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1.Consumer behavior, marketing, management

last twenty five years have shown an effective development of intensive efforts and

research oriented toward a better understanding of human behaviour concerning its consumption

activity. The knowledge and understanding of consumer behaviour has become a basic task both

at the  entrepreneurial and  institutional levels. Firms  have realized  that since consumers  have

adopted  a-more  aggressive  and  demanding  role,  they  have  to  modify  their  attitudes.  At an

institutional level, every Government has necessarily to be aware about the quality standards of

living  and  welfare  of  the  people,  being consumption  a  major  issue  of  this  awareness.  The

emergence of the studies on Consumer Behaviour as an autonomous discipline is a phenomenon

that, as  we all know,  takes place in  the 60's. It  can be asserted  that ever since, a significant

advance has  been-made out,  from an obscure  and sporadic research  toward a  comprehensive

effort in the study of all those aspects relevant to the knowledge of consumer behaviour. Whether

from a scholar or business approach, theoretical or empirical, published or not, this cumulative

effort has been a subject of different reviews. At present, there is a wide and varied literature on

Consumer Behaviour and, in addition, it  has become a subject  widely included in  University

teaching program.

Consumer behaviour is a psychological part of an individual which makes the difference

in purchasing any goods, services and anything else. The behaviour of any consumer depends on

many factors which are very important for any marketing management team in any business or

any  organization which  deals in  directly  to consumers.  The study  of consumer  behaviour

involves search, evaluation, purchase, consumption and post purchase behaviour of the

consumers and includes the disposal of purchased products keeping environment and personal

characteristics in mind. It is the body of knowledge which studies various aspects of purchase and consumption of products and services by individual. The American Marketing Association

(AMA)  defines  consumer behaviour  as  the  dynamic  interaction  of  cognition, behaviour  &

environmental events by which human beings conduct the exchange aspect of their lives with

various social and psychological variables at play.

The global marketplace is  a study in diversity, diversity among consumers, producers,

marketers, retailers,  advertising media, cultures,  and customs  and of course  the individual or

psychological behaviour. However, despite prevailing diversity, there also are many similarities.

The object of the study of consumer behaviour is to provide conceptual and technical tools to

enable the marketer to apply them to marketing practice, both profit & non-profit. The study of

consumer  behaviour (CB) is very  important to the marketers  because it enables them to

understand and predict buying behaviour of consumers in the marketplace; it is concerned not

only with what consumers buy, but also with why they buy it, when and where and how they buy

it, and how often they buy it, and also how they consume it & dispose it. Consumer research is

the  methodology used  to study  consumer  behaviour; it  takes place  at every  phase of  the

consumption process: before the purchase, during the purchase, and after the purchase. Research

shows that two different buyers buying the same product may have done it for different reasons,

paid different prices, used in different ways, have different emotional attachments towards the

things and so on. According to Professor Theodore Levitt of the Harvard Business School, the

study of Consumer Behaviour is one of the most important in business education, because the

purpose of a business is to create and keep customers. Customers are created and maintained

through  marketing  strategies.  And  the quality  of  marketing  strategies  depends  on  knowing,

serving,  and influencing  consumers. In  other  words, the  success of  a  business is  to  achieve

organisational objectives, which can be done by the above two methods. This suggests that the

knowledge  & information  about consumers  is critical  for developing  successful  marketing

strategies because it challenges the marketers to think about and analyse the relationship between

the consumers & marketers, and the consumer behaviour & the marketing strategy.  

Consumer behaviour is interdisciplinary; that  it is based on concepts and theories about

people  that  have  been  developed  by  scientists, philosophers  &  researchers  in  such  diverse

disciplines as psychology, sociology, social psychology, cultural anthropology, and economics.

The  main  objective of  the  study  of  consumer behaviour  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. Thus, consumer behaviour

researchers with their skills for the naturalistic settings of the market are trying to make a major

contribution to our understanding of human thinking in general. The  study of consumer

behaviour helps management understand consumers’ needs so as to recognisethe 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 behaviour

derived by the different categories of people :

A marketing  manager would  like to  know how consumer behaviour  will help  him to

design better marketing plans to get those plans accepted within the company. In a non-profit

service organisation, such as a hospital, an individual in the marketing department would like to

know  the  patients’ needs  and  how  best  to  serve those  needs.  Universities  &  Colleges now

recognise  that  they  need to  know  about  consumer  behaviour to  aid  in recruiting  students.

Marketing Admissions has become an accepted term to mean marketing to potential students.

