Essay about Consumer Behaviour
Essay about Consumer Behaviour

Essay about Consumer Behaviour

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  • Pages: 12 (3217 words)
  • Published: December 31, 2017
  • Type: Case Study
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The post-World War era has brought about significant changes in the way organizations view consumers. They are now regarded as the central focus and are treated with utmost importance, even being revered like gods in certain organizational cultures, such as Japan. In the past, during the Fordism era, Ford believed that production was the sole determinant of profits. Consequently, customers who desired a Ford car were restricted to selecting only black cars (Porter, 1996). However, the post-Fordism era witnessed the emergence of the Japanese automobile industry. They successfully comprehended and predicted customer requirements, leading to the manufacture of cars that better catered to those needs.

Toyota, Honda, and Nissan have risen to prominence in the global automobile industry, surpassing Ford. Their success is attributed to their recognition that the customer is of utmost importance. Consequently, the concept of "Marketing Orientation" emerged

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, prompting business academics to focus on crafting marketing strategies. This shift gave rise to the definition of marketing as a profitable process that recognizes and predicts customer needs and wants (Huff, 1990).

Therefore, it was acknowledged that the central focus of any organization should be on "customers" and marketing concepts such as segmentation, targeting, and positioning became crucial. Marketing also realized the significance of the marketing planning process, with a key emphasis on understanding consumer behavior, as this impacts the entire marketing strategy. This is why marketing academics like Dr. Philip Kotler and others placed increased importance on consumer buyer behavior.

Consumer buying behaviour refers to the examination of the psychology behind consumer purchasing patterns and behaviors. This analysis delves into the reasons, timing, methods, and locations in which individuals choose to buy or abstain from buyin

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products (Davidson, 1987). Consequently, the study of consumer buyer behavior involves a consideration of various theoretical fields including psychology, sociology, and economics. A particular focus is placed on understanding the consumer decision making process, resulting in the development and examination of numerous consumer decision making models. Some examples of these models include the "Black Box model" and the "six steps" consumer behavior model, both of which offer insights into the factors influencing consumer decision making (Kotler, 1994).

This particular assignment has two objectives. The first objective is to explore how consumer behaviour models can be applied to Omega company in order to gain a better understanding of its target consumers. This will involve identifying external factors that can influence consumer buyer behaviour and assessing their impact on the Omega brand. The second objective is to analyze different positioning strategies and make a recommendation for the most suitable positioning strategy for the Omega brand.

Omega is a prestigious luxury watchmaker based in Switzerland, widely renowned for its reputation. The brand is well-known for its association with various sports and has been favored by numerous celebrities who act as brand ambassadors. Notably, Omega was chosen by NASA for the moon landing in 1969 and served as the official Time Keepers for the 2010 Vancouver Winter Olympics. Its popularity soared even higher through its affiliation with the iconic James Bond movies starting from 1995. Distinguished individuals who have worn Omega include former President John F. Kennedy, Prince William, Hollywood actor George Clooney, Nicole Kidman, and Cindy Crawford. According to www.Omega.com, seven out of ten people are familiar with the brand showcasing its remarkable level of brand awareness.

This section analyzes the

influence of external factors on Omega's business operations, investigating different models to gauge their impact on the company.

3.1 Black Box model: According to Despande and Webster (1989), the Black Box model consists of three phases. The first phase is the input phase, where all external factors that affect consumer decision-making are considered. Vyse (1999) identifies the external factors for consumers as either PEST factors or Marketing Mix elements. These variables have a significant impact on consumer buyer behavior, which in turn affects the overall performance of the business.

When studying consumer buyer behavior, it is important for marketers to understand the three different groups of decision makers, or the decision-making unit, as stated by Wolf Olins (1995). Urde (2003) defines this unit as comprising five key individuals: gatekeepers, who regulate information flow; financiers, who handle financing; influencers, who influence decisions; purchasers, who make the actual purchases; and users, who consume the product.

3.1.1 Cultural Factors: As a prestigious global brand, culture plays a crucial role in the success of Omega. While focusing on the Indian market for this assignment, it is important to consider the global market as well. In a diverse global environment, culture significantly influences consumer behavior.This section focuses on the role played by both culture and sub-culture.

