Consumer Behavior

Assignment 1
Khawar Ali Sher ERP ID : 05003

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Part 1: Segmenting the Market:

A market segment can be defined as: A group of consumers (or potential customers) who share a set of similar needs and wants. Marketers use segmentation to identify which consumers are the most valuable, and which ones have the most potential for their product. The objectives for marketers is not limited to sales numbers only, the ultimate objective is to build product and brand loyalty and not just make them frequent users but also to convert them into ambassadors of their products. To successfully segment the market and identify key or potential segments, the marketer needs to have an in-depth understanding of the consumer behavior patterns which the consumer will exhibit in purchasing and using the product.

Market Segments:
In order to have a better understanding of how segmentation is done, we can consider only one brand in the category of Frozen foods. With this simplification it would be easier to study what strategies that brand has adopted and how they are delivering quality satisfaction and value to their customers. Here we shall only consider KnNs Chicken products. Age based segmentation Age based segmentation is one of the simplest demographics based segmentation, in the case of Frozen foods, the brand managers have to be aware that consumers of their products have a minimum age limit. Although we see that some of the brands are trying to position themselves with the younger target market. The purchase decision makers are still the adults. No doubt children love fun nuggets but it is always the parents who buy the product, thus consumer behavior of the parents is more important to study. A respondent in the market told that they usually buy products such as chicken nuggets, chapal Kabab and read to eat chicken tikka cubes when on way home after picking children from the tuition center. This shows that the lower age segment has an influence on the consumer behavior. Location based segmenting: Most of the company owned stores for KnNs are located in DHA and Clifton area (7 stores) that defines what location preference does that brand when it thinks about the customers it intends to target.

CB Assignment 1

From where the stores have been located we can read the core of the brand managers strategy, they do not wish to position the product for lower income segments and they are explicitly targeting the higher income localities of the metropolis through their company owned stores. For this segment the positioning statement is; as an alternative to fresh meat products, as a convenience provider while ensuring quality and healthy food. For this segment, the brand is a permanent part of the grocery list. Life Cycle Stage:
Another element upon which STP can be performed is the life cycle stage. Individuals which are earning but still living as bachelors are one of the potential segments. These people also play the role of Uncles, Aunts and elder siblings in the family setup. Therefore they not only purchase the product for themselves but also for the people around them. Since they have started earning recently, the also have a higher tendency to spend. The important contributing factor here is the life style they have.

Income Segment: The product is also available throughout the city in almost every street corner retail store or convenience store, not only is it available, the brand is actually incurring a huge distribution cost and maintaining relations with the retailers by providing them with branded freezers to keep the product frozen and in best shape for the consumers. This suggests that the income segment is not limited to the upper or the upper middle income categories only. The brand managers have a much broader income segment in mind. Since income also dictates a number of other factors, we can see that the brand is positioning itself for the convenience and good taste proposition. The people who buy from retail outlets are not frequent users of the product, they buy them occasionally. For example when they have to serve guests, at special family get-togethers or prepare a meal in a hurry. Family Type: The independent family which has both husband and wife working are the ideal target markets for the frozen foods category. Since both the hands are earning the level of disposable income is high, and the time they have on their hands is very limited. Therefore, to have a quality meal and enjoy home-made taste as well, they would be most willing to spend on frozen food products. The above mentioned can also be regarded as the positioning statement that the brand makes to this segment. Therefore we see that the brand has positioned itself very strongly with such families, these are most prominently depicted in their advertisements. These families are mostly found in the middle and upper middle income segments of our society. In terms of population numbers, this is also one of the fastest growing segments as currently about 60% of our population is below the age of 25; therefore in future this segment has tremendous value.
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Brand managers are targeting all these segments and how are they managing this? Brand managers are using the different tools available to them to reach different types of customers. With the stores they are targeting one segment and through the retailers they are targeting a different segment. The table given hereunder gives an idea about the segments the brand managers for KnNs have considered and decided to target. Variable Possible Segments Selected Segments Selection rationale / medium used for targeting These are earning people with expendable incomes, also running families. Only above a certain income level people will recognize their need for the products Expendable income and changing life style Independents will need convenience Working couples mostly, ideal target market Hygiene factor Lifestyle difference Most small independent families constitute these locations.

Age

- 15-21 - 22-28 - 28-40 - 40-50 - 50+ Income - 5,000 15,000 (per - 15,000 - 24,999 month) - 25,000 39,999 - 40,000 + Life-cycle - Teenagers stage - Young adults - Earning bachelors - Earning bachelors living independently Family - Independent couples (Nuclear families) Type - Small families - Joint Family Geographic Upscale high-end residential areas and or location stores as Aghas, Naheeds and Metro (Housing space 2 kanal and above) Upper and Middle class residential areas (Housing space above 10 marla)

28 40 40 - 50

25,000 39,000 40,000 +

-Earning bachelors living in family setup -Earning bachelors living independently -Independent couples -Small families (Nuclear families)

Part 2: Quality, Satisfaction and Value

Once the market has been segmented the next task is to position the product with respect to the consumer behavior patterns which are prevalent in the selected segments. The positioning statement of the brand is a generic form, which in this case is advertised on the national television level, but for each segment that positioning translates into a specific set of attributes.

CB Assignment 1

Studying the emotional and functional attributes which consumers relate to the product for each targeted segment would take too long, for this let us consider the target market of small independent families also commonly referred to as nuclear families. Emotional and functional attributes: Consumer behavior is the study of how products are consumer by the consumer right from the purchase decision to the feedback which the consumer gives in the form of repurchase or discontinuation of usage. Emotional attributes which the consumer places with the product during this entire process are therefore of immense importance to the marketer. In the selected market segment, the requirement or the need of the product is the first step towards emotional attribution. Working women do not have the time on their hand to cook traditional foods such as kabas or make pizzas at home. Therefore they need a solution which will enable them to get the job done in a short span of time i.e. after coming home from work till dinner time. This in most cases is just a couple of hours and that too after an exhausting day of work. Therefore for this user the emotional connect with the product is very high. One user which was interviewed called the product an essential on her grocery list, this shows that she heavily relies on frozen foods by KnNs and thinks that she canno t operate without the convenience that she gets from using these products. In monetary terms the product is providing the customers due value in the ease and comfort of use. Only the hygiene factor for one of the respondents was enough to satisfy the extra cost that they were bearing in purchasing the product. From the functional stand point, the product not only makes it convenient for both the parents to be able to prepare a quick meal for their children, but also for the early teenage segment to make meals on their own. This functional aspect has been highlighted in one advertisement by a brand in the same product category. Indeed such consumption pattern has been exhibited by the target market, and especially in small families living independently.