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MBA404 Consumer Behaviour and Marketing Psychology - Kaplan Business School
Task: Demonstrate an understanding and application of various consumer behaviour concepts and theories by analysing the facts gathered from the video and the survey, and present strategic recommendations. You will be required to incorporate recent peer-reviewed literature in order to justify your proposed recommendations.
Executive Summary 1: The study focuses on Dell laptop as a FMCG product. The overview of the product has been presented in the study along with the issues that are faced by the customers. The analysis of the product which is Dell laptop is done. The organisations current market strategy and the marketing mix of the organisation have been discussed in the study. The analysis would help to understand the causes that are acting in favour of the product and the causes that are decreasing the customer loyalty of the product. Numerous recommendations have been provided in the study that would help in improving the market of the product.
Executive Summary 2: The sales and demands of any product or service is dependent on the necessity and demands of the consumers. The following report has elucidated the demands for Tata Motors product, Tata Xenon, in the Australian market. Tata Motors has been successful in introducing its Tata Xenon that has been configured and designed specifically for the Australian market. The model is of Euro 5 emission compliant that has a turbo DICOR diesel engine of 2.2 litre.The marketing strategy that has been employed by Tata Motors for the promotion and sales of Tata Xenon, has been developed by keeping under consideration the likes, dislikes and the various requisites that are expected by the consumers of Australian markets.With respect to the case of Tata Xenon, the marketing communication mix was developed using the 4 P's of marketing has been effective in attracting a large segment of the target consumers. With respect to the case of Tata Xenon, the strategic recommendations for further improvement would include integration strategies of vertical as well as horizontal integration, market penetration and product development.
Question 1: Prepare a report in which you must critically analyse company's current marketing strategy and marketing communication mix and its alignment to your findings in assessment 1 and 2.
Solution 1: Introduction: Consumer behaviour refers to the study of individuals behaviours regarding purchase, sale and disposal of the goods. The actions of the individuals related to the marketplace and the things that drive those actions are encompassed in consumer behaviour. Consumer behaviour is pivotal for an organisation as it determines the sale and customer base of the organisation. Consumer behaviour encompasses every aspect of the individual such as mental, emotional and behavioural stimulus related to a product or the market as a whole.
The study focuses on the FMCG product that has been selected as a Dell laptop. Consumer loyalty has been seen to degrade in recent times for the product. The study analyses the current marketing strategy used by the organisation and the marketing mix of the organisation has also been analysed. Based on the analysis, the strategic and logical recommendations have been provided in the study.
Product overview of Dell laptop
Dell is an organisation that has been dealing with the computer, computer peripherals and accessories (dell.com, 2019). Dell laptops have been trusted by the consumer before but recently it has been seen that the customer loyalty of the product, which is Dell laptops is continuously decreasing due to several factors. Dell has been dealing with hardware products until 2009, in which it entered the IT services market. The organisation also ranks in the top IT companies in the world. As per the views of Van Lierop and El-Geneidy (2016), the consumers have not been relying on the Dell laptops as they are creating several issues in the operations that are highly criticised by the consumers. Several consumers have been seen to complain about the terrible service that the organisation has been providing in recent times.
The customer service has been the primary issue that has been troubling the consumers and causing a decrease in the sales and customer loyalty of the organisation. The customers have also been complaining about the performance decrease that Dell laptops have been facing in the same configuration, whereas other brands have been providing top-notch performance in the same configuration. The technical support of the organisation has been very disappointing to the customers as the customers have complained that the issues do not get resolved in 24 hours (Chen et al. 2015). This has been decreasing the consumer loyalty of the Dell laptops.
The shipping issues are also critical as the consumers have seen that their dates of shipping change from time to time, which is related to the stock product. The stock products are also mostly unavailable.
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Organisation's current marketing strategy
Dell has been focusing on segmentation and targeting of the customers to find potential customers for the products it manufactures. The fundamental target market of the organisation is the professional field executives and professional organisations. Dell has been seen to be close to its customers to increase customer loyalty. According to Csikósová et al. (2014), Dell has created an internet infrastructure which has helped it in expanding its customer base through online bookings and orders placed by the consumers. Dell has created an immense market for itself by using the brick and mortar strategy to create a market for itself. The organisation believes in the traditional way of providing services with face-to-face services. Dell has created differentiation in its brand image by a different tactic than used by other brands. Dell has been seen to collaborate with the rivals and organisations of the segment in which it wants to create a market (Weinstein and Winston, 2016).
