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CONSUMER BEHAVIOUR MODEL ANSWERS FOR 2015 EXAMINATION SESSION QUESTION 1 Production concept: Holds that consumers will and favour products that are available and highly affordable, and management should therefore focus on improving production and distribution efficiency. The concept is useful in two situations. The first occurs when demand for a product exceeds the supply. The second situation occurs when the product’s cost is too high and improved productivity is needed to bring it down. Product concept. Product oriented organization focus their efforts primarily on producing better products of higher quality and with more features. It is assumed that customers rate improvements to the products above other considerations and therefore a good product is all that is required to get them buy. The logic of product oriented firms is that; Customers are always looking for better products Technology development will make it possible to improve our products. Selling concept Some organizations concentrate on selling and promoting their products using some of the techniques of marketing without responding to customer needs. The logic behind is; The product we are offering does fulfil a need, it’s just that the customer doesn`t realize it. It is justifiable to use the latest sales and promotion techniques as these help the customer to make decisions which we know is in their best interest. Mark Scheme: Five (5) marks for each. 5x3 = 15 marks. QUESTION 2 Input stage: Influences the consumer’s recognition of the product need and consists of two major sources of information: the firm’s marketing efforts (the four p’s) and the external sociological influences on the consumer (family, friends, neighbours, other informal and non-commercial sources, social class, and cultural and subculture memberships) The process stage: 1 Focuses on how consumers make decisions. The psychological factors inherent in each individual (motivation, perception, learning, personality, and attitudes) affect how the external inputs from the input stage influences the consumer’s recognition of a need, pre purchase search of information and evaluation of alternatives. The experience gained through evaluation of alternatives, in turn, affects the consumers existing psychological attributes. The output stage. It consists of two closely related post decision activities: purchase behaviour and post purchase behaviour. Purchase behaviour for a non durable product may be influenced by the manufacturer’s coupon and may actually be a trial purchase; if the consumer is satisfied, they may repeat the purchase. The trial is the exploratory phase of purchase behaviour in which the consumer evaluates the product through direct use. A repeat purchase usually signifies product adoption. Mark Scheme: Three (3) marks for each. 3x5 = 15 marks. QUESTION 3 Family life cycle The stages through which families might pass as they mature over time. People change the goods and services they buy over their family life cycle. The following are the generally accepted life cycle stages: Bachelor, newlywed, full nest, empty nest, solitary survivor. Consumers will demand products that are in line with the stage of their family on its life cycle. Students who give examples of product being sought at different stages of the family life cycle to get more marks. Occupation A person’s occupation affects the goods and services bought. Blue collar workers tend to buy more work clothes, whereas office workers buy more smart clothes. Marketers try to identify the occupational groups that have an above average interest inn their products and services. A company can even specialise in making products needed by a given occupational group. Lifestyle People coming from the same subculture, social class and occupation may have quite different lifestyles. Lifestyle is a person’s pattern of living as expressed in his or her activities, interests and opinions. Students who give examples of products being sought in relation to a particular lifestyle to get more marks. Mark Scheme: Three (3) marks for each. 3x5 = 15 marks. QUESTION 4 Reasons for carrying out secondary research first before primary research. To avoid duplication of data. Secondary research is cost effective. 2 To make primary research better informed. Secondary research can provide all the answers without the need for primary research. Secondary research can provide suggest methodologies for data collection Secondary research can indicate problems with particular methodologies. Techniques to increase the response rate of the mail questionnaire. Enclosing a stamped self addressed envelop Using a provocative questionnaire. Sending a pre-notification letter. Follow-ups. Offer incentives Mark Scheme: a) One (1) mark for each answer. 1x5 = 5 marks b) Two (2) marks for each answer. 2x5 = 10 marks Total 15 marks QUESTION 5 Innovators They are venturesome. They are not averse to risk. They tend to be young. They tend to be well educated. Have relatively high purchasing power. Take a large number of publications in search for innovative ideas. Early adopters. They take fewer risks. They are integrated into their social systems and culture. They have a highest number of opinion leaders. They take fewer publications than innovators Early majority. First of the general mass population. Slightly above average income. They tend to be followers. They rely heavily on information from others. Late majority. Last of the general mass population. They are cautious about new ideas. Tend to older. Less well educated. Less discretionary income. 3 Rely on information from others. Laggards. They are the last to adopt. They are traditional. They are suspicious of anything new. They tend to be oldest. They are the least well educated. They are the poorest group. Mark Scheme: One mark for each point. Four (4) marks for each category. 4x5 = 20 marks. QUESTION 6 a) Three possible strategies for directing marketing effort after segmentation. Undifferentiated segmentation/marketing; Takes no account of market differences and applies the same market effort to the whole market. It relies on one basic product and marketing program to attract sufficient buyers. Concentrated segmentation/marketing; If resources are limited an organization may decide to limit its approach to only one segment of the market and follow a strategy of concentration. Most small businesses need this focused market approach in order to survive the start – up period. Differentiated or Multiple segmentation/ marketing; Targets distinct customer groups using marketing efforts appropriate to each segment. This may involve developing different products or offering different mixes of pricing, promotion or distribution arrangements. 4 b) Four factors to consider when assessing the attractiveness of a particular segment. Segment size Segment growth. Seasonality of demand. Customer sensitivity to price change. Bargaining power of customers. Mark Scheme: a) Four (4) marks for each strategy. 4x3 = 12 marks b) Two(2) marks for each point. 2x4 =8 marks Total 20 marks. QUESTION 7 a) Reasons why need driven human activity never cease. Many needs are never fully satisfied; they continually impel actions desired to attain or maintain satisfaction. As needs become satisfied, new and higher order needs emerge that cause tension and induce activity. People who achieve their goals set new and higher goals for themselves. 5 b) How Maslow’s need hierarchy can be adapted to market segmentation. It is adaptable to market segmentation because there are consumer goods designed to satisfy each of the need levels. Buy healthy foods, medicines and low fat and diet products to satisfy physiological needs. Insurance and home security systems to satisfy safety and security needs. Personal care and grooming products, clothes are bought to satisfy social needs. High technology products are bought to fulfil ego needs Post graduate college education, hobby related products ways of achieving self fulfilment. Mark Scheme: a) 1.7 marks for each reason. 1.7x3 = 5 marks b) Three(3) marks for each point. 3x5 = 15 marks Total 20 marks. QUESTION 8 Need recognition: Marketing managers need to be aware of the needs of consumers so that needs can be met and the opportunity of building a competitive advantage is created; aware of need inhibitors so that strategies can be designed to overcome them; and alert to the benefits of stimulating need recognition. Information search: Marketing managers need to know where consumers look for information to help solve their decision making. Communication can then be directed to consumers through those sources. Evaluation of alternatives: For decisions where the consumer is highly involved, marketing managers need to provide a lot of information about the positive consequences of buying. For low involvement decisions, marketing managers should seek top of the mind awareness through repetitive advertising and trial. Post purchase evaluation of the decision: Marketing managers need to dispel cognitive dissonance by using advertisements, direct mail or telephone calls to act as positive reinforcers. However, besides this kind of reassurance, marketing managers need to market products that meet and exceed the needs and expectations of customers so that this stage is associated with high levels of customer satisfaction. Mark Scheme: Five (5) marks for each. 5x4 = 20 marks. 6 7