How Buyer Behaviour Is Used in the Context of Marketing - Essay Example

?A brief Introduction: Nestle is a multinational company offering a wide range of tasty and nutritious food and beverage categories. This report mainly focuses on Nestle MilkPak, which is a premium quality, harmonized UHT treated milk, filled with healthiness, wellness and nutrition. Discussed in this report is the buying behaviour of consumers for MilkPak with special emphasis on its target market, their market segmentation techniques, and their product positioning etc. Furthermore the report highlights how Nestle MilkPak has developed its marketing mix in a way that best attracts consumers and also fulfils their expectations. Also gives the reader an insight about the influence of buyer behaviour on the development of Nestle MilkPak’s marketing mix within the packaged milk industry; it shows how the product, price, placement, and promotion of the product have been altered to best fit the consumers’ choice and also encourage positive buyer behaviour, which in turn induces consumer loyalty and attracts more consumers. In addition to this, the report also discusses the different marketing communication channels and how they are being used by the company to influence the consumer decision-making process with regard to the consumer decision-making model, the technique that has been applied by the company and how it influences the purchase of their product.  Aims and Objectives: Following are the aims and objectives of the report: To understand the importance of buyer behaviour in the Packaged Milk Industry, specifically for Nestle MilkPak with regard to market segmentation, target market as well as product positioning. The influence of buyer behaviour on the development of Nestle MilkPak`s marketing mix within the packaged milk industry i.e. how the product, price, placement and promotion of the product have been altered to best fit the consumers` choice and also encourage positive buyer behaviour, which induces consumer loyalty and also attracts more consumers.  The different marketing communication channels which include T.V, radio, newspapers, bill boards and magazines and how they are used by Nestle MilkPak to influence the consumer decision-making process with regard to the consumer decision-making model, which technique has been applied by the company and how it influences the purchase of their product.  Nestle The Company: In 1866, Henri Nestle founded the Nestle Company in Vevey, Switzerland and its headquarters are still based there to date. Its factories and operations are spread all over the world, with approximately 280,000 global employees. Its sales for 2010 were almost CHF 110 bn. Nestle is one of the top Nutrition, Health and Wellness companies in the world, pursuing the mission of "Good Food, Good Life". The company aims towards providing its consumers with tasty and nutritious food in a wide range of food and beverage categories. (Nestle.com 2011) Nestle MilkPak: MilkPak by Nestle is well known for its nutritious value and uncontaminated natural taste. It has added nutritious value of Iron, Vitamin C and Vitamin A, which is very beneficial for the health of the entire family. MilkPak is harmonized UHT milk that benefits from NESTLE’s expertise and is brimming with healthiness, wellness and nutrition. A single glass of MilkPak fulfils 20% Iron, 41% Calcium, 18% Vitamin A and 20% Vitamin C of an individuals’ daily requirement, as stated by Nutritional Reference Values, CODEX Alimentarius. (Nestle.pk 2007) Milk, as well as dairy products, contain a vast quantity of nutrients and provide a shortcut of the supplying of these nutrients to the diet within moderately few calories. (The Dairy Council 2011) Milk is an important source of nutrition and its hygienic quality is important from public health point of view. (K. Muhammad, I. Altaf, A. Hanif, A. A. Anjum* and M. Y. Tipu 2009) Market Segmentation: Market segmentation can be divided into two broad categories, namely descriptive and behavioural. The descriptive market segmentation is done on the basis of descriptive characteristics which are demographic, geographic and psychographic. While in behavioural segmentation, responses of the consumers to brands, usage occasions and benefits are taken into consideration. (Kotler, P & Keller K 2006) Nestle MilkPak has basically done descriptive segmentation by taking into account the Geographical characteristics. On a national level, the company has done geographical segmentation. Furthermore, on the city level, the segmentation has been done on the basis of income. The product caters to the needs of the entire family and not just children, although the concept exists that drinking milk is chiefly useful for growing children. But since the commodity is such that it’s for the entire family, hence all age groups are targeted equally, which combines to make a part of the family. Education level of the target market is important to the extent that it gives consumers’ some knowhow of the nutrition of milk and the advantages of the UHT milk. It is very important that the company know the buying behaviour of their consumers and hence, it has been found out that the following trends are prevailing in the market. Fresh Milk delivered at the door step by the Milkman: The consumers like the convenience of the fresh milk as it’s delivered to their door step and also, because a thick layer of cream forms on the surface of the milk when it is boiled which is considered to be a sign of its purity and freshness. Shops selling unpackaged fresh milk: A lot of people find it very convenient to purchase unpackaged milk from a shop near their house, which forms a thick layer of cream on the surface when boiled. Also, they believe in the claim that the shopkeepers make that the milk is 100% fresh and pure. Although, somewhere at the back of their minds they know