According to Schein (1999), culture can be defined as the way in which we conduct ourselves. It is something that is learned and is associated with acquiring a basic set of values, perceptions, and preferences through socialization within various societal institutions such as family and other crucial establishments. For instance, individuals growing up in American culture are exposed to values like achievement, success, efficiency, practicality, progress, material comfort,

individualism, freedom, external comfort, humanitarianism, and youthfulness. When considering the impact of culture on Omega, the global influence of Hollywood and Bollywood allows for exposure to a wide range of cultures. By promoting Omega through popular actors, the brand can positively influence consumer behavior.

Many global cultures are slowly but surely embracing American culture through McDonaldization and Coca-Colization. These phenomena have influenced consumer habits in various aspects of life, leading to Americanization. According to Kotler and Armstrong (1991), cultural traits such as achievement, success, activity efficiency, practicality, progress, material comfort, individualism, freedom, and external comfort are crucial factors for the rise of Indian society and economy. As Omega is associated with traits commonly found in successful individuals such as achievement, success, and efficiency, successful personalities are drawn to the brand since it embodies these values.

3.1.2 Subculture:

As per Stanton (2001), subcultures exist within every culture. In India, even within the introverted Indian culture, there are extroverted groups of individuals who possess qualities like entrepreneurship, innovation, and risk-taking. These individuals, who seek differentiation from society, prefer to express it through the use of prestigious brands such as Omega that share similar brand values. For Omega, understanding these subcultures allows them to focus solely on them rather than trying to comprehend the cultural impact the entire population might have on their business operations.

3.1.3 Social Class:

In every human society, social stratification is evident and accepted. Typically, this stratification is reflected in the existence of different social classes. Maslow's hierarchy of needs suggests that once individuals satisfy their basic and safety needs, they strive to fulfill their social needs (Palmer, 2004). To meet these social needs, individuals often align themselves

with brands that represent their own social class.

The technological advancement has reached developing nations like India and China, leading to a growing threat posed by these two countries to developed nations. This has resulted in many firms establishing ventures in India, causing a transformation in its economic and social structure. Due to this rapid development, a new higher social class has emerged in India, with increased disposable income and exposure to global influences. For luxury product manufacturers, this emerging affluent segment presents a lucrative opportunity.

According to Cheong (2003), traditionally the luxury brand market was dominated and associated with individuals between the ages of 30 and 50. However, globalization has had a significant impact on society, allowing younger generations to fulfill their aspirations at an earlier age. These younger individuals often obtain qualifications and even masters degrees in developed countries like the United Kingdom and United States while still young. This shift in demographics has changed the target market for luxury products. This presents an opportunity for Omega as these younger generations will enter the market once they return to India and will desire to be associated with the Omega brand as it showcases their social status (Ind, 2000).

According to recent research, the desire for materialism and association with prestige is not only limited to high-end consumers but also appeals to less affluent young consumers who are driven by a desire for fashion brands. This shift in social trends, following the .com boom era, has led to an increase in the luxury brand market, with more and more companies attempting to attract younger consumers. Omega, for example, wants to target the younger segment due to their

vulnerability and the significant opportunity for mass media advertising. Additionally, the youth segment has a higher disposable income, which would positively impact the growth of the Omega brand in India (Keller, 1998).

However, the younger generation has the same attitude towards buying luxury items as older adults.

3.1.4 Social Factors:
Luxury product consumers are influenced by factors other than social class, such as family, friends, reference groups, and social status.

When considering luxury products, the influence of a reference group is highly significant. A reference group refers to a group that can directly or indirectly change an individual's attitude, either positively or negatively. Omega, being a symbol of success and achievement, attracts individuals who belong to success-oriented groups. These individuals are likely to be influenced by others using Omega and may even project their success onto others. The association of Omega with prestigious organizations like NASA, the Olympics, and movies like James Bond further strengthens its influence on success-oriented reference groups. This aligns with the saying "birds of a feather flock together." For individuals within these reference groups, maintaining social status and prestige is crucial, creating an opportunity for Omega to thrive.

