes, behaviours and perceptions 2. Brand issues (recognition, association, image, positioning…) 3. Communication issues (efficiency, understanding, slogan) 4. Comparing with competitors (strengths, weaknesses) 5. Generating ideas, new concepts, innovation management 6. Testing new concepts, new names, new packagings… 17 ADVANTAGES /DISADVANTAGES OF PRIMARY RESEARCH Designed & executed by your company Uses your own research tools/methods It asks the specific questions you need answers to (customized) Provides data in the format you need It is up to date (New!) It is owned by you It only available to you (private)! Is costly to implement (can you afford it?) May require the services of a professional research company Is longer to implement ( the raw data must be collected/analysed/ summarised…) 18 9  14/10/2020 KEY DOs / DON’Ts Do reference all your sources accurately Do use reliable, credible sources Do study all relevant markets Don’t use only blogs/forums… Don’t confuse the vocabulary! Secondary research = second use / “second hand” It is NOT less important than primary research It is NOT done second Primary research = first use / first hand (you do it) It is NOT more important It is NOT done first Secondary & Primary research are complementary to each other. Primary provides more specific information which is not otherwise available to the company 19 MARKET INTELLIGENCE Developing expertise Using market research Now WATCH AGAIN And complete the learning exercises! 20 10  14/10/2020 Descriptive Market Analysis Statistics, Structure & Dynamics (Micro-environment) 1 OVERVIEW OF THE DIFFERENT ENVIRONMENT PERSPECTIVES Macro Environment PESTEL Legal factors Micro Environment Political (Market specific) factors Suppliers Market Ecological Internal Structure factors company & Trends analysis Competitors Economic factors Consumers Distributors Technological factors Socio- demographic factors 2 1  14/10/2020 1. 1 2.What is a market? 3 4 2  14/10/2020 “An actual or virtual place where forces of demand & supply operate, and where buyers and sellers interact (directly or through intermediaries) to trade goods or services (…) for money” 5 MARKET MECHANISMS Markets include mechanisms or means for: (1) Determining price of the traded item (2) Communicating price information (3) Facilitating deals and transactions (4) Effecting distribution The market for a particular item is made up of existing and potential customers who need it and have the ability and willingness to pay for it. http://www.businessdictionary.com/definition/market.html 6 3  14/10/2020 WIN-WIN MARKET EXCHANGE A clearly defined need An existing demand linked to the satisfaction of this need A supply which corresponds to the need A price which gives rise to a voluntary exchange of value in order to acquire the product/service. Source: https://courses.lumenlearning.com/wmopen-principlesofmarketing/ 7 THE MARKET STUDY IS COMPOSED OF: Competitors Distributors Market Suppliers Structure & Buyers Statistics Consumers Influencers / End users 8 4  14/10/2020 PURPOSE OF MARKET ANALYSIS 1. Provide information overview about industries, major customer groups, competitors, market growth and other market variables. 2. Back up business idea with descriptive statistics, data, and facts (provide a convincing business plan) 3. Recognize market potential at an early stage & avoid making the wrong decisions 4. Identify the market entry barriers and estimate the market attractiveness. 5. Identify any existing knowledge gaps and fill them in on time. 6. More informed decisions about possible marketing strategies 9 1. 2 2.Market structure, dynamics & trends 10 5  14/10/2020 ANALYSING MARKET STRUCTURE Levels and forms of existing competition Ease of entry into the market: Captive / accessible Who are the customers of the business?  B2B / Business to another Business  B2C / Business to a consumer  C2C / Consumer to another consumer Size and scope of the market: Mass / niche Geographic dispersion of the customers: Fragmented / concentrated Bricks / clicks / both (physical stores only / virtual stores only / multi-channel) 11 MARKET ATTRACTIVENESS & GROWTH POTENTIAL Use data that is as accurate & up-to-date to: Determine and evaluate the current turnover (value) or sales volume of a product or service Make forecasts about the future development and potential attractiveness Identify key trends / technological innovations which drive the market Identify market life cycle / Business Cycle (emerging / established / declining) First time buyers (new equipment) or renewals 12 6  14/10/2020 SEASONALITY OF SALES Winter: ski holidays, anoraks, warm clothes, soup Summer: beach holidays, swimming trunks, sandals, sun- screen 13 1. 