that the shopkeepers and milkman adulterate it with water to increase volume sizes. Powdered Milk: People living in Karachi were the first user of powdered milk of the country. Powdered milk was used mainly due to its convenience of handling and availability. Powdered milk was mostly used in the case of emergencies and its plus point was that it could be bought in bulk & stored easily. Most of the families used powdered milk for their children and also because powdered milk was low in price as compared to other milk. Consumers thought that the powdered milk was pure; it may be due to the fact that it was being imported from European countries. Packaged Milk: The trend seen in the industry was that the packed milk was mostly used in the need of emergency and the people were not very regular users of it with most people using the packed milk only on special occasions. Also, some people favoured the packed milk because it was tasty and few people thought it was a little bit pure also. It was very important for the company to know about the prevailing trends in the market and also the buyer behaviour of the consumers, because this is what led the company to improve its advertising campaign and also create awareness about the importance and benefits of packaged milk. Target market: MilkPak is basically targeted towards the upper class as its price is comparatively higher than that of its competitors. The company mainly targeted the major cities of Pakistan, specifically Karachi and Lahore, with Karachi being the prime focus. This target market was chosen because in rural areas people have their own cows and they don’t need to purchase milk from the market, while in the large cities people are becoming more and more health conscious by the day and they prefer using packaged products. A lot of diseases are spreading due to the bacteria present in the water and no one knows which water source the milkmen are using to adulterate the milk, so more people now prefer the UHT treated packaged milk. Also, there is this concept in the mind of consumers that if a product costs higher then it automatically means that its quality is also better than that of the lower priced product. The growth of livestock sector has increased, in turn increasing the milk production as well. It is all very good since milk is the largest and single most important commodity and Pakistan is the fifth-largest milk producer in the world. Also, according to the 2006 livestock census, milk production had increased by 36 percent since 1996. (Zia n.d) Primary market: The health conscious upper and upper middle class people of Karachi and Lahore, who can afford the packaged milk, form the primary market. If the health conscious people are offered products with added nutritious value, they will definitely opt for that and this is what MilkPak has done. The milk has added iron and vitamins A & C, while Nesvita, which is low fat but has added calcium and vitamin D in it, is targeted towards the diet conscious people. The company understands that by adding value to their product they can attract more consumers and also influence the consumer buyer behaviour. If one sees two milk cartons side by side, one being regular and the other having added nutritious value then the individual would definitely go for the second option if he has to pay a higher price for it. Secondary market: Upper and upper middle class people of Karachi, Lahore and other major cities come under this category. Since the product is expensive, so the company focuses its efforts on the upper and the middle class as they can afford it and also because they will be educated and will know better about the benefits of packed milk, only then they will be willing to pay a higher price. An educated person knows about its value while a layman may not consider it to be pure, since the thick layer of cream that floats on the surface of the fresh milk when boiled, is nonexistent on the surface of the packaged milk. This is because all that nutrition is broken up and spread throughout the milk. Positioning in the Market: The company has positioned MilkPak in the market as prime quality, highly processed bacteria free milk which charges a high price because it is of the best quality and better than that of its competitors, also it has added nutritious value and is 100% pure, safe and healthy. They have emphasized upon and also created awareness about the importance of milk, importance that it be pure and hygienic and also about the seven layer quality packaging in which the milk is packed. The packaging of MilkPak is done by Tetra Pack and they have started a campaign of Milkateer. It’s a short cartoon for children, which educates them that the packaged milk is full of nutrition, power and is very pure and hygienic. Due to this campaign, more and more kids are insisting on drinking packaged milk because they all want to be part of the strong and powerful Milkateer team. This campaign of Tetra Pack has done wonders for Milk Pak in terms of sales because in the minds of consumers where packaged milk is concerned, MilkPak is considered to be by far the best, so when children say they want Tetra Pack packaged milk, their parents buy them MilkPak. Nestle has to position its product in the market in such a way that it is perceived to be better than that of the competitors and also the new entrants. Haleeb is a very strong competitor and their unique selling point is that it’s very thick. People drink a lot of tea in Pakistan and consumers know that it makes excellent tea because of its thickness (Haleeb Foods 2005). Good Milk by Shakarganj Food Products is relatively new to the market but still poses direct competition to MilkPak. It has developed a sophisticated system of collecting milk directly from the farmers on a daily basis which ensures its freshness (Shakarganj Foods 2008). Nestle is now facing hard competition