MODULE: IPS 321

LECTURE: MR DYWILI

DATE: 26/07/17

GROUP ASSIGNMENT
GROUP MEMBERS

SURNAME NAME STUDENT NUMBER

MASHOLOGU SINOVUYO(GROUP LEADER) 201512650

MNGUNI LIBHONGO 201506300

MANZI BONGILE 201505153

GANATI APHELELE 201513424

MGWALI KAMVELIHLE 201506720

SODA RUTH 201515413

MAKAURE KUDZAI 201515399

TOKONYA LIPOLELO 201503426

GQEZU TABITA 201402356

JIKIJELA ALUNCEDO 201002867

BUSHU AKHONA 201300890

NOGUDA BANDILE 201515839

NJENJANI LUYANDA 201516233

Introduction

Consumer behavior is the study of individuals, groups, or organizations and the

processes they use to select, secure and dispose of products, services, or ideas to
satisfy their needs and wants. It is also concerned with the social and economic impacts
that purchasing and consumption behaviour has on both the individual consumer and
on broader society. Behavior occurs either for the individual or in the context of a group
for example friends influence what kinds of clothes a person wears .Consumer behavior
involves the use and disposal of products as well as the study of how they are
purchased (Schiffman,2004). Product use is often of great interest to the marketer
because this may influence how a product is best positioned or how we can encourage
increased consumption.

Since many environmental problems result from product disposal for example motor oil
being sent into sewage systems to save the recycling fee, this is also an area of
interest. Consumer behavior involves services and ideas as well as tangible products.
The impact of consumer behavior on society is also of relevance. For example,
aggressive marketing of high fat foods or aggressive marketing of easy credit may have
serious effects for the national health and economy. The main objective of the study of
consumer behavior is to provide marketers with the knowledge and skills, that are
necessary to carry out detailed consumer analyses which could be used for
understanding markets and developing marketing strategies.

The study of consumer behavior helps management understand consumers needs so

as to recognize the potential for the trend of development of change in consumer
requirements and new technology. And also to articulate the new thing in terms of the
consumers needs so that it will be accepted in the market well. The following are a few
examples of the benefits of the study of consumer behavior derived by the different
categories of people. A marketing manager would like to know how consumer behavior
will help him to design better marketing plans to get those plans accepted within the
company (Schiffman,2004).
The marketing concepts

Production Orientation

According to Erasmus (2010) production orientation is concerned about the internal

production or manufacturing capabilities of the firm rather than on the needs and
desires of the customers. Whereas, according to Sanjana& Mornay (2013) it refers to
the increased production of goods in order to address the issue of shortage of goods in
the market. Therefore the main focus is not on customers but rather the resources
within the organization. Erasmus (2013) asserts that this orientation can lead to failure
in the long term, for example customers will show no interest thus leading to over-stock
of goods. This orientation is inadequate because it does not consider whether the goods
and services that the firm produces most efficiently meet the needs of consumers.

Societal Marketing Orientation

Societal marketing orientation acknowledges that a firm exists not only in order to meet
the firms objectives and the customer needs and wants, but rather also to preserve and
enhance individuals and societys long term best interests. It aims at promoting the
societal well-being. It aims at protecting consumers and prevents vulnerable consumers
from exploitation. Lamb et al (2015) asserts that marketers should produce
environmentally friendly products as well as packaging. Also marketers should provide
benefits to their society in order to regain reputation. For example, Woolworths
launched Farming for the future project to help farmers who supply them with fresh
produce to reduce their dependence on artificial chemical fertilisers.