3 2.Descriptive statistics and quantitative indicators 14 7  14/10/2020 QUANTITATIVE INDICATORS Market share = company's sales over the period / by the total sales of the industry over the same period. Gives idea of the size of a company in relation to its market and its competitors. Sales volume eg 10,000 units (tons, litres, nights, subscriptions…) Sales value eg 95,000€ (=10,000 units x price of unit 9,5€) (= Total Revenues or Turnover) Growth trends (volume or value) + or – 15 QUANTITATIVE INDICATORS Market share = company's sales over the period / by the total sales of the industry over the same period. Gives idea of the size of a company in relation to its market and its competitors. Sales volume eg 10,000 units (tons, litres, nights, subscriptions…) Sales value eg 95,000€ (=10,000 units x price of unit 9,5€) (= Total Revenues or Turnover) Growth trends (volume or value) + or – 16 8  14/10/2020 QUANTITATIVE INDICATORS Actual Market = market composed of existing, active customers ( yours or your competitors’) Potential market = Actual market + Relative non-consumers who should enter the market soon Penetration level = rate of circulation of a product in its market and the potential growth still available in the market Example : Market Penetration Rate: You sell electric scooters. You determine that the total potential market is 50 million people, and the actual market is 10 million existing purchases (your customers and those of your competitors) The electric scooter market penetration rate = (10,000,000 / 50,000,000) x 100 = 20% - with 80% still to conquer 17 FINDING THE OPPORTUNITIES: ELECTRIC BIKE GROWTH 2017 French bicycle market (Observatory Union Sport & Cycle Federation): Sales of regular bicycles and e-bikes combined increased to 2,782,000 units (+ 2%), Sales of e-bike rose by + 90%. 18 9  14/10/2020 1. 4 2.Keys to successfully analysing your market 19 KEY SUCCESS FACTORS 1. Use numerous, up-to-date, official, reliable statistics 2. Quote your sources extensively (Harvard referencing) 3. Study all relevant market data, from different data perspectives Eg: DOMESTIC ASSISTIVE ROBOT FOR ELDERLY: The domestic robot industry in general The segment specific to assistive robots for the elderly Population data on senior citizens Data on the health/autonomy of senior citizens 20 10  14/10/2020 Descriptive Market Analysis Statistics, Structure & Dynamics (Micro-environment) Now WATCH AGAIN And complete the learning exercises! 21 11  14/10/2020 ACTORS OF MARKET SUPPLY Analysing Competitors & Distribution channels 1 THE ANALYSIS OF THE MICRO ENVIRONMENT IS COMPOSED OF: Competitors Distributors Market Suppliers Structure & Buyers Statistics Consumers Influencers / End users 2 1  14/10/2020 1. 1 2.Why study the competitors? 3 4 2  14/10/2020 WHY STUDY THE COMPETITION? Your aim is to conquer, defend and grow your territory in a market Your arrival will be noticed and competitors will react… Analysis reveals who you are « fighting » & how they play The more you know, the more you can anticipate…. Competition is normal in a healthy market place! Competition increases visibility / consumption It challenges you to do better / to innovate It forces you to listen to the market/customers It forces you to be different and to stand out! 5 1. 2 2.How to classify competitors? 6 3  14/10/2020 HOW TO CLASSIFY CHOCOPOPS’ COMPETITORS? 7 HOW TO CLASSIFY CHOCOPOPS’ COMPETITORS? Direct Indirect Indirect 8 4  14/10/2020 IDENTIFY DIFFERENT TYPES OF COMPETITOR Direct Competitors: inter-product – products which are technically comparable Indirect competitors: inter-segment products which are in a different segment but serve the same need (substitutes) New entrants: innovative products in a new category 9 CUSTOMERS WILL CHOOSE SOLUTIONS ACCORDING TO PARTICULAR CONSIDERATIONS / CONSTRAINTS Time / duration of the journey Distance covered / fatigue Simplicity of the journey Accessibility (town centre or external airport) Costs/budget available Number of participants Luggage / things to transport Necessity of physical presence.. 10 5  14/10/2020 1. 3 2.How to do a competitor analysis? 11 HOW DO YOU MEASURE UP ? 12 6  14/10/2020 COMPETITOR ANALYSIS SUMMARY OF STRATEGIC INFORMATION TO ASSESS THE STRENGTHS / WEAKNESSES AND RELATIVE POSITIONS IN THE MARKET, & BE ABLE TO DEVISE YOUR OWN, ALTERNATIVE MARKETING MIX  Identify the direct competitors (in particular)  Use key criteria to analyse & compare:  The Company Size / years of existence / financial strength  The Reputation, Visibility, Market Share  The Product / service information (quality/image/satisfaction)  The Price /promotions /discounts / aggressivity  The Sales strategy (ambition/ activity/objectives)  The Distribution (market coverage / channel)  The Communication strategy (How they communicate / type of message (positioning) Where /frequency) 13 COMPETITOR ANALYSIS – WHERE TO FIND INFORMATION? Economic press / specialised press Distribution channel reports Competitor websites (product information) Their Social Media presence and following Their advertising /communications Exhibitions / trade fairs BUT ALSO : Direct observation (in their stores, in-store merchandising, pricing comparisons, in-store animations) Requests for information (mystery shoppers) Primary research (asking customers to talk about them) 14 7  14/10/2020 CLASSIFICATION BY MARKET POSITION Leader: Largest share Challenger: Medium share, to challenge the leader Follower: No offensive posture against the leader Nicher: Focus on small segments of market only LEADER NICHE PLAYERS CHALLENGERS FOLLOWER 15 THE STONGEST DOESN’T ALWAYS WIN 16 8  14/10/2020 IT’S GOING TO GET MESSY! 17 1. 4 2.How to analyse the distibution? 