in Pakistan as its market share is being snatched by Olper’s of Engro Foods, which is capturing the market and moving towards becoming the market leader of the category (Jamal 2010). Influence of the buyer behaviour on the marketing mix: Product: MilkPak is homogenized & hygienically packed UHT milk, having an extended shelf life of 3 months without refrigeration. The packaging for by MilkPak is of excellent quality. It consists of seven layers and ensures hygiene and freshness of the milk. The milk is UHT treated i.e. it is treated at ultra high temperature which kills all the bacteria in it and also increases its shelf life. As the company targets the upper and middle class, therefore things like UHT, seven layer packaging and attractive packet are important things for them. Also, the added vitamins attract the consumers while the low fat high calcium milk attracts the diet and health conscious consumers. They greatly emphasise on their packaging, how it protects the milk from bacteria and keeps it fresh. Also, the design on the packet has been changed and it now uses a lot of green which gives a very fresh and healthy look to the packet and attracts the consumer. The added nutrients are also boldly mentioned on the packet so that the consumer is attracted towards it. For the purpose of convenience, the packet is available in three sizes 1000ml, 500ml and 250 ml and consumers can purchase the packets in accordance to their requirements. All packets are rectangular as they are easy to store. In earlier years, a triangular packet also used to be available but the packaging was changed as consumers preferred the rectangular packets over the triangular ones. Taking my own example, I prefer Nesvita over all other types packaged milk because first of all, Nestle screams quality to me; secondly, it states that it has vitamin D in it, which locks the calcium in your bones. I know how important calcium is for women so if there is a type of milk on the shelf which states that it is enriched with calcium and also helps absorb it in the bones, I would certainly give it preference over others, and Nesvita cashes in upon this very factor. MilkPak has added iron and vitamins A&C and since its competitors don’t boast this, so it’s easier to decide what one wants and the answer is simply, the milk with added vitamins as it will be better for health and to keep well and active. New competition is coming in the market with the entry of Olpers Milk by Engro foods, which also a very strong brand name. Hence, MilkPak will have to make an effort to retain its customers as well as attract new ones in the face of heavy competition. A new Packaged Milk Brand Flows into Pakistan with the launch of Olper`s Packaged Milk by Engro Foods in the year 2006. It was expected to fail due to the heavy competition in the existing industry, but current results have proven otherwise (Naeem 2008). In the year 2000, there was a 12% increase in the quantity of milk collected and the milk quality was also better and this is specially owed to the substantial investments made in chilling lines over the last years (Nestle Milk Pak 2000). Women are also becoming more aware of the importance of milk, especially during pregnancy. A Research was conducted by scientists who compared the birth weights of babies born to mothers who regularly drank at least one cup of milk everyday during pregnancy with ones whose mothers did not. The babies of milk drinkers were healthier and also weighed more (Lister 2006). Pricing: The price of MilkPak is higher than that of its competitors in the market. Also, there is a slight price variation between major cities i.e. Karachi and Lahore. The price in Lahore is lower as compared to Karachi and this difference in price exists due to the distribution costs, spoilage, carriage to the warehouses of suppliers and the payment of taxes. It is also expected that the price of the one litre pack may be reduced to encourage bulk buying in consumers. They have taken into account the fact that consumers believe that products for which they are charged a higher price is of better quality than the product which costs comparatively less. Also, since they target the upper and middle class, therefore those households have enough income to be able to pay a higher price for the milk they purchase. These consumers are very health conscious and that is basically what attracts them to packaged milk. Hence, the company spends on its packaging quality and on adding healthy nutrients and vitamins to it, which is the main reason why their product is costly. Another thing is that people have blind trust in Nestle and by charging the consumers a higher price they are also cashing in on their brand name. The price of Milk in Karachi increased without any reason. Within just two years milk prices have skyrocketed and have gone up from Rs 20 per litre to Rs 25, showing a 25 percent increase (Dawn 2011). Placement: Product place is very important in terms of consumer`s buying behaviour. Their product placement is very good and their product occupies the prime location on the shelf where it can easily catch the eye of the customer. Also, their product placement in the mind of the consumer is also outstanding as they trust and believe in its quality. Hence, most of its consumers are very brand loyal. Promotion: The company promotes all its products quite well. As far as MilkPak is concerned, since it is for the consumption of the entire household, hence they have portrayed a very family oriented image for it. The consumer perceives it as a source of health and fitness for the entire family. They don’t offer any consumer savings on purchase of their product, which is a de-motivational factor for the purchase. For example, Lipton Tea Company offers sometimes an attractive mug, a packet of sugar or tea whitener with the purchase of each box and consumers do prefer