Consumer Decision-making and Internal Factors - Case Study Example

Consumer Decision-making - Internal Factors Name: Institution: Date Introduction Customer preference for specific products or services as is influenced by a combination of both internal and external factors. The concept of consumer behavior in regard to purchase of goods or services has been well explored with comprehensive analysis of types of consumers and their behavior. Consumer behavior generally refers to consumer behavioral trends or patterns displayed in the search, purchase, use, evaluation and disposal of products or services which they regard to have the value that gratifies their needs. Thesis In evaluation of the influence of internal factors on decisions that consumers make, this paper will focus on the fast food industry, with reference to the marketing strategy employed by McDonald’s to influence and retain its customers. With the capacity to serve over 47 million customers on daily basis, McDonalds is arguably the global leader in the fast food industry. Despite 85% of its business being managed by franchises, the company has put in place an elaborate framework to train and monitor the franchises to enforce adherence to provision of high product and service standards, value propositions and cleanliness Principles of consumer behavior are widely employed by many organizations in strategic marketing management. According to Ferrel, Hartline and Newman (2002), more efficient techniques of production and distribution have led to a drastic revolution in the concept of production. Organizations continue to invest vast resources in improving the features, quality and performance of their products. More rigorous strategies are now employed in marketing and selling of products, with increased global campaigns and initiatives for companies to comply with social responsibility principles in marketing of products and services. But the product and services that McDonalds offers presents a significant drift from the assumption that the success of a company is attributed to development of its product only. Significant investment in customers and employees is of critical importance. McDonald’s investment in its customers and employees is an indication of the commitment it bears for the satisfaction and fulfillment of people. Of essence is the recognition that employees that are happy in turn make customers happy. In its internal marketing strategy, the company hires, trains and motivates employees to offer quality service to its customers. In effect the company ranks customers as the most important people, followed by frontline employees, middle level managers and finally, frontline mangers (Armstrong et al., 2004). Motivation and Consumer Needs Marketers must have knowledge of the implication of goals that influence consumer behavior, the dynamics of goal setting, and what and how consumer needs are aroused. Consumer behavior is largely influenced by motivating factors that compel them to make unique buying decisions. To secure a competitive age against potential competitors, McDonalds has a well defined category of target customers, which are mainly children, youth and young urban families. The strategy of segmenting, positioning and targeting of its customers has enabled the company to develop sustainable customer loyalty (Murray, 2005). Marketers are increasingly capitalizing on the stimulation levels of their target markets. Individuals with high stimulation levels are more likely to take the risk of trying out newer products, are more innovative in their purchasing decisions, and more responsive to entry of new products or services in the market. It is in this consideration that children are the largest consumers of food related products. In an effort to attract children to its outlets, McDonalds introduced Happy Meal where a variety of toys such as hot wheels and a range of Walt Disney characters are provided. This was basically an informal partnership with Walt Disney, but highly significant in enhancing the value of McDonalds product and service portfolio (Armstrong & Nelson, 2003). Several outlets have facilities such as ‘Play Place, where children enjoy playing arcade games and air hockey. The objective of McDonalds marketing strategy is to develop an environment where it is fun to eat. Human decisions and actions are motivated by their needs, which may be inherent or attained from external influence. Needs that are innate are largely physiological, such as water, food, or air. On the contrary, needs that are acquired are psychological, such as prestige and affection. Needs may be aroused by a deliberate motive, or an unfulfilled need. But motivation can either be positive or negative. Positive motivation provides users with an incentive to use a given object, while negative motivation discourages users from the object. Motivations in users can be achieved through physiological, cognitive, or emotional arousal. It is in this regard that McDonalds also has gone to great lengths to appeal to teenagers. To this end, several products have been aggressively priced, in consideration that this category of customers is highly price sensitive. Wi-Fi facilities have been provided to make outlets more appealing especially to students. Need for Variety Differences in consumer behavior are largely attributed to reflections of personality of the individual. Of essence to marketers is to evaluate the impact on consumers of product and marketing information. The objective of marketing strategies is development of brand attributes that portray a particular trait or personality. Personality refers to the unique psychological and physical distinctiveness of an individual or organization that influences their behavior and determines their response to the physical and social environment. Personality attributes may be unique to individuals, or may be common to a few or a larger group. Marketers are presented with opportunity to explore into markets where consumers are more exploratory and are able to try out new experiences in using new and better products and services. A significant attribute that has sustained customer loyalty at McDonalds is its consistency in the quality and taste of its product. This it has maintained through development of an intricate network of suppliers and efficiency in its distribution framework. MacDonald’s strategic model lays emphasis not only on delivering optimum sales at any moment, but developing an organizational framework that protects the long term reputation of its brand Consumer Perception The ultimate objective of marketing strategies is to influence the perception of consumers in a way that motivates them to buy and use a given product or service. Perception refers to a process by which individuals collect, decide on and construe incentives to develop a true picture of a given situation or object. Marketing dynamics are proven to be greatly influenced by selective perception, a situation where people perceive things as they want them to be, and avoid information that they deem insignificant or uncomfortable. In selecting favorable stimulus, individuals are largely motivated by their expectations, previous experiences and their present