18 9  14/10/2020 DEFINITION OF DISTRIBUTION CHANNELS A distribution channel is a chain of businesses or intermediaries through which a good or service passes until it reaches the final buyer or the end consumer (where you buy the good). Supply chain / upstream process: "Who are our suppliers?" Distribution channels / downstream process: How can we get our product to where the consumer wants to buy it?" 19 AIMS OF THE DISTRIBUTION ANALYSIS How are similar products being distributed currently? How do the competitors distribute? Where do my potential customers expect to buy? Are there both physical shops / e-commerce? Which distribution channels are dominant? Do I need a distributor or can I manage myself?  This analysis will be used to define your distribution strategy (= PLACE in the Marketing Mix) 20 10  14/10/2020 TYPES OF DISTRIBUTION CHANNEL AVAILABLE Multiple retailers Drive-in retailers Independent retailers Vending machines E-commerce Franchises 21 22 11  14/10/2020 GEOGRAPHIC MARKET COVERAGE: CUSTOMER CATCHMENT AREA Definition: The geographical area from which a particular store location draws its customer or prospects. Considerations: Density of the population in the town / region Socio-professional category and profile of the potential consumers (CSP) The size and nature of the intended shop (small Convenience store/ Hypermarket (profitability, originality, attractiveness.) The distance between the point of sale and the residential areas: Proximity / Accessibility & Convenience (urbanisation, pedestrian access, bus, metro, car, bicycle..) Proximity of competition (image , category of products) 23 EXAMPLE OF IKEA: NATIONAL LEVEL 24 12  14/10/2020 EXAMPLE OF IKEA: REGIONAL 25 ACTORS OF MARKET SUPPLY Analysing Competitors & Distribution channels Now WATCH AGAIN And complete the learning exercises! 26 13  14/10/2020 ACTORS OF MARKET DEMAND Buyers, consumers, influencers 1 THE ANALYSIS OF THE MICRO ENVIRONMENT IS COMPOSED OF: Competitors Distributors Market Suppliers Structure & Buyers Statistics Consumers Influencers / End users 2 1  14/10/2020 UNDERSTANDING CONSUMER DEMAND IS ESSENTIAL TO FUTURE SUCCESS! Consumer Demand is the willingness to buy a product or service based on the consumer's desire. Demand > Supply Demand < Supply Companies have to work on generating desire /demand 3 1. 1 2.How to define 3.Actual and Potential Demand? 4 2  14/10/2020 ANALYSIS OF DEMAND: CONSUMERS / END-USERS Consumer = person who consumes / uses the product or benefits from the service Potential Demand Actual Demand Relative Non Consumers Active Consumers A.N.C. R.N.C. R.N.C Our Our Absolute Involontary Volontary active competitors’ clients active clients NO ACTION PROSPECT MAKE PROMOTE OUR PROSPECT INFORM CONVINCE LOYAL / ADVANTAGES DEVELOP Demand = Number of buyers X Quantities X Frequency of Purchase 5 UNDERSTANDING CONSUMER BEHAVIOUR IS A MAJOR CHALLENGE FOR THE MARKETER We will study Consumer behaviour in future videos: Internal and external influences on Consumer Behaviour Purchasing decision-making processes Primary Research tools for understanding / explaining / predicting consumer behaviour Never assume that your consumer thinks just like you! 6 3  14/10/2020 1. 2 2. Different roles: 3. Deciders, Buyers, 4. End-users / consumers 7 DECIDERS, BUYERS AND END-USERS Decider: decides what to purchase, Buyer: buys the product and (sometimes but not always) pays for the product End-User / Consumer: uses or consumers the end product Sometimes all 3 roles are combined in the same person Sometimes they are separated (in a decision-making unit) 8 4  14/10/2020 Decider, Buyer and Consumer = same person Decider = School (imposed purchase) Buyer / payer = Parent Consumer = school child Decider = Parent / Student Buyer / Payer = Parent Consumer = Student Decider = Joint decision Buyer / Payer = Joint or individual Consumer = Joint 9 Children can have an enormous influence on their parents…. 10 5  14/10/2020 1. 3 2. Role of Influencers 11 ROLE OF INFLUENCERS Any person who, by his reputation, image, social status, profession or life style, is able to recommend a company/brand/product https://influencermarketingreview.wordpress.com/2013/03/23/rebecca-mahony-six-key-steps-to-freshening-up-your-influencer-marketing-efforts/ 12 6  14/10/2020 SPECIALIST INFLUENCERS (PRESCRIPTEURS) 13 CELEBRITY ENDORSEMENT INFLUENCERS 14 7  14/10/2020 ROLE OF SOCIAL MEDIA Influencers are particularly important for the CONTENT they publish in Social Media – blogs / articles / photos / videos Ordinary people turn to favorite Instagram models, Twitter personalities and YouTube stars for advice on purchasing Marketers apply “influencer marketing” getting these influencers to talk about their brands to their followers Top Fashion Influencer 2019: Chiara Ferragni (17 M followers) 15 UNDERSTANDING THESE 3 ROLES ON STIMULATING FUTURE DEMAND IS ESSENTIAL FOR YOUR FUTURE SUCCESS Buyers Consumers Influencers / End users 16 8  14/10/2020 ACTORS OF MARKET DEMAND Buyers, Consumers, Influencers Now WATCH AGAIN And complete the learning exercises! 17 9  14/10/2020 MARKET RESEARCH 1 QUANTITATIVE TECHNIQUES 1 1. 