This tactic has led Dell to expand its market from the hardware sector to the IT services sector by collaborating with a service organisation. Dell has seen to collaborate with Xerox for printing service requirement and Perot Systems for providing the IT services. It can be seen that the organisation has collaborated with one of the largest brands in its field. This collaboration of Dell is done on a global basis which affects every country where Dell operates.
Figure 1: Marketing Mix
Dell believes in providing new products to the individuals as per the changing needs of the customer. Dell does not rely on a single supplier for its products but has established an efficient supply chain which leads to a reduction of issues related to manufacturing. The organisation has been seen to segregate and segment the target market properly in every market. Dell manufactures the products according to the need of the regional public and the need of the customers of that area. Dell has been providing up to date products to the consumers which helps it to be stable in the market (dell.com, 2019). Dell has been seen to provide an all-round solution to the customers in every aspect of information technology rather than a single aspect. These aspects are hardware components and the services related to these.
Dell products are made at affordable prices to the public. There are several plants of Dell in which the products are made at a local level so as to provide the regional market price to the consumers (dell.com, 2019). The regional pricing strategy and support after sales have been able to differentiate Dell from its competitors.
Dell has been concentrating highly on the locations and strategy aspect of the locations in which its products and services are used. Dell has been providing local stores in the places where the services are provided and products are dealt with. This approach helps Dell to build trust with the local consumers that further helps in creating a greater customer base for the organisation.
Dell has been seen to engage in the extensive marketing campaign for its products. Dell has been seen to use the direct approach to the consumers for expanding its market. The main channels of promotion that is used by Dell are through television and digital advertising. According to Alessandri (2014), Dell also uses catalogues, brochures and other promotional materials to promote its products. Dell is also promoting its products through the retailers which include BestBuy, Wal-Mart and others.
Analysis of the strategies and marketing mix
The segmentation and the targeting that is used by Dell is adequate and assists in creating a target market for the organisation easily through targeting the professionals. Dell uses the traditional brick and mortar methods for building a market for itself. This strategy has helped the organisation to create trust among the consumers. A contradiction is being created as the consumers are getting local shops but the service quality of the products is not up to the mark. The technical support of the organisation is lousy and not supporting the customers in providing faster resolution. This has led to decreasing customer gratification regarding the products. The collaboration of the organisation with its competitors or the segments in which it wants to expand can be regarded as a better move by the organisation in increasing its market. The availability of newer products has been seen to increase the market of the organisation as the organisation has seen to provide changes in products according to the market changes. The local pricing strategy that is used by dell would help the organisation to expand its market as the products are affordable for the consumers. Dell has been using proper methods of promotion and digital marketing which has led to increasing the market of the organisation. The digital methods have helped to create an adequate customer base of the organisation as the customers get updated information about the organisation.
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Solution 2: Product Overview: Tata Motors Limited is fundamentally an automotive manufacturer that is engaged in developing, designing, manufacturing and assembling, financing and sales of the vehicles, along with the sales of their accessories and spare parts. Tata Motors has various brands and subsidiaries, of which Jaguar and Range Rover are a part (Market Line, 2018). With respect to the Australian market, Tata Motors has been successful in introducing its Tata Xenon that has been configured and designed specifically for the Australian market. The model is of Euro 5 emission compliant that has a turbo DICORdiesel engine of 2.2 litre. The car has been priced at AUD 22,990 drive away. The car has been made available through the distributor Fusion Automotive (Tata Motors, 2013).
The car has been specifically configured for the Australian market after being extensively tested in Australia. The car is being sold through 15 Tata dealers that are present across the nation. The Xenon offers the consumers in the light commercial segment an unrivalled value, along with unique brand position that has the value, strength and safety that is available in the cab chassis, dual and single cab variants and the consumers are able to choose a 4x2 or 4x4 drive line (Tata Motors, 2013). Tata Xenon is the third largest segment of the new car market of Australia, in the 4x4 and 4x2 categories. The car has several unique interior features that have been added to enhance the safety and comfort of the driver. These include front passenger and driver airbags, USB and Bluetooth connectivity, along with power windows as standard. The customers have the option to select from the range of optional features such as reverse camera, reverse sensors, and touchscreen navigation system (Tata Motors, 2013).