Consumer behaviour has become an integral part of strategic market planning. It is also the basis of the approach to the concept of Holistic Marketing. The belief that ethics and social

responsibility should also be integral components of every marketing decision is embodied in a

revised marketing concept –the societal marketing concept –which calls on marketers to fulfil

the  needs  of  their target  markets  in  ways  that  improve society  as  a  whole.  The  study  of

consumers helps firms  and organizations improve their  marketing strategies  by understanding

issues such as the psychology of how consumers think, feel, reason, and select between different

alternatives (e.g., brands, products); The psychology of how the consumer is influenced by his or

her environment (e.g., culture, family, signs, media). The behavior of consumers while shopping

or making other marketing decisions. Limitations in consumer knowledge or information

processing abilities influence decisions and marketing outcome. How consumer motivation and

decision strategies differ between products that differ in their level of importance or interest that

they  entail for  the  consumer; and  How marketers  can  adapt and  improve their  marketing

campaigns  and  marketing  strategies  to  more  effectively  reach  the consumer.  One  "official"

definition of consumer behavior is "The study of individuals, groups, or organizations and the

processes they use to select, secure, use, and dispose of products, services, experiences, or ideas

to  satisfy  needs  and  the  impacts  that  these  processes  have  on the  consumer  and  society."

Although  it  is  not  necessary  to  memorize  this definition,  it  brings  up  some  useful  points:  

Behavior occurs either for the individual, or in  the context of a group (e.g., friends influence

what kinds of clothes a person wears) or an organization (people on the job make decisions as to

which products the firm should use).  

Consumer behavior involves the use and disposal of products as well as the study of how

they are  purchased.  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 (e.g., motor oil being sent into

sewage systems to save the recycling fee, or garbage piling up at landfills) 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 repercussions for the national

health and economy.

Marketing Mix

Now, that we know all the Ps that enables you to market your product. The right blend of Ps that is fitting for a product depends very much on the perceptive ability of a marketing manager. A thorough understanding of the product; its market; the needs and preferences of the customers is essential to building a valuable insight into the marketing mix for your product. Hence to be effective the marketing mix of a product must satisfy the following conditions :

Product should match the envisaged positioning

A unique positioning for a product requires that each element of the marketing mix are complementary to each other. It should also be in line with the positioning strategy of the firm.

Target customer profile matching

The marketing mix needs to be based on the profile of the targeted customer to be effective. It only means that if the targeted customers are high-end ones, then your product must be placed superior in qualitative terms. The pricing should also reflect quality.

Resource matching with firms

A thorough survey of the resources that are available with the firm for disposal is the first step. Because it is the resources that dictate your limit, you may have big plans but, they are just daydreams without funds to support them.

Ensure the harmony of elements

All the components of your marketing mix should synthesize well to give a distinctive position for your product. Any disharmony in the internal aspects could affect the credentials in the eyes of the market and lead to failure.

Competitive advantage

Now you must remember that you are not alone selling the product, but you can make it look unique, and that is your creativity. Hence, the choice of your marketing mix must factor in the competitor’s strategy and must develop counter attacking solutions as well.

Merge organizational goals as well

You need to gauge the overall organizational goals and align your mix to facilitate the company’s goals as well for example. If your company is looking for broad market penetration with the new product, you need to select the pricing, the people, the promotional strategy and distribution method accordingly.

Finally

The marketing is a context based discipline. The internet has diversified the traditional approaches to marketing. The internet based technologies facilitates deeper penetration into the very individual. But the essence of marketing and its objectives remain the same, and the 4 Ps thus are the starting point for any new businesses, large or small. In the today’s world of startups the 4 Ps acquire special importance. A talented marketer can combine the additional Ps with the traditional 4Ps to bring out the best for his product, company and clients. But, everything begins from the basic 4 Ps.

SERVICE MARKETING MIX DESIGN.

There is quite common to use a lot of marketing mix concepts. We all know the concept called 4P, used from year 1960 by E. Jerome McCarthy[1], defining 4 basic variables the company (or organization) needs to put together to satisfy target market:

? ? ? ?

Product - specification of the goods or services we want to sell or distribute

Price - policy of the pricing, possible discounts etc.

Place - where the customer can buy our product. Definition of the point of sale or retailing

Promotion - all about advertising, PR and publicity, related to the product. Simply how the customers would recognize our product between the others,

Following this concept, 4P was enlarged to 7P under title Service Marketing Mix [2] as the reaction to the more complexity of distributing services.