interests. McDonald’s strategic objective is to attract and maintain positive relationships with its customers. The quality of the products and services provided by the outlets are further highlighted by the ambience in these outlets, which exemplifies the management’s commitment to superior value for the customer as promised in slogans such as “Feed your inner child”. A fundamental ingredient for the success of a product or service is the customer’s perception. The failure of otherwise revolutionary innovations can be attributed to failure to develop a worthy consumer perception of the product. Personality and consumer behavior is in some individuals driven by a desire to be unique. They are largely introverts who resent conforming to other people’s standards and expectations. On contrary, other consumers are highly susceptible to external influence, and tend to portray their public image in consideration of what others think about them. It is in this regard that marketers have developed innovative ways of creating advertising by focusing on the inclination of a target market to be influenced through interpersonal interactions. A company of McDonald’s stature with a global coverage has enormous expectations from its customers. With effective market segmentation in place, and after identifying its target segment, McDonalds came up with a management strategy based on % 5 P’s, that is, the product, place, price, promotion and people (Mansell, 2005). Product The company’s strategy on product quality was to design and manufacture a product that enhanced the experience of customers. Its objective was to develop products that were distributable, sellable, feasible and with a desirable and useful design. In enhancing the quality of its product, McDonalds has incorporated in its production certain attributes such as guarantees, looks and packaging. McDonalds as part of its strategy has deliberately maintained a limited product width and depth. Place With an elaborate distribution framework, McDonalds has guarantee of its products availability to target customers at the right time, place and quantity. McDonalds as a brand is a symbol of happiness and fun. There is commitment to offering value propositions that match the needs of its customers. The environment in all its outlets upholds uncompromised standards of hygiene, excellent ambience and high quality service. Its recent innovation is provision of free internet services in its outlets (Bateman, & Snell, 2004). Price A major consideration in the pricing factor is the apparent reaction of competitors. Nonetheless, pricing is the single most significant factor of the pricing mix as this is where revenue is generated. Apart from the list price, it must incorporate available discount functions that would be appealing to consumers. The equation of demand and supply is hence of fundamental significance. McDonalds has however made deliberate initiatives to appeal to lower and middle class customers and this is reflected in the increase of the customer base that the company has attracted. To this end the company has developed aggressive pricing and bundling strategies that include happy meal, family meal and combo meal in an effort to enhance customer loyalty and increase overall profitability through increased sales volumes (Newman, 2002). Promotion For any organization to achieve profitability, it must employ effective strategies and efficient channels for promoting the product. To effectively communicate information on its products and services, McDonalds has employed several channels that include advertising, personal selling, sales promotions, direct marketing and public relations. This has been developed in consideration of customer’s values and expectations. In advertising, McDonalds aims at enhancing product awareness of the items on offer, while creating a positive feeling of the products among its customers. McDonald’s strategic advertising objective is to communicate the right information to the appropriate target market and through the correct media. This it does through advertisements on television, bus shelters and hoardings. People The challenges apparent in the service industry are becoming more intricate with the rapid revolution in technology and increase in global competitiveness. The dynamics of marketing in a service industry require in-depth comprehension of customer perceptions and expectations, which ought to be reflected in the design of products, planning of operations and efficiency in delivery. McDonald’s success in the fast food industry is largely attributed to its success in integrating the perspective and expectations of customers with product and service development. This integration in operations is exemplified in the emphasis of McDonalds on suppliers as customers, while treating its customers as co-producers of quality service. Theories on personality - Critique Personality is a reflection of the unique attributes of a group or an individual. A distinct attribute of personality is that it has to be enduring and consistent. Several theories have been advanced to explain human personality. The Freudian theory explains human personality and motivation as driven by unconscious needs. The theory holds that human personality is shaped by three systems, i.e., the id, where personality is shaped by a drive for pleasure, the super ego, which is an expression of a society’s ethical and moral fabric, and the ego which refers to deliberate control of an individual’s conscience. The New-Freudian Personality theory is of the perspective that personality development is largely attributed to social interactions and relationships. In this regard, there are three distinct groups of people. There is the complaint group that has tendency to be influenced by others, the aggressive group that tends to be in conflict with others, and the detached group which tends to drift away from the rest. The Trait theory focuses on identifying and providing quantifiable measurements of psychological personality traits (Leavitt, 2004). A critical evaluation of consumer personality identifies various categories of behavior attributed to variation in personality. Consumer innovativeness categorizes individuals in a group that has a natural tendency to be innovative. They exemplify willingness to try a new product or service. On the contrary, consumer dogmatism is a demonstration of rigidity towards products that are unfamiliar and are unwavering in what they believe in. Consumer social character is based on identifying and classifying individuals into categories based on socio-cultural orientation. Consumers that are inner directed rely on personal values in decision making, while other-directed consumers look up to others to make decisions (Ferrel & Hartline, 2005). Conclusion The concept of consumer behavior is a vital component which should be taken into consideration by decision makers in any business entity. It basically determines the success of a business. In a mission to prosper and thrive in business undertaking, McDonalds has successfully employed the required components to ensure that the needs of the customers are efficiently met. This should be a guiding principle to other enterprises. References Armstrong