1 2. Different forms of Market Research 2 1  14/10/2020 DIFFERENT TYPES OF MARKET RESEARCH (BY TYPES OF SOURCE: EXISTING OR NEW) Secondary research sources (or desk research) journals, articles, newspapers, commercially published market studies, government statistics, Internet … Primary Research sources (or Field research) Personal, online, phone, self-administered, postal questionnaires, interviews, experiments, product tests… 3 DIFFERENT TYPES OF MARKET RESEARCH BY TYPES OF DATA: NUMERICAL OR VERBAL AND BY OBJECTIVE: QUANTIFY OR EXPLAIN Quantitative research Tools: questionnaires / surveys Quantifies / measures behaviour, attitudes Tests hypotheses Presents data in statistical charts Requires large sample size to be reliable Qualitative Research Tools: indepth interviews, focus groups, discussions Explores / Qualifies /describes / explains behaviour, attitudes Presents findings in the form of words « Verbatim » Requires small number of interviewees 4 2  14/10/2020 QUALITATIVE AND QUANTITATIVE RESEARCH PROVIDE COMPLEMENTARY ANALYSIS Quantitative followed by Qualitative Do a survey first (basic trends) and then develop the answers in detail Qualitative followed by Quantitative Explore with detailed human interaction first, and then quantify Are these ideas widespread? Is this common / typical of my consumers? 5 AD-HOC VERSUS CONTINUOUS RESEARCH Ad Hoc / One-off Data collected once when a specific problem arises Custom designed study: You commission an independent study, plan independently and pay the full costs Omnibus study: You buy « space » in a general questionnaire which deals with lots of different subjects, and pay for just the part regarding your questions Continuous Research / longitudinal studies Tracks changes among the same set of respondents over a regular period of time Consumer Panel: data on what consumers buy over time Retail Panel: data on what is sold in a retail outlet (shop) over time 6 3  14/10/2020 LONGITUDINAL: CONSUMER PANELS Collecting the same data, for a longer period of time, from a group of consumers, target audience The validity of the survey is ensured by a large sample (thousands) Used to track continuous consumer purchasing habits : o groceries, o food and drinks, o electronic gadgets…. 7 LONGITUDINAL: RETAIL / DISTRIBUTOR PANEL Collecting the same data, on a regular/permanent basis, from a sample of retailers representing the retail environment Used to collect data about sales, objectives, promotions, etc… In exchange retailers get information about their competitors (if also part of the panel). Eg Hypermarket actors: Nielsen, Iriworldwide & Marketingscan. Specialist retail market actors: GFK (IT, telephones, pharmacies…). 8 4  14/10/2020 1. 2 2. Market Research Planning Process 9 THE RESEARCH PROCESS 1: Define the problem 2: Define the Research Objective 3: Develop the Research Plan (type/format) 4: Collect the information 5: Analyze the information 6: Present the findings 7: Make the decision 10 5  14/10/2020 1. 3 2. How to design quantitative research? 11 DEFINITION OF QUANTITATIVE RESEARCH Based on numerical analysis and statistics. Used to quantify attitudes, opinions, behaviors, and other defined variables. Conducted through questionnaires, polls and surveys Asks a representative sample to generalize the results to an entire population. The larger the sample, the more credible the results 12 6  14/10/2020 KEY CONSIDERATIONS WHEN DESIGNING YOUR QUESTIONNAIRE What information do you need and in what format? Profile of respondents o Sufficient in number: 100 rather than 10 o Representative of your target population o Accessible to you? o With relevant expertise / experience Questionnaire Administration method o Self administered or by interviewer? o On-line / phone / face-to-face Questionnaire Analysis method Excel? SPSS, Classification of answers 13 1. 4 2. Types of questions you can include 14 7  14/10/2020 DIFFERENT TYPES OF QUESTIONS You wish to measure the satisfaction of the 600 customers who visited your store this year: Sample size: 150 (25%) Email with link to an online questionnaire On-line questionnaire tool You must design questions which : Can be analysed automatically (there are 150 questionnaires!) Provide helpful statistics to measure satisfaction Allow customers sufficient choice to express their answers Open Questions: completely free expression: Closed questions: pre-defined answer options 15 HOW TO GIVE ANSWER OPTIONS WHILST STILL BEING STATISTICALLY MEASURABLE… OPEN QUESTIONS CLOSED QUESTIONS How old are you? ______ How old are you? □ 20-29 □ 30-39 □ 40-49 □ 50 or above What is your marital status? What is your marital status? ______________ □ Single □ Married / Paxed □ Living as a couple but not married □ Divorced □ Widow Are you satisfied with our customer service? 