it over other teas in that context. It’s true that there is no such thing as a free lunch in life but if given the opportunity, who wouldn’t avail it? We all would be happy to. Therefore, considering the psyche of the consumer, if there are offers consumer saving on the purchase of MilkPak then they will successfully influence the buying behaviour of the consumers. They have very strong advertising and promotion campaign and they uses all media sources to reach their consumers. They have TV advertisements, radio advertisements, Newspaper ads and magazine ads. They have a very competitive advertising and promotion budget in their industry, which is why they have been able to outshine their competitors. In my opinion, following attributes heavily influence the consumer buying behaviour: Strong brand name, consistent quality, heavy advertisement and promotion as it increases awareness, consumer saving offers, free samples, incentives for bulk buying, competitive prices, attractive packaging, added value of the product e.g. added nutrients and vitamins, and also, it is very important that the image of the company be protected. The image of the overall industry is also of utmost importance because it affects all the companies existing in that sector. In December 2009, Dr. Yaqoob Bhatti sought after public interest measures in the framework of packaged milk being infected with injurious amounts of melamine and other harmful contents. (Pakistan Defence n.d) Justice Mian Saqib Nisar of the Lahore High Court expressed severe concern when the Pakistan Standards and Quality Control Authority chairman confirmed the mixing of melamine, besides detergents, in packed milk. (Dawn 2009) In reply to the above claim Lahore High Court judge, Justice Mian Saqib Nisar stated that the court would not permit anyone to “play with the lives of innocent people, especially children” (Daily Times 2009). The company hence, needs to remove any such concerns from the minds of the consumers or it may lose them. Marketing Communication Channels: In light of the significant share of women that are involved in the rural milk industry, Nestle has deployed several teams of “Women Milk Promoters”, composed of Nestle employees who work with rural women to encourage the increased productivity of women milk Entrepreneurs at the village level (Regoverning Markets 2004). Advertising sources: TV set, Radio, Newspapers and Magazines They have very attractive, homely, fresh and family oriented advertisements. Another thing which has supported them is that its packaging is done by Tetra Pack packaging and tetra Pack has come up with a very attractive cartoon for the children, which tells them about the benefits and health value of milk to the children, which in turn attracts them to packaged milk. They have large bill boards in significant locations, especially in major cities which help in increasing brand awareness. For example, if on the way to the market I stopped at a signal and saw the large bill board of MilkPak in front of me, then when I get to the market, I would automatically prefer it over the brand which had no bill boards at all on my way there. Also, the newspaper and magazine advertisements play a key role because an image is created in the mind of the consumer. If everywhere one looks, s/he is surrounded by advertisements, and unconsciously one would prefer it over the company with lower brand awareness. Hence, a technique employed by the company is to surround the consumer and not give him/her the chance to think about or consider the competitors product. It is very important that the product promotion be done just right as we can perceive by the proceeding example of Got Milk? Kotler and Keller has stated the case of ‘Got Milk?’ in their book. An interesting fact was brought into light that in Spanish the ‘Got Milk?’ slogan translated into ‘Are you lactating?’ Besides this, the ads showed how annoying it was to run out of milk. In the Hispanic households, it was considered to be a very bad thing to run out of milk as not having milk meant that you have failed your family. Hence, the company changed their campaign and the slogan was changed to ‘Have you given them enough milk today?’ And they also presented milk as a very sacred ingredient in their ad campaign. (Leon & Wynter 1996) Consumer Decision Making Model: Three Decision-Making Models: Utility Theory: According to this theory, consumers base their decisions on what they expect will be the outcomes of their decisions. Satisficing: This theory states that consumers approximately get to the point they wanted to reach and then stopped the decision-making process. Prospect Theory: This theory incorporates in itself both the Utility Theory and Satisficing Theory to build up a new theory that was made up of the best aspects of each, also providing solutions to the problems present in each of the two theories. Its two major fundamentals are the concepts of value and endowment, in which an item is more valuable if one owns it in comparison to someone else owning it (Richarme 2004). The utility theory is playing a significant role in the purchase of MilkPak by consumers. They are attracted to it because of the outcome they expect from it and because it is living up to their expectations. The consumers expect it to be hygienic, safe and healthy as compared to the fresh milk and the company ensures that not only is it able to live up to the expectations of the consumers, but also that it maintains it. The consumers believe that since MilkPak comes with added Vitamins A& C and is enriched with iron, so it will be better and more nutritious than competitors like Haleeb, Olpers or Good Milk. This is the competitive edge that Nestle has over its competitors and this is also its unique selling point which allows it to charge higher price. References 1. 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