Critical Analysis: Tata Motors have been successful in establishing itself as a strong and a highly competitive automobile manufacturer and seller, across several nations, including Australia. The company has been making several improvisations with its marketing strategies and communication mix so as to gain larger segment of the target consumers. Tata Motors has been successful in introducing Tata Xenon in Australia and the same has been gaining popularity in the market as well as the target segments. The marketing strategy that has been employed by Tata Motors for the promotion and sales of Tata Xenon, has been developed by keeping under consideration the likes, dislikes and the various requisites that are expected by the consumers of Australian markets (Tata Motors, 2013).
Marketing Strategy of Tata Xenon: To efficiently assess and evaluate the marketing strategy that is employed by Tata Xenon, it is important to analyse its segmentation, targeting and positioning (STP) strategies. The segment of the market that is being targeted by Tata Xenon, plays a crucial role in determining the rest of the marketing strategies. Typical segmentation of the consumer is based on either demographic factors, behavioural factors, geographic factors or psychographic factors (Gunter, and Furnham, 2014). With respect to the case of Tata Xenon, the segmentation of the market or consumers have been based on the demographic factors of middle class and upper middle class incoming group of individuals who would prefer to purchase pick up trucks for their use. This strategy of selecting the middle class income group has provided the company with the advantage in the competitive market. It has been mentioned that selection of the middle income or upper middle income group of individuals as target consumers favour the organisations more(Solomon, Russell-Bennett, and Previte, 2012). The segmentation has mostly been based on the needs of those individuals seeking pick up trucks or have presented the behavioural pattern of purchasing pick up trucks. This has further benefitted Tata as the company has evidently been able to gain more sales by selecting these segments of consumers.
The targeting of the customers of Tata Xenon has focused towards the consumers who have been seeking commercial utility with respect to their automobiles. Several of the pick up trucks are preferred mostly by those individuals who need to carry several items in their trucks, while being able to carry their families as well. Targeting the customers based on their necessities and demands is crucial for any organisation (Weinstein, 2013). It is important for a business to ensure that the market or customer segment that is being targeted by them have the necessity or requisite for that product or service, prior to targeting them (Leeflang, et al., 2014). The failure to conduct an assessment of the same may result in losses as the target customers may not be interested in the purchase of that product, thereby causing the company to not being able to achieve the desired sales (Oliver, 2014). Therefore, it is important for any organisation to efficiently assess the segment of the customers that are targeted so as to ensure that the demands are fulfilled and the desired sales are achieved.
Position is yet another significant component of marketing strategy. The organisation is required to position the brand or the product in such manner that it is able to attract majority of the target segment of consumers, thereby achieving the required sales and position in the market (*). With respect to Tata Xenon, the company has positioned the brand as a powerful machine that delivers superior performance withengine as well as is capable of off-roading, thereby allowing it to drive or ride on unsurfaced roads or tracks. As there are several uneven terrains in Australia, therefore, Tata Xenon offers the consumers the luxury to be able to ride on those roads without much problems. By successfully positioning a brand or product as stronger and more competitive with high utility, organisations are able to attract more customers from the target segments, thereby achieving greater profits (Porter, and Kramer, 2019). It is important for the organisation to ensure that while marketing any product, they position the product or brand at the top most position with higher utility and ability as opposed to their competitors, so as to attract more customers (Agarwal, Hosanagar, and Smith, 2011).
Marketing Communication Mix: Marketing communication mix that is employed by an organisation plays a crucial role in communicating the product or brand to the targeted segment of consumers. The lack of efficient marketing communication mix negatively affects the marketing process of an organisation (Hughes, Le Bon, and Malshe, 2012). With respect to the case of Tata Xenon, the marketing communication mix was developed using the 4 P's of marketing that comprises of products, price, promotion and place and the details regarding the same are as follows.