16 8  14/10/2020 DIFFERENT TYPES OF CLOSED QUESTIONS Dichotomous questions (2 opposing choices) Yes / No; True / False Are you satisfied with our customer service □ Yes □ No Multiple Choice Questions (pre-determined answers) One choice only: Please describe your level of satisfaction concerning customer service : □ Very dissatisfied □ Dissatisfied □ Satisfied □ Very satisfied Several choices possible What do you particulary appreciate about our staff? □ Availability □ Product Knowledge □ Sense of service □ Quality of advice □ Friendliness □ Objectivity 17 DIFFERENT TYPES OF CLOSED QUESTIONS Rating Scale / Likert scale (Generally 1-5, or 1-7 point scale) Please rate your level of satisfaction below, 5 being the highest Customer service □ 1 □2 □3 □4 □5 Opening hours □1 □2 □3 □4 □5 Product choice □1 □2 □3 □4 □5 Or Ranking Question Rank the following items in terms of their importance in choosing to visit our store (From 1-6, 1 being the MOST IMPORTANT): □ Opening Hours □ Choice of Products □ Quality of Service □ Accessibility of store □ Product Quality □ Prices 18 9  14/10/2020 DIFFERENT TYPES OF CLOSED QUESTIONS Semantic differential Osgood Please rate our store staff according to the following items Hostile _______ Welcoming Rude _______ Polite Useless _______ Expert Disinterested _______ Dedicated Inefficient _______ Efficient Self-centred _______ Customer-centred -3 -2 -1 0 1 2 3 19 QUESTIONS CONCERNING THE DEMOGRAPHICS OF THE RESPONDENTS Possible demographic questions Filter questions concerning the use of the product / service Gender Age Profile Eg Ownership of a dog / car / Professional category house / bicycle… Annual revenues Geographic location Educational background Check how representative the sample is of the target market Provide descriptive statistics of the respondents (65% female, 40% aged 18-25) Compare answers from certain sets of respondents (cross tabulation) Do women respond differently from men? Do students respond differently from working people? 20 10  14/10/2020 1. 5 2. Checklist 21 BEST PRACTICE CHECKLIST  Give an short explanation and reassure (time / respect of anonymity / data use)  Divide the questionnaire into topics to be discussed  Keep it short (or respondents will get bored)  Start with easy questions first (reassurance) and get progressively more specific / detailed  Always TEST first (for ambiguity / vocabularly) before you take it to the entire sample  Check that the questions will provide the data you need to solve your problem  Say « THANK YOU! » 22 11  14/10/2020 MARKET RESEARCH 1 QUANTITATIVE TECHNIQUES Now WATCH AGAIN And complete the learning exercises! 23 12  14/10/2020 MARKET RESEARCH 2 QUALITATIVE TECHNIQUES 1 1. 1 2. Different forms of Market Research 2 1  14/10/2020 DIFFERENT TYPES OF MARKET RESEARCH (BY TYPES OF DATA: NUMERICAL OR VERBAL AND BY OBJECTIVE: QUANTIFY OR EXPLAIN Quantitative research Tools: questionnaires / surveys Quantitifies / measures behaviour, attitudes Tests hypotheses Presents data in statistical charts / histograms Requires large sample size to be reliable Qualitative Research Tools: indepth interviews, focus groups, discussions Explores / Qualifies /describes / explains behaviour, attitudes Presents findings in the form of words « Verbatim » Requires small number of interviewees 3 1. 2 2. Objectives of qualitative Research 4 2  14/10/2020 5 CONSUMERS CAN HAVE VERY DIFFERENT REACTIONS / ATTITUDES / BEHAVIOURS ABOUT A GIVEN PRODUCT 6 3  14/10/2020 USE OF PRIMARY QUALITATIVE RESEARCH Question consumers directly, allow them to express their ideas freely Enable them to manipulate products/ images … Discover behaviors, attitudes, opinions, language, feelings….of your potential target Understand and Explain underlying reasons, opinions and motivations Provide insights into a problem (why a consumer doesn’t buy) Develop ideas or hypotheses for potential quantitative research 7 1. 3 2. How to design effective qualitative research? 8 4  14/10/2020 CRITICAL SUCCESS FACTORS FOR QUALITATIVE RESEARCH THIS IS NOT A SURVEY! Let the respondent tell their own story Use language / vocabulary that the interviewee can understand List the topics you want to cover in the appropriate order Be Neutral : don’t agree / disagree Use active listening techniques: Repeating, paraphrasing Tell me more That’s really Wow! about.. interesting! 9 KEY QUALITIES OF A GOOD INTERVIEWER Structured & clear Knowledgeable Steering: knows topics & keeps on track Gentle: lets you finish, gives you time Critical: is prepared to challenge what is said to get more information Balanced: does more listening than speaking 10 5  14/10/2020 TYPES OF QUESTIONS YOU CAN USE Warm-up questions: easy to answer to develop trust Direct questions: Do you find your job interesting? Indirect questions: What do most people here think about this? Is that the way you feel too ? Follow-up questions: Could you tell me more about.. Probing questions: What exactly do you mean by.. Specifying questions: So what did you do then? Interpreting questions: So, is it fair to say that you like the packaging? Closure question: leave the respondent feeling empowered/listened to 11 1. 4 2. Qualitative research 3. Techniques and methodologies 12 6  14/10/2020 INDEPTH INTERVIEWS (ONE TO ONE) Intensive individual interviews conducted with a small number of respondents to explore their perspectives on a particular idea, product or situation ◻ 60-90 minutes face-to-face ◻ Recorded by Audio, video or “paper - pencil” ◻ More or less structured format ◻ Particularly appropriate to discuss sensitive, more personal topics ◻ Easy to organise but costly Duplicate interviews until you reach SATURATION POINT i.e. the point at which you do not learn anything new 13 DIFFERENT TYPES OF INDEPTH High INTERVIEWS Objective: Confirmation of what you knew Structured Fixed questions Interview driven by the interviewer Level of knowledge about subject Standard interview method between respondents Objective: mostly exploratory Semi-structured Has some pre-determined topics Interview flows like a conversation with some