Relationship orientation

Relationship orientation focuses more on securing long-term, profitable relationship with

customers and other stakeholders that satisfy the needs of all. It focuses on customer
care (Erasmus,2013). Relationship orientation is more about treating customers as the
shareholders and involve them in any decision making processes and listen to their
views about the products offered by the business.
According to Joubert (2010), firms which practises relationship orientation builds
relationships with customers by offering value and providing satisfaction on a consistent
basis. Firms that successfully put this into work benefit from repeated sales which show
loyalty of customers to the business and referrals, meaning a friend or a business
associate can refer a fellow business associate to seek the product or service offered by
a firm, this then leads to an increase in sales, market share and profits. Costs fall
because it is less expensive to serve existing customers and also the advertising costs
are low because there is a solid base of loyal customers.

Personal or social marketing orientation

Organisations should focus to analyze the needs and wants of target market and
provide the desired satisfaction more effectively than competitors do. They should turn
the weak points of competitors into their strong points that is they should take
advantage of competitors weak points. Market concept starts with a well-defined
market, focuses on customer needs and wants and ends at creating long term customer
relationship by effectively satisfying the needs and wants of customers. Organisations
could be benefited in the long run if they adopt to the marketing orientation
(Strydom,2004).

Consumer orientation

According to Lamp et. al. (2015) consumer orientation assumes that consumers do not
buy products for the sake of having them, but because of the need satisfying properties
that the products have. This basis of a consumer orientation is identifying,
understanding and satisfying the needs of consumers. The consumer orientation
ensures that it treats a customer as a king, the needs of customers are put before
everything else meaning in the design of a product or a service customers input should
be taken into consideration.

For example FNB gives support in sporting activities done in societies thus boosting its
market by being socially responsible. Therefore, this is an effective approach to
marketing.
Sales orientation

According to Hawkins et al (2010) it is when a company believes that they will sell more
products or services if aggressive sales methods are used to gain higher sales. They
use methods like highly aggressive promotions. The limitation for this method is that it is
not focused on what the customers want but on what the company produces Erasmus
et al (2010). It is based on the idea that people will buy more goods and high sales
volumes will result in high profits.

Sales Orientation is a business approach of making profits by focusing on persuasion of

people to buy the products instead of understanding the customer needs. Emphasis is
put on advertising and improving the abilities of the sales force Lamp et al (2010).A
sales orientation is typical when product supply exceeds the consumers needs or
during economics hard times when the buying capacity of customers slows down.

Product orientation

It is when a firm has its primary focus on the product thus the skills, quality, knowledge
and system that support the product. A company that chooses product orientation
focuses more on the quality not the quantity of the product or service Erasmus et al
(2013).

Lamb et al (2015) believes that a firm that follows product orientation end up ignoring
the needs and wants of the customers and just focus on efficiently building a quality
product. Firms with a product orientation philosophy believe that they will be successful
if they manufacture good quality products regardless of the impact of other influences

Customer value, value. satisfaction, trust and retention

Customer value

Customer value is defined as the ratio between the customers perceived benefits and
the resources used to obtain those benefits. Perceived value is relative and subjective.
In every buying decision, a consumer asks the same question: that is What I am going
to receive worth what I have to give up in order to get it? The gain the consumer
receives for the benefit is weighed against the cost the consumer must pay to acquire
the benefit. The value the individual consumer places on a product or service becomes
the customer value for that offering (Havaldar,2014).

This customer value is weighed against the customer values assigned for similar
products and services that would provide a similar benefit. Consumers will typically
purchase the item with the highest customer value among all offerings in the
marketplace. Companies can choose to focus their efforts on providing a reliable
product at a reasonable price. The low price helps to increase the value of their offering
to the consumers even if it is weighted against a low benefit. For example, you might
place a high customer value in a meal at McDonald's restaurant because you know you
will receive a consistent, satisfactory meal at a low price.

Customer satisfaction

Customer satisfaction is individuals perception of the performance of the product or

service in relation to his or her expectations(Joubert,2010) .As noted earlier, customers
will have drastically different of an expensive French restaurant and a McDonalds
although both are part of the restaurant industry. The concept of customer satisfaction is
a function of customer expectation . A custom who experience fall below expectation for
example limited wine list at an expensive restaurant or cold fries served at a McDonald
will be dissatisfied. Diners whose experiences match expectations will be satisfied. And
customer whose expectations are exceeded from the chef served between course at
the expensive restaurant will be very satisfied. The researchers propose that companies
should strive to create supporters, raise the satisfaction of defectors and turn them into
loyalists, avoid having terrorist and reduce the number of mercenaries..