The product mix and strategy of Tata Xenon has focused towards promoting the best features and attributes of the product so that the same would be able to attract large segment of the target consumers. Tata Motors has ensured to follow all the stringent quality norms as well as abides by the regulations that have been implemented by the regulatory agencies. With respect to the price mix of the marketing communications, Tata Motors has ensured to maintain the price of Tata Xenon such that it offers more comfort at an effective price. The competitive pricing strategy that is employed by an organisation plays a crucial role in ensuring as well as maintaining its competitive position in the market (McWilliams, and Siegel, 2011). The same has been witnessed with respect to the case of Tata Xenon.
With respect to the place mix of the marketing communication, it can be stated that the company has targeted and positioned Tata Xenon amongst those consumers who shall be interested in purchasing the product based on their requirement as well as the features that are offered by it. As Tata Xenon is capable of off-roading, therefore, the product is largely being considered for that purpose, by the target consumers. Tata Motors have been providing the product to the consumers of Australia through their collaboration with the distributor Fusion Automotive thereby reaching a major segment of the target consumers and serving their needs (Tata Motors, 2013). The promotion strategy of the marketing communication mix of Tata Xenon has been achieved by efficiently promoting the product amongst the target segment of consumers. It is highly vital for an organisation to implement suitable promotional strategies that would allow them to reach to a maximum consumer and gain major recognition amongst them (Baker, 2016). Therefore, by the implementation of suitable promotional strategies, Tata Motors has been successful in efficiently promoting Tata Xenon, thereby gaining strong market position in the Australian market and consumers.
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Question: Provide at least three strategic recommendations to the board of directors, along with reasons for recommending further improvements.
Solution 1: Strategic Recommendations: Dell has incorporated immensely beneficial tactics for the promotions and sales of their products, as has been seen in the four aspects of the Marketing Mix employed by the company. However, regardless of the integrated strategies, Dell has been seen to have a regular downfall in the quality of service provided and the feedback of customers. One of the major factors acting as a barrier to the company providing satisfactory services is the aspect of customer services after sales as well as the lack of availability of products ordered through online services.
Integrated Customer Service
Figure 2: Distribution of Computer Skills among People Aged 16-65
In order to improve the quality of services and to ensure that the company lives up to the reputation of being one of the top IT companies in the world, the first and foremost recommendation would be to improve the quality of customer service. According to statistics, more than 50% of the population in a multitude of developed countries around the world has either no knowledge, terrible knowledge or poor knowledge about computer skills (Weforum.org, 2017). In such a situation where such a huge section of the population even in developed countries is so unaware of computer skills, the company needs to be able to provide the required skills to solve any and all problems that may occur in the course of using Dell products. According to Wong et al. (2015), providing satisfactory solutions to such problems can only result in an increase in customer satisfaction among users. In order to do so, not only does Dell need to improve the quality of customer service, but provide training to make all employees aware of the basic skills and recruit employees who already possess the necessary knowledge.
Training and Development and Recruitment: In the current market where trends, specifically trend in technology, keep changing, there is a need to inculcate integrated troubleshooting and problem-solving skills (Cohen, 2017). In the case of Dell as well, in order to keep up with the new kinds of issues that may arise in the aftermath of new kinds of technologies, the company needs to provide the required training to employees to ensure that they are able to solve all the questions and issues that customers may face while using their products. For this purpose, constant training and development of employees is an urgent need. As opined by Asfaw et al. (2015), training of employees needs to be carried out on a regular basis, to make the employees aware of the newest and most efficient ways in which problems can be solved and customers can be assisted.
In addition to training the existing employees, Dell would also need to be selective in their recruitment process and only choose the individuals who already possess the required skill set and sufficient knowledge regarding the newest technologies and the ways that problems arising out of these new technological advancements can be solved.
Regulation of Stock and Inventory: One of the major reasons for the displeasure among the customers of Dell was identified to arise from the lack of products that customers would place orders for through the online channels. According to Gallino et al. (2016), if the promise of delivering the product is not fulfilled after the customer has already placed the order, it can give rise to negative feedback. In order to prevent this, Dell needs to strictly monitor the stock and inventory and ensure that while the customer is placing the order, the product is available in stock. However, If a certain product is not in stock or is sold out, then the online channel used by the customer needs to reflect the same, so as not to give rise to expectations that would ultimately not be fulfilled (Zhuand Liu, 2018). However, Dell also needs to regulate the quality of products as selling defective goods in an attempt to keep up with customer demands. This would only give rise to more displeasure and negative feedback from the customers.