refocusing Topics are dealth with as the interviewee refers to them Unstructured Objective : Explores an unknown subject General theme is announced Conversation is driven by the respondent’s answers Large variation possible between respondents Inexistant 14 7  14/10/2020 FOCUS GROUPS OR GROUP DISCUSSIONS Gathering together of people of similar background or experiences to DISCUSS A SPECIFIC TOPIC of interest to the researcher ◻ 8 - 10 people ◻ 2h - 4h discussion which is guided, monitored, recorded ◻ 1 animator and 1 observer (usually outside the room) ◻ Everybody needs to be at ease as they interact with each other ◻ Not as expensive as individual interviews but more difficult to organize. ◻ Complex analysis 15 16 8  14/10/2020 DIRECT OBSERVATION RESEARCH Systematic process of recording the behavioural patterns of people, objects and occurrences as they are witnessed. There is no questioning or communicating during the action, but behavior can be explained / commented after the recording Why did you pick up those 2 products? What information were you looking for? Why did you eventually buy the green one? 17 1. 5 2. Analyzing the data 18 9  14/10/2020 WHAT IS QUALITATIVE DATA AND HOW CAN YOU ANALYZE SUCH DATA? Non-numerical data that captures concepts and opinions in the form of transcripts from interviews, audio/video recordings and notes from observation. Qualitative data analysis reveals patterns and themes in your data 1. Transcribe: convert all data into textual form 2. Organize data into tables by topic, by respondent 3. Categorize /code your data ie identify a word or a short phrase that represents a theme or an idea.eg “Price” or “Value for Money” 4. Analyze data to reveal repetitions / patterns 5. Identify revealing VERBATIM RESPONSE = exact words spoken by the respondent The packaging is I find the design too slippery too cluttered! when I’ve got wet hands.. 19 VERTICAL ANALYSIS OF DATA INTERVIEW Respondant #1 Respondant #2 Etc.. CONTENTS Answers Answers Q. 1: How Yhdd…? AAaaaaA BBbbbB CCcc…. Q. 2: Who Bfjdf…? AAAAaaaaaa bbbbBb Cc… Q. 3: … AaAaAaAa BbBbBbB c…. etc… … … … Identify recurrent topics, Sub topics “Verbatim” 20 10  14/10/2020 HORIZONTAL ANALYSIS OF DATA INTERVIEW Respondant #1 Respondant #2 Etc.. CONTENTS Answers Answers Identify Q. 1: How Yhdd…? AAaaaaA BBbbbB CCcc…. COMMON topics to all Q. 2: Who Bfjdf…? AAAAaaaaaa bbbbBb Cc… different respondents Q. 3: … AaAaAaAa BbBbBbB c…. Identify the etc… … … … DIFFERENCES 21 COMPLEMENTARITY OF QUALITATIVE AND QUANTITATIVE RESEARCH Qualitative followed by Quantitative Explore with detailed human interaction first, and then quantify Are these ideas widespread? Is this common / typical of my consumers? Never assume that your customer thinks like you… Always ask them directly... You may be surprised! 22 11  14/10/2020 MARKET RESEARCH 2 QUALITATIVE TECHNIQUES Now WATCH AGAIN And complete the learning exercises! 23 12 CONSUMER BEHAVIOUR EXTERNAL INFLUENCES  1 What is consumer behaviour?  CONSUMER BEHAVIOUR IS: An inter-disciplinary social science that blends elements from psychology, sociology, social anthropology, marketing and behavioural economics. How consumers behave while researching and shopping How consumers think and feel about different alternatives (brands, products, services, and retailers) How consumers make choices between different alternatives when buying How consumer behaviour is influenced by their external environment (peers, culture, media) and their personal factors  2 Why does consumer behaviour matter? WHY STUDY CONSUMER BEHAVIOUR? UNDERSTAND: WHAT are consumers doing when shopping in a BIOCOOP? What do they buy in store? How long do they stay? How much money and time do they spend? EXPLAIN: If I understand that many consumers come to buy custom quantities of organic cereals, then I can explain WHY they act that way: To reduce packaging To reduce storage space To control their spending To support local producers ANTICIPATE: If I can understand and explain that consumers search for reduced packaging, then I can anticipate their future behaviours & determine a product that will attract them Eg Biocoop VRAC Volant. EXTERNAL & INTERNAL FACTORS INFLUENCING CONSUMER DECISIONS A GOOD UNDERSTANDING OF CONSUMER BEHAVIOUR… Helps you explain & predict the future behaviour Consumer behaviour will also help you to SEGMENT your potential customers into smaller homogenous groups with near identical needs and behaviours. Envisage how marketing campaigns can be adapted and improved to more effectively influence the consumer  3 Social factors affecting consumer behaviour FLOWS OF INFLUENCE IN THE EXTERNAL SOCIAL ENVIRONMENT Culture Sub Culture MACRO SOCIAL ENVIRONMENT Social class Reference Family Groups MICRO SOCIAL ENVIRONMENT MACRO-SOCIAL FACTORS - CULTURE Culture is a set of values, norms, attitudes that a group of people share, transmit from one generation to another. It shapes them into adopting common behaviours. National Identity National Symbols WHY IS IT SO IMPORTANT TO UNDERSTAND CULTURE If you go global you will have to adapt to local customers MACRO-SOCIAL FACTORS - CULTURE « Normal » or « inacceptable » Foods MACRO-SOCIAL FACTORS - SUB-CULTURE : GEOGRAPHIC MACRO-SOCIAL FACTORS - SUB-CULTURES: ETHNIC ORIGIN / LGBT Amsterdam 2017 