Customer retention

The overall objective of providing value to customers continuously and more often
effectively than the competition is to have and to retain highly satisfied customers
(Havaldar,2014). This strategy of customer retention makes it in the best interest of the
customers to stay with the company rather than switch to another firm. In almost all
businesses situations it is more expensive to win new customer than to keep existing
ones. Studies have shown that small deduction in customer defection produce
significant increases in profit because loyal customer buy more products. Loyal
customers are less price sensitive and pay less attention to competitors advertising.
Servicing existing customers who are familiar with the firms offering and processes is
cheaper loyal customer spread positive word-of-mouth and refer other customers.

Furthernore, marketing efforts aimed at attracting new customers are expensive.

Indeed in saturated markets, it may be impossible to find new customers. Marketers
who designate increasing customer retention rates as strategic corporate goal must also
recognise that all customers are not equal .Sophisticated marketers build selective
relationship with customers based on customer ranking in terms of profitability rather
than merely strive to retain customers. Successful customer retention involves more
than giving the customer what they expect.

The measurement of customer retention should distinguish between behavioural

intentions and actual customer behaviours. The use of behavioural intentions as an
indicator of customer retention is based on the premise that intentions are a strong
predictor of future behaviours, such that customers who express a stronger repurchase
intention toward a brand or firm will also exhibit stronger corresponding behaviours
(Schiffman,2004).

The impact of new technologies on marketing strategies

When the first modern computer was invented, experts from IBM forecast the market
demand for such a machine for no more than half a dozen world-wide. This
demonstrates that information technology can exceed all expectations when it matures .
However it is necessary to define the term information technology (IT). It is a generic
term encompassing a range of technologies to capture, store, process and transmit
information. It includes the three main technology groups of hardware, software and
telecommunications (Havaldar,2014). Thus, IT includes computers, internet, videotext,
mobile telephones, digital communications, personal digital assistants (PDA) and many
more.
E-commerce

The Internet allows the buying and selling of goods and services online which has led to
an enormous increase in e-commerce. An e-commerce website offers various benefits
such as access to a global market as goods can be sold and bought from every corner
in the world. The products and services are directly sold to the customer, making the
middleman redundant.

Email

Most companies use emails to communicate with shareholders, company managers,

coworkers and some use it to report for example office administrator always send tax
invoice on expenses to their supervisors. Email offers companies a fast, flexible and
effective way of getting marketing messages through. This channel seems to be less
intrusive compared to telephone marketing. It also provides the option to link the
customer to a specific page to purchase a product immediately and to forward or reply
to the message (Schiffman,2004). However, marketers need to handle this tool with
caution with respect to the companys reputation as customers are already confronted
by unsolicited mails. To inform the customer through email incurs virtually no costs,
which is one of its most important benefits.

CD ROM

Besides computer disks, CD ROMs offer a marketers excellent opportunities to market

their products. Apple Computer, for example, developed a CD ROM which included a
software store. The user could browse for the needed program, install it and test the
product. If the customer wanted to buy the product he or she just needed to call a 800-
number to provide his credit card details. Afterwards, he received a special code which
unlocked the already installed programe.
Broadband

Broadband describes a high capacity data-transmission system. Typically, speeds

higher than two million bps are regarded as broadband. The communication technology
includes modems (14.4 Kbps), ISDN (144 Kbps) and ATM (up to 622 000 Kbps).One
example of a successful installation of broadband is the online retailer IrishWear.net.
The company strongly increases its internal operating efficiencies using broadband
instead of a 56K dial-up internet connection. The ability to keep their website up-to-date
is of prime importance. Uploading of the website content represents a major task. The
manager of IrishWear.net states that the uploading takes a lot of time and this could
even mean that the website becomes disconnected. Broadband could reduce the time
and costs involved and, therefore, ensure that the business window does not go off-line
(DTI, Irishwear.net, 2004).

