Project, Pages 9 (2204 words)
Consumer behaviour theory refers to the process through which people decide what, where, when, how, from where, and whether to buy a particular product. The theory explains the process through which consumers goes through when making the decision as to whether to buy or not. In addition, the theory explains what influences’ an individual to buy a product and their attitudes towards the products. Consumer behaviour theory helps companies to understand the buying habits of customers so that they can be able to know how best to influence them to buy their products.
Moreover, the theory helps companies know how to segregate the different customers, how to advertise their products and ho w to distribute the products. In this section, we look at two major automobile companies, Volkswagen and BMW and how they use consumer theory to target a market and market their brands. We analyze how Volkswagen and BMW have positioned themselves in the market with respect to Passat and 3 series respectively.
Brand and product overview
Volkswagen is a German automobile company which deals with the manufacture of automobile. The automobiles are divided into two, the passenger cars and commercial vehicles. In 2008, it was rated the third top most. Though the company has its operations all over the world, it has its core market in Europe. The company produces over 18 models of cars, among them, the beetle, Jetta, Polo, Golf, Passat and Passat CC.
Passat is the company’s second most selling model after the beetle (Rohm, 2007). BMW is an engine, automobile and motorcycle manufacturing company started in 1916.
Its reputation is widely known for the production of luxury cars. Its number one provider of premium cars in the world.
Identification of the relevant theory
Volkswagen’s uses different marketing strategies to identify its market target. It uses demography to categorize their customers. The company mainly targets the luxury market especially with the Passat new model. The car enjoys a large market ranging from both males and females, people who want luxurious cars but economical, college graduates and households with an average income of $100,000. BMW divides its market geographically with its main market being in China and Asia. This is due to the rapid urbanization and development going on in these countries. China is developing at a very high rate and this has translated into increased need for more vehicles.
Application of the theories
The Passat is car is one of the most luxurious cars for the Volkswagen. To market this car and get a larger portion in the market and uses demographic segregation. This includes people’s age, gender, and socio-economic status. It is an upgrade of standard into a luxurious model. This way, customers are able to identify the model with their level of living. It is an innovative way of making the middle income earners to enjoy the feeling of driving a luxurious car. This has worked for the company as the passat continues to be the most sold luxurious car (Haak & Tachiki, 2004). The company developed the new passat model as a new and unique model. This is unlike the common Volkswagen model which can easily be identified.
Customers are more interested in this new model due to its uniqueness and this has seen the sale of the car go up in the last few years. All categories of people, the old, the young, males and females are attracted to this new model. As a marketing strategy, the company continues to be creative in its models. Constant upgrading of the model is done to ensure that it’s better and better in the coming times. This way, people can still buy the same car but with new and unique features (Solomon, 2009). The company advertises and sells all its cars under one name around the globe.
This way, different people from different company can be able to buy the same car under the same name. This has continued to help in the building of the brand. The company advertisements have created a strong engagement within the company and the clients. This is because; the adverts appeal to people’s intelligence and reflect those people who don’t just go for fancy cars, but also functional ones. They also create their adverts in a humorous and friendly way. This enables the brand to introduce modifications, which are readily accepted by customers (Parsons ; Maclaran, 2009).
According an article in China hourly, China is the world’s largest market for the BMW’s 3 series. The company reported that due to the rapid urbanization, the companies have the opportunities for long-term market in the region. Moreover, China and other arts of Asia has a very large population. This has promoted the efficiency of the company to have a ready market for the vehicles. In addition, the large population provides cheaper labour for the company, thus reducing its operation costs and increasing its profits (Vuskane, 2010). BMW also has a large market in Thailand where BMW 3 series is considered a luxurious car.
Royal families and business people are constantly using the BMW’s. The company is, there for, establishing an industry in Thailand, which will be manufacturing the 3 series. There will be minimization of its shipping costs and have easy access to the market. The brands have been developed through such actions. The company is within a strategic position on this market by creating a bond with the local people. In addition, the company is localizing its operations making it possible for the people to the Chinese people to identify in the company.