MICRO-SOCIAL FACTORS : REFERENCE GROUPS Any group that serves as a point of comparison (or reference) for an individual in forming either general or specific values, attitudes, or a specific guide for behavior Primary Reference group = primary source of relationships & socialization Characterized by close, personal, & intimate relationships that last a long time, maybe a lifetime Made up of love, caring, concern, loyalty, and support. Essential in the formation of individual’s sense of self and identity (development of values, norms, morals, beliefs, worldview, and everyday behaviors and practices) Secondary Reference groups = secondary source of relationships Relatively impersonal & temporary relationships that are goal- or task- oriented Often found in employment or educational settings. Groups you choose to join  PRIMARY REFERENCE GROUP - FAMILY Marketing Analysis Marketing Analysis SECONDARY REFERENCE GROUPS  4 Situational factors affecting consumer behaviour SITUATIONAL FACTORS INFLUENCING CONSUMER DECISIONS Buying Task: Market offerings: Type of purchase Substitutes available Prior experience Access to information Reason to buy Access to assistance Perceived risk Adverts, SMS, Value of the purchase Promotions Time available Where you are Who you are with  CONSUMER BEHAVIOUR EXTERNAL INFLUENCES Now WATCH AGAIN And complete the learning exercises!  MICRO-SOCIAL FACTORS: PRIMARY REFERENCE GROUP - FAMILY  The family is the primary source of relationships and socialization  Members share close, personal & enduring relationship Marketing Analysis  Play a normative role in shaping behavior through face-to-face, regular/daily contact.  Looking for approval of group, give strong, honest advice you trust.  Education, upbringing, values, attitudes, religion, initial consumption trends Marketing Analysis  MICRO-SOCIAL FACTORS: SECONDARY REFERENCE GROUPS School children influence each Marketing Analysis other’s behaviour through Peer Pressure, either positively or negatively! Neighbours influence each other inMarketing choice ofAnalysis garden decor, installation of solar panels, renovations… CONSUMER BEHAVIOUR INTERNAL INFLUENCES  1 What do we mean by consumer behaviour?  CONSUMER BEHAVIOUR IS THE STUDY OF: How consumers behave while researching and shopping How consumers think and feel about different alternatives (brands, products, services, and retailers) How consumers make choices between different alternatives when buying How consumer behaviour is influenced by their external environment (peers, culture, media) and their personal factors A good understanding of the behaviour of your consumer: Helps you explain & predict the future behaviour Envisage how marketing campaigns can be adapted and improved to more effectively influence the consumer FACTORS INFLUENCING CONSUMER DECISIONS  2 Personal Factors affecting consumer behaviour PERSONAL FACTORS Characteristics that are specific to a person and may not relate to other people within the same group. How a person makes decisions, Their unique habits and interests, Their opinions. Personal decisions are also influenced by age, gender, background, and other personal issues. As young people YOU will have different Needs, and will adopt different consumer behaviour than an older person. YOU will choose products differently and spend your money on items that may not interest an older person.  PERSONAL FACTORS : AGE Age can help you understand and explain many differences in shopping behaviours Marketing Analysis PERSONAL FACTORS: AGE PERSONAL FACTORS: FAMILY LIFECYCLE Single In First child Active Family Empty Nesters Survivors Relationship Leisure House Holidays Holidays Health Hi-tech Leisure Kids’ stuff Quick meals Home services Education Domestic Trips abroad Financial Education Dinners at appliances Flat services home Transport Fashion Restaurants Insurance Jewellery Legal advice Car Small Health Health furniture Child care House High spending renovation in relation to Rational income Rational spending to Low spending Sensible spending to secure future High spending spending secure future PERSONAL FACTORS : OCCUPATION, INCOME & STATUS Occupation plays a significant role in influencing buying decision. An individual’s nature of job has a direct influence on the products and brands he picks for himself/herself. People are very concerned about their image and their status in society which is a direct outcome of their material prosperity. The status of a person is projected through various symbols like the dress, accessories and possessions.  PERSONAL FACTORS : LIFESTYLE Our life styles are reflected in our personalities and self-concepts. A person’s mode of living is identified by his or her activities, interests and opinions. Activities, interests and opinions affect consumer buying behaviour. 