iPhone, Mobile Phone, Short Messaging Service

Telemarketing is another type of direct sales channel, based on a regular or cellular

phone. It can be used in two different ways and its either either the customer phones up
the organisation e.g. calling a free number of an insurance company (inbound), or the
company phones the customer e.g. to inform him about new products (outbound).Short
Messaging Service (SMS) can be used as a further channel to reach the customer. 70
percent of the population already has a mobile phone and most people carry them with
them all of time. On the other hand, as mobile phones are a personal thing, people can
respond very negatively, to receiving unsolicited messages (Havaldar,2014). Also the
length of the text is limited to 160 characters. An innovative development is the Multi
Messaging Service (MMS) which allows sending more interesting multimedia messages
including pictures, video-clips and music.

Management Software and Database Marketing

Marketers need management information software to manage the high amount of daily
data. The software includes operating systems, Management Information Systems
(MIS), Decision Support Systems (DSS), Executive Information Systems (EIS) and
application software (word processing, databases, and integrated packages).
Database marketing refers to all uses of databases for marketing purposes which has
become an integral part of todays marketing function. Data warehouses present very
large databases that hold operational, historical and customer data and makes it
available for decision making purposes. It is an analytical system where the
information is a snapshot at a particular point in time.

Most supermarket chains obtain this data through bar-code data from the checkout
points. Often the checkout systems are integrated into the entire ordering, stocking and
replenishment systems (DTI, Irishwear.net, 2004). An interesting example of the use of
data warehouses is a large US retailer. With the help of its database, the company
identified that a distinct correlation between the sales of nappies and beer exists, just
after work hours. In response, the retailer merchandised nappies closer to beer and
could increase the sales of both items

Product

The Internet is changing the product and services available in a big way. In professional
services, the internet is allowing firms to develop new packaged products sometimes
by providing integrated or related services such as financial and estate agents services.
Using extranets means that certain clients can be provided with access to the firms
internal systems which both adds value and locks in clients to your service.There are
some good legal examples at kt.uklaw.net and fidler.co.uk. The expansion of the
Internet is creating new issues in terms of contractual rights and copyright too new
service areas for lawyers.

Price

The Internet allows a lot of information to be obtained easily by customers. One side
effect is that it is much easier to compare prices making price competition fiercer. The
use of computer systems to reduce the time and effort involved in producing and
delivering products and services means that suppliers can either increase their margins
or offer the same services at a lower price. On-line payment (through credit cards)
makes it more convenient to clients/customers and can make cash collection quicker
and cheaper for suppliers. Again increasing the possibility of price reductions. Yet the
internet can make it more difficult to offer discriminatory pricing (i.e. different prices for
different customer groups).

Place

The developments in the power of databases means that direct marketing is really
coming to the fore allowing new segments to be more easily identified and allowing
segments-of-one to be profitably targeted. It also means that it is much more difficult
toretain any form of differentiation when your services and approach are clear for all
including your competitors to see. The internet also allows you to reach a much wider
geographical spread than was previously possible. The internet makes markets more
even allowing smaller players to compete with big players and overseas competitors to
enter new markets with ease. Some argue that the internet is just another channel
which needs managing just the same as other channels(DTI, Irishwear.net, 2004)..

Promotion

In just about every sphere of promotion there is advertising, direct marketing, personal
selling, public relations and CD Roms, web sites, personalisation and interactivity are
making fundamental changes to the way marketing works. For example:

Advertising

You need a web site even if only as an on-line brochure. You need to advertise to get
traffic to your web site (Havaldar,2014). You can provide a web address in
advertisements to provide further information or to capture customer information and
orders. Digital television and the broadcasting revolution (including web TV) makes
mass advertising practical and affordable for much smaller companies than previously.