Family plays a significant role in an individual's decision making and buyer behavior. Understanding the family life cycle helps determine the disposable income available for purchasing high-end luxury goods (DeChernatony, 2006). The likelihood of purchasing a luxury product is influenced by one's familial responsibilities and children. Additionally, if a particular generation is associated with traits like exclusivity and prestige (e.g., the Royal family), it can positively influence luxury brands, potentially favoring the Omega brand.

The representation of www.Omega.com by Prince William is solely based on the prestige

he possesses from his generation, and wearing Omega serves to affirm this. A vital element in Omega's triumph is its capacity to convey to consumers that it is a watch for their generation. Consequently, the family unit plays a crucial part in Omega's industry success. If a father has been wearing Omega, there is an increased probability that their children will also opt for Omega as it represents their family's pride.

According to Bitner (2000), in the case of luxury products, both husbands and wives have a significant role in decision making. Husbands typically determine which brand should be purchased and which model should be selected. Therefore, managers at Omega should identify the decision-making roles of each member and understand who holds more influence in purchasing luxury products. Particularly in India, deChernatony, L., and McDonald, M. (2003) suggest that men have greater influencing power before marriage, but this power dynamic shifts after marriage. Conversely, Solomon (1999) asserts that India is predominantly a feminine culture where decision making heavily relies on women's opinions.

3.1.5 Other Factors

There are additional factors that contribute to consumer buyer behavior, particularly for luxury products like Omega. These factors are discussed below.

3.1.5

a) Economic Factor

Apart from social factors, economic factors also play a crucial role in the success of luxury brands. According to DeChernatony (2006), luxury brands are the first to be affected during a recession. The 2009 annual report of Omega SA showed a slight decline in the sales of Omega watches worldwide. However, Aaker (1996) suggests that luxury brands are not very sensitive to economic factors and are more driven by emotions. Therefore, the target market, which values prestige, is not concerned

about the price of the Omega brand but rather the association with it. Another luxury watch brand, TagHuer, withdrew Tiger Woods as its brand ambassador to protect its brand image (Metro, 2009). Although economic indicators may impact business outcomes to some extent, luxury brands do not rely heavily on them.

b) Technological Factors

Omega has always been a brand that stays current with its technology, as seen through its partnerships with James Bond, the Olympics, and NASA. The younger generation is increasingly influenced by technology, as evidenced by their purchases of Apple iPhones and brands like Gucci (www.times.com).

The aforementioned factors will influence the consumers' physiological aspect, which in turn can affect both internal influences and the decision-making process according to the Black Box Model. Consequently, this will impact the final outcome of whether or not the brand Omega is purchased. Hence, it is crucial for Omega's marketers to stay informed about changes in consumer behavior.

Figure 3.1 Black box model of consumer buying behaviour (Aker, 1996)

4. Positioning strategy for Omega

According to Kotler (1994), marketers should develop an effective positioning strategy after considering different segments and selecting target markets. This strategy would result in the development of an effective marketing mix. However, Aaker (1996) proposed that the positioning strategy for the Omega brand should only be developed once the marketers are clear about the brand's value proposition, whether it is emotional value or functional value.

According to Aaker (1996), positioning is defined as "the way the brand is perceived in the minds of the consumer". DeChernatoney (2006) describes it as "the part of the brand identity and value proposition that is to be actively communicated to the target

audience and that demonstrates an advantage over competing brands." Kotler (1994) refers to it as "the unique selling proposition". Essentially, the positioning statement is crucial for exclusive brands as it captures both the heart and mind of consumers.

Aker (1996) states that there are various positioning strategies and means for luxury brands. According to him, the development of a brand positioning strategy should focus on three key elements.

According to Kapfere (2000), the core identity of a brand refers to what the brand stands for. It is the central, timeless essence of a brand. In the case of Omega, it ultimately stands for prestige.

According to Aker (1996), the identity structure revolves around various factors such as relationship and self-image. This concept is further explained by Gronroos (2001) through the Kapferer brand identity prism, which outlines six factors that marketers need to consider when developing a brand identity. These factors include physical facet, brand relationship, brand personality, brand culture, customer reflection, and customer self-image. In essence, brand identity involves attributes, sub-brands, special features, or services that add value to the customer. When developing a positioning strategy for Omega, it is essential to consider all of these factors in the identity structure.