2 customers may both like reading, but one loves Science Fiction, the other Historical novels Personal Values play an important role in consumption: Eg Animal rights, pollution, global warming, child labour The analysis technique used to measure and classify consumer lifestyles is called Psychographics (see segmentation video)  HSBC ADVERTISING USING LIFESTYLE FACTORS Marketing Analysis Marketing Analysis  PERSONAL FACTORS – PERSONALITY Personality is sum of an individual’s enduring internal psychological traits that make him or her unique Psychological traits and resources available Energy Self-confidence Intellectualism Novelty seeking Innovativeness impulsiveness Leadership Vanity  PERSONAL FACTORS: BIG 5 PERSONALITY TRAITS Imagination, Careful, efficient, Talkative, outgoing intellectual curiosity dutiful, reliable Marketing Analysis Marketing Analysis Empathy, altruism, Anxiety, worry, kindness, cooperation envy, jealousy  PERSONAL FACTORS – SELF-IMAGE Self Image is both psychological and physical. It is composed of several factors How you see yourself (subjective self image) How others see you (Social image) How you would like to be seen (ideal image)  3 Psychological factors affecting consumer behaviour FACTORS INFLUENCING CONSUMER DECISIONS In daily life, consumers are being affected by many issues that are unique to their thought process. Psychological factors can include perception of a need or situation, the person's ability to learn or understand information, and an individual's attitude. Marketers must take these psychological factors into account when creating campaigns, ensuring that their campaign will appeal to their target audience. PYCHOLOGICAL FACTORS Motivation describes the customer's willingness to Buy (eg ideals, achievement, self-expression) Perception influences the way a consumer sees & interprets the world Experience describes the impact of familiarity on decision making (we learn from past experience, either good or bad) Attitude is the individual's consistently favorable or unfavorable evaluation, tendency or feeling about a product or brand.  PSYCHOLOGICAL FACTOR: ATTITUDE = Thoughts + feelings + experiences towards a product Attitudes tend to be slow to evolve (so can be helpful to predict behaviour) Has 3 components.  Cognition (Think) = It has to do with conscious, thought processes  Affect (Feel) = it has to do with the emotional attachement a consumer has with the product  Conation (Do) = it has to do with an intended / planned course of behaviour. I LOVE my BMW , because it has NEVER let me down (300 000 km..!) no doubt I’ll buy another one. I KNOW about global warming, I CARE ABOUT the planet, so I BUY organic products.  4 Understanding Consumer behaviour is essential to the marketing process ACCURATE CONSUMER INSIGHTS WILL ALLOW YOU TO: Consumer profile  CONSUMER BEHAVIOUR INTERNAL INFLUENCES Now WATCH AGAIN And complete the learning exercises! HIERARCHY OF NEEDS  1. 1 2.What is a need?  DEFINITION OF A NEED “A need is a basic deficiency for an essential item.” A customer need is a motive that prompts a customer to buy a product or service. Ultimately, the need is the driver of the customer's. purchase decision. EVERY LUNCH TIME YOU HAVE THE SAME PROBLEM. NEED : I’M HUNGRY SOLUTION : BUY SOME FOOD PURCHASE DECISION DEPENDS ON: AVAILABILITY, TIME, BUDGET, CONVENIENCE, PERSONAL TASTES/ PREFERENCES  NEED OR WANT ? Some needs related to physiology (drinking, eating) are natural. You need food, water, air, security Others needs are acquired during social life (values, beliefs, education, etc.) Individuals associate the possession of a product with the satisfaction of a need A want places specific, personal criteria on how a need must be fulfilled “I need a new phone” = “I want the latest iphone XS max” Marketing is mostly about satisfying wants. NEED OR WANT?  1. 2 2.Maslow’s Pyramid of needs MASLOW’S HIERARCHY OF NEEDS 1943 theory of human motivation You must satisfy the basic needs before moving to higher level needs BASIC NEEDS (PHYSIOLOGICAL / SAFETY) Some products you need Some products and you need but desire don’t desire (don’t want to spend money on) CARS ADDRESSING DIFFERENT NEEDS Self fulfillment (luxury/conspicuous) Esteem (brand status) Belonging need (branded look) Safety need (transport family) Basic need (personal mobility) ?  1. 3 2.THE KEY IS DEFINING THE NEED HOW CAN MASLOW BE APPLIED IN MARKETING? A need is a consumer’s desire for a product’s specific benefit, whether that be functional or emotional. The emotional benefit tends to be a stronger driver for consumers Functional benefits can be easily copied by competitors Consider the level of need your customer is trying to meet Show exactly how your product fulfills that need. NEED FOR ANTI-PERSPIRANT FROM PROBLEM TO SOLUTION Sex Appeal Repulsive Attractiveness Esteem Self–conscious Self confident Rejected Accepted Belong ing Vulnerable Protected Prisoner of sweat Freedom of movement Safety Uncontrollable Controllable Unpleasant smell Pleasant Scent Wetness Dryness Basic  1. 4 2.SO WHAT IS THE NEED ? WHAT IS THE REAL NEED YOU ARE ADDRESSING? The consumer buys solutions Problem – How do I fix my shelves? Need - I need to be able to make holes cleanly SolutionThe tool which makes holes MAKE SURE YOU DO CONSUMER RESEARCH TO TEST THE NEED… Do these solve any real problems? Would you be prepared to pay for them? HIERARCHY OF NEEDS Now WATCH AGAIN And complete the learning exercises!  THE BUYER DECISION-MAKING PROCESS  1. 1 2.Different types of Purchases  ROUTINE PURCHASE : LOW INVOLVEMENT Low value, frequent purchase products – familar, satisfy need, no risk. Same routine every week, sometimes with a shopping list No time /desire to think about alternatives Very difficul