Direct marketing

Database technology aligned with digital printing of short runs of full colour promotional
materials has had a dramatic impact on direct mail. Email lists make it easier to have
more regular and focused communications with key customers and clients. The use of
call centres and computer assisted voice telephony are rewriting the books on customer
service and fulfilment. Permission marketing is where customers provide information
about their needs and preferences and agree to the supplier using this information for
further marketing activities. (Havaldar,2014).

Public relations

Brochures and publications are now electronic, interactive and tailor able to the specific
needs and interests of smaller markets and even individuals. On the WWW, the
customer decides what information they require and in what order so some level of
supplier control is lost. Desktop design and publishing is reducing the need for and cost
of expensive designers and printers. Sadly, good design is becoming scarcer as more
amateurs try their hands. Client communication programs are much more easily
maintained through the use of email and electronic communications which also reduces
the cost of postage. Media relations can be enhanced by providing background
information and news releases on web sites. The Internet environment has generated a
wide range of additional media which are hungry for good content.

Selling

Those tasked with selling can use the Internet to undertake fast research into prospects.
Electronic presentations can be easily tailored and presented desk side or remotely (by
email or teleconference). Databases have revolutionised client and contact
management systems and field sales staff effectiveness and supervision.

The types of mobile consumer

Up-to-Date: These people are driven to stay current with the news, weather and events
at all times. They like to be informed and others look to them as beacons of information.
They use their mobile phone as a resource to keep them connected with real-time
information about the world around them.

Social and Curious: These people are sometimes described as connectors because
they enjoy bringing others together, networking and planning events and outings. They
use their mobile phones to keep up with their friends lives and to stay connected to the
people they care about.
Busy and Productive: This group of people is very concerned with all information
related to their own personal efficiency and their ability to cope with a busy schedule.
They use mobile phones because they are more portable, accessible or convenient
than using traditional computers. They are interested in anything that can help them
manage their multiple priorities and meet the demands of their busy day.

Latest and Greatest: These people want to be the first taught try something, even if
there is no guarantee that they will be satisfied with it. They always want to use the
newest technologies and applications and to be a part of the newest social networks
and communities. Friends look to them for reviews and recommendations of new
technologies.

Just the Basics: This group of people is not really interested in the phone, except for
the fact that it makes life easier. They are not impressed by the newest technology or
the marketing appeals of most applications. They are not early adopters and they look
to reviews and recommendations to find the tools and applications that they want to use
on their mobile phone.

Conclusion

An understanding of consumer behavior is an important part of grasping the allocation

of resources by individuals. Consumption decisions are made based upon a logical
process valuing utility, price, and income alternatives. Firms seek to understand this
process in order to better serve consumers (Havaldar,2014). Firms employ brand
managers to allocate resources to effectively serve consumers on a product or service.
These decision might involve redesigning products or better targeting consumer
markets with information.
Reference list

Erasmus, B.J.,Strydom, J.W. & Rudansky-kloppers, S. (2013). Business Management.

Cape Town:Oxford University Press.

Sanjana, B. P., & Mornay, R. (2014). Consumer Behaviour. Cape Town: Oxford
University Press.

Joubert, P. (2010). Introduction to consumer behaviour. Cape Town: Juta & Co.

Havaldar, K. K., Essentials of marketing. New Delhi: Tata McGraw Hill.

Strydom, J. (2004).Introduction to Marketing.Cape town: Juta.

Schiffman, L.G. & Kanuk, L.L. (2004). Consumer Behaviour. New Jersey: Pearson
Prentice-Hall.

Lamb, C. Hair , J. & Elliot, R. (2015).Marketing. Cape Town: Oxford university press.

Hawkins, D.I.,Mothersbaugh, D.L. & Mookerjee , A.(2010).Building marketing strategy.

New York: Tata McGraw Hill.