  5 PRACTICAL EXAMPLE

The Service Science, Management and Engineering is the study program, found on Faculty of informatics, Masaryk University. It is the first of the fully Service Science oriented study program in the middle and eastern Europe. Its uniqueness comes also from the fact it interconnect the IT and other branches (mostly economics and soft skills), using multidisciplinary approach. The general information about this study program are published in [10] and [11]. The biggest difference between this study program and the others can be described into following points:

? Multidisciplinary approach (T-shaped professionals) [10]

? Close cooperation with companies to provide 6-month intensive internship [11] [12]

The using of service oriented marketing mix helps us to improve the communication with all groups of our customers. The present form of the marketing mix is the result of three years of development of the optimal way of the communication with our clients, using the basement of the Service Science - see the information in [12]. Very brief we can make the example of service oriented marketing mix for this particular study program:

5.1 Customers

Our customers can be divided into two main groups [12]:

? students - where we can separate three (or four) kinds of them

? who are thinking to enroll this study program

? who are already studying it

? alumnus of the program

? and special group could be the students who gave up their studies

? companies (partners of the study program)

? regular partners (take at least one student per every school year)

? random partners (cooperated more than one time, but not regularly)

? one shot partners (come usually with particular student and are not interested in long

term cooperation)

5.2 Costs

Well, because the studying on the university is costs free for students, the cost they need to invest is mostly their time. They spend it because they expect the benefit coming from their better education in the future, when they will use it as competitive advance.

The companies, cooperating with study program need to set up their processes to be able to accept the student for the half-year internship [10].Indeed, this part is more expensive for the one-shot companies - the regular companies use economies of scale and a lot of companies declare the save their costs also on their wage funds - they do not need to pay the students the same amount of the money as for their regular employees. Moreover they can earn more money if they use the ideas coming with students for their business.

5.3 Convenience

The enrollment process is very easy, mostly supported by several IT services. All documents for study candidates are available on-line, as well as the documents for the internships. All questions can be answered by email or on-line communication. Students nor companies need not to come anywhere to do administrative steps. They need to make only entrance tests or interview.

5.4 Communication

We communicate mostly the information about our program curriculum and the competitive advantage for the all participants. For the main points belong:

?T-shaped knowledge and multidisciplinary education

?Internship, where we advertise also our main partners logo

?Experiences, coming from the students and from the companies

Our tools for the communication are the leaflets, the noticeboard on the faculty and web pages of the faculty and study program.

Personal communication is mostly used for solving particular problem or during support of internship process – see [10] for detailed description of it. There is one specialized person just for the internship administration. Personal approach is also used when faculty responsible representative visits the companies to check if they follow the faculty rules for the internship.

5.5 Community

Community we build consists from more elements than we mentioned before:

?Students (see the chapter Customer)

?Companies (see the chapter Customer) + new companies and organizations that identify the cooperation with us as the competitive advantage

?Teachers (get involved to the study program or want to be involved)

?Public (all people need to be informed about new education trends and possibilities)

5.6 Channels

Channels we use for the communication with our community:

?Internal (in the faculty) – noticeboard – mostly consists information about actual behavior in the study program, actual offer of the courses and possibilities

?Web pages of the study program – general information about the study program, divided into two parts – for the students and partners. Many constant information can be found there.

?Repository of the internship – actual offers for the internships for the students. Every student can look to the repository to find the most suitable position.

?Facebook pages – the group SSME on Facebook, one of the unofficial sources of our feedback

?Workshops and meetings – organized for the students to inform about the rules and conditions of their study and internships and for company representatives to discuss

?Emails – to solve particular problems

?YouTube – to present actual videos from the workshops to distribute new actual information to

all community using sharing option

?Information system of the university – supports the teaching, the examination and provide the anonymous feedbacks from the students

?Personal contacts and visits – mostly personal meetings with the company representatives and students

2.

Price elasticity of demand = percentage change in quantity/ percentage change in price

Between Y and Z, elasticity of demand is inelastic as shown

Percentage change in QD = Q2- Q1/(Q2+Q1)÷2 * 100

= 70-45/(70+45)÷2*100 = 2500/57.5 = 43.47

Percentage change in price = P2-P1/(P2+P1)÷2* 100

= 20-70/90÷2*100 = -5000/45 = -111.11

Price elasticity of demand = 43.47/111.11= 0.39 which is less than 1 i.e demand is inelastic between Y and Z

Price elasticity between W and X

Percentage change in QD = 25/45÷2*100= 2500/22.5 = 111.11

Percentage change in price = -50/230÷2*100= -43.47

Price elasticity = 111.11/43.47=2.55 which is greater than 1 and is highly elastic

Price elasticity between X and Y

Percentage change in quantity demanded

45-35/45+35÷2*100 = 1000/40= 25

Percentage change in price

-20/160÷2*100 = -2000/50 = -25

Price elasticity= 25/25 = 1 which is unitary between X and Y.

It's true that price elasticity of demand is not equal to the slope of the demand curve.