The company employs the local people so that acceptance of the products will be lessened (Cohen, 1996). BMW has become a successful company due to its steady development of marketing strategies. The company uses advertising campaigns as their marketing strategy. The company advertises on trade fairs, magazines, press, motor vehicles and televisions. The company uses differentiated strategy, where they manufacture specific cars for specific groups of people. The company uses segmentation to prospect and identify potential customers (Holmstrom, 009). BMW looks for demographic, socioeconomic, and behavioural information to help them develop models that will suit each group in the chosen geographical region. BMW 3 series attracts customers who seek prestige, and its performance biased. For over three decades, the model has continued to be the best selling model. The model is prevalent in areas where luxurious cars are considered to be expensive, thus, most people who buy the car are rich and can be able to meet the high maintenance costs (Maguire, 2007).
Effectiveness of the theory
Volkswagen has benefited in the strategy it employed in that it benefits from a wide market across the world. The Passat is considered as a luxurious car but economical. This has attracted a wide range of customers into buying the car. A recent research shows that 53% O customers who purchases the passat are males are males while the rest are females. This means that the car has attracted the minority market of females. This is unlike the BMW’s 3 series which is, majorly, bought by male customers. The model locks out the female customers (Baker, 1998).
Passat has also attracted market from recent graduates meaning that the car is affordable, though still considered as luxurious and stylish. The fact that recent graduates can afford to buy the car means that many more people can buy the car. In addition, the company has attracted has attracted middle income earners with an average of $100,000 per annum. This has contributed to the growth of the company’s sales (Kerin, 2004). This is unlike the BMW 3 series, which is too costly and the wealthy people can afford and maintain. Fresh college graduates are locked out from buying this car due to its initial costs and maintenance.
While Passat is not very expensive, it is still luxurious and commands status for the people owning its. The car is also being used by government officials in some countries like Kenya; this is because, the car is economical to maintain but also considered luxurious and stylish. This has helped to build the Volkswagen’s brand (Mercer, 1996). BMW 3 series has benefited from its strategy in that, in the region it invests, it gets a great market share. In China and Thailand for instance, the company enjoys the biggest market of all the other automobile manufacturers.
The large populations in this country provide a market for the car. In addition, the rapid industrialization and urbanization in such countries provides great opportunities for the company’s sales. However, the company has failed to establish itself well in some countries and this has seen its sales in such countries fall. For instance in the UK, people do not consider BMW as luxurious and this strategy. Profit have fallen considerable from such countries as people turn to other cars they consider more stylish and luxurious like the Passat and Mercedes (Groucutt, 2004).
BMW 3 series offers the customers the power to maintain their status quo in terms of price, and prestige. This means that the company uses demographic segregation as a sub- strategy in its marketing. The company has a class of people it intends to serve and these are the classy people in different regions like the achievers, enumerators and belongers in Thailand who wish to maintain their status as demonstrated by the cars they drive. The high prices for the BMW 3 series have seen it fail to attract large markets from people of the ages below 30 years.
This is because, the car is considered as being too expensive for them. The price has also made the model fail to attract popularity in some countries, especially in the poor African Countries (Parkinson, 2009). The brand has been prohibited to develop in such countries. To access some markets, the company can decide to reduce its prices on the car so that people with middle level income and graduates can be able to purchase the model. 4. 0 Conclusion As a company, a brand is the strongest strategic asset and basis of competitive advantage.
A brand enables a company to access the market more easily. It becomes very easy for a company to introduce a new product in the market if has already built a brand. The company can create the brand through the marketing strategy they use to market their products. As companies decide on the marketing strategies, they should not be very rigid, this is because, customers are very different in different countries and as such, different strategies should be used (Cleland, 2006). Using demography to segregate the market will be profitable.
Demography refers to the characteristics of people like age, gender, religion and socioeconomic status. This strategy allows a company to access different categories of people and as such, provides a large market. Passat has a wide market in terms of age, as even the young graduates can be able to buy it for style while the old can buy them for prestige. In addition, middle income people can afford to buy the car and maintain it, while the rich can also buy it because it is luxurious. When a company has market across all demographic aspects, then it building the brand becomes relatively easy (Lock, 2007).
Geographic segregation can be of help to a company, in that the company only concentrates on the regions with high markets. Is also helps the organization to establish industries in areas where the market is large to ensure that the transport costs are reduced. Moreover, the company can establish industries where the raw materials are cheaper and readily available. BMW uses this strategy to increase its earnings. It aims to establish an automobile manufacturing industry in Thailand, to capitalize on the large market available in the region.
Lastly, no single company can be able to build its success fully by using a single strategy to build its status. A company has to employ several strategies that will ensure that it reaches all the markets. This way, the company is able to get hold of market share in different geographic and demographic regions.
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