The proposal includes benefits that help establish connections with target audiences.

According to Stanton (2001), the positioning strategy should be based on three key components: customer targets, competition (which is determined through external environment analysis), and competitive advantage (which is identified through environmental scanning). As Palmer (2004) puts it, positioning is not about changing the product but about influencing people's perception.

Hence, it is crucial to take into account the fulfillment, the consumers' viewpoint, and their attitude towards

luxury products. Additionally, identifying the competitive advantage platform for Omega while developing the position strategy is also essential.

Consumer perception and attitude have shown that the youth segment is becoming more interested in luxury products for various reasons, as previously mentioned. However, it is important to recognize that young people do not automatically link all expensive goods with high prestige, as they are well-informed about different brands through information technology.

Palmer (2004) states that individuals are motivated to purchase luxury goods in order to enhance their self-identity, tastes, and values, while also considering the value for money. According to Schein (1999), luxury brands meet emotional needs and provide pleasure to one's senses. Luxury goods are typically associated with premium quality, unique design, and excellent service, targeting primarily higher income individuals (Aaker, 1996). However, the concept of luxury brands has expanded to include young and emerging markets like India and China. This expansion can be attributed to the desires and fantasies stimulated by the social environment which prioritize well-being, comfort, quality, and self-image.

Depending on an individual's social and economic status, the perception of luxury may differ.

In India, Omega is universally acknowledged as a luxurious brand.

The target segment for marketing the luxury brand is the youth segment, as discussed previously. This is a lucrative and growing market.

According to Gronroos (2001), the youth consistently displays a favorable outlook on luxury items, occasionally even experiencing a sense of excitement. Additionally, they acquire these items in order to satisfy their self-esteem needs. The youth's perception of luxury brands relies on whether the brand elicits an emotional connection.

Therefore, it is crucial for Omega brand managers to take into account the emotional aspect during

the development of a positioning strategy. The younger generation perceives emotional value through pleasure, aesthetic beauty, and excitement. Stanton (2001) further explains that nowadays, young people are more inclined towards luxury brands rather than their family responsibilities.

When purchasing a luxury brand like Omega, the elderly rich segment seeks a balance of tangible and intangible values. It is crucial to consider the segment that the brand originally catered to when positioning it. As a result, Omega's positioning strategy should incorporate both emotional and functional value aspects.

According to Palmer (2004), the youth segment seeks influence, power, and wealth by associating with the Omega brand. On the other hand, the elders strive for personal development and fulfillment by embracing the luxury brand. Therefore, managers must strategically position themselves to effectively communicate with both segments.

The country of origin is a key factor in the positioning strategy, and in India, Swiss watches are seen as extremely luxurious compared to Japan and other countries, especially among younger consumers. This aligns well with Omega's brand positioning strategy. Swiss watch brands have a strong competitive advantage over their rivals in terms of quality, fashion, and brand recognition (Palmer, 2004). This gives them a competitive edge in meeting the emotional needs of their target market (Stanton, 2001).

Suitable positioning strategy for Omega is recommended by considering all the factors mentioned above.

The position strategy mentioned above aims to meet both the emotional and functional needs of consumers. Given that Omega is a luxury brand, price is not a significant factor to consider.

5. Conclusion and Reflection

The examination conducted above has aided in identifying the appropriate approach for a marketer when positioning a luxury brand in the minds

of consumers. Initially, my goal was to understand how consumer behavior impacts luxury brands, and throughout this module, I have learned various factors that influence consumer behavior. This knowledge has been instrumental in developing an effective marketing mix. It is important to note that the product itself has a significant impact on consumers' purchasing decisions.

According to Blois (1996), the importance of the brand name is crucial for luxury brands. Omega has made significant investments to establish itself as a leading player in the watch industry. This includes sponsoring prestigious events like the Olympics and James Bond movies, as well as featuring renowned celebrities such as James Bond, George Clooney, and Cindy Crawford. All these promotional activities have the goal of positively influencing consumers' perceptions. As a result, consumers consider all these factors when making a purchase decision. The exclusivity that Omega represents means that price is no longer the main determining factor; instead, it should be priced exclusively. This strategy also helps in understanding different stages of consumer buyer behavior, which will be further explained below

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