Conclusion: Dell is a successful organisation but there are several factors that have led to decreasing the customer loyalty of Dell products. Dell deals in hardware products and IT services after it has collaborated with Petora Systems. The market strategy used by Dell is the traditional brick and mortar strategy. This strategy focuses on dealing with consumers face-to-face and providing the services directly. This has created trust among the consumers but there is also a contradiction to this statement. Dell has not been able to provide the technical support and proper customer services that have been leading to lessening customer gratification. The customers are really disappointed by the slow service and resolutions that are provided to them.
The collaboration of the organisation with the organisation of the different segments has led to increasing the service and product market of the organisation. Dell has been able to provide new and updated products to the consumers which the consumers have appreciated. The supply chain of the organisation is efficient which supports the manufacturing units of the organisation. Dell has been able to provide affordable price to the customers through the establishment of local regional stores. This has led to an increase in customer base and profitability of the organisation.
Dell has been seen to engage in extensive marketing to promote its products and services. It uses digital marketing and other marketing techniques to increase consciousness among consumers regarding the products. These have led to the success of the Dell laptops.
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Solution 2: Strategic Recommendation: Strategic management of any organisation allows the enterprise to gain a competitive advantage over their competitors in the markets of their operations. Development of an efficient strategy allows the organisation to gain advantage in the markets and therefore, the enterprise is required to keep under consideration two objectives during the implementation of those strategies, and these include strategic objective and financial objective (Al-Turki, 2011). Financial objective focuses towards increasing the revenue and improve the cash flow and so on. The strategic objective focuses towards the non-finance associated aspects such as market shares, technology, product quality, operations and so on (Barney and Hesterly, 2019). With respect to the case of Tata Xenon, the strategic recommendations for further improvement would include the following.
Integration strategy: Integration, otherwise known as controlling the availability of the processes and resources, is divided into two kinds, horizontal integration and vertical integration (*). With the help of vertical integration, the organisations are able to gain control of their competitors, suppliers and distributors. Vertical integration is further subdivided into smaller segments, namely backward and forward integration. The forward integration is further known as acquisition of retailers and distributors (Bresnahan, and Levin, 2012). With respect to the case of Tata Motors, it has the ability of reducing the dealership and begin its own distribution in the markets of Australia via the mode of franchising method that makes the process more efficient. Using this strategy, Tata Motor would be able to gain more control with respect to the consumer experience. Horizontal integration is employed when the organisation aims towards acquiring their competitors and the same is done by purchasing a smaller company by a larger company (Jarillo, 2013). Tata Motors could employ the same strategy for the acquisition of some smaller companies that can aid the company to expand the market of Tata Xenon in Australia.
Market Penetration: The strategy of market penetration allows the organisation to increase their market share in the existing market of its operations (Hitt, Ireland, and Hoskisson, 2012). Tata Motors is required to engage this strategy and improve its market position in the Australian market, thereby gaining more advantage over its competitors. In addition, if the organisation further integrates itself in the market, then it shall be able to better serve its customers and engage more towards fulfilling their requirements. Tata Motors should use this strategy by enhancing its marketing efforts associated with Tata Xenon, using efficient promotions, advertisements, promotions and similar such offers that would increase the brand visibility. With the help of lucrative promotions, the organisation shall be able to encourage as well as attract the target audiences of the existing market to further explore the brand. The strategy also contributes towards the enhancement of the brand recognition amongst the target segment of audiences.
Product Development: The strategy of product development allows an organisation to gain an increase in the sales by improvising and modifying the existing products.The strategy of product development is essential for ensuring the sustainability of the brand as every has a product life cycle as well as maturity period of its own (David, 2011). With respect to the case of Tata Xenon, by employing the strategy of product development, the company shall be able to compete against their competitors by the introduction of an updated product that has all kinds of technological upgradation. Furthermore, the product shall be developed such that it fulfils the requirements of the consumers of the local market. For achievement of this strategy, Tata Motors is required to make expenses with respect to their R&D division, so as to ensure that the upgradations are at par with the latest technologies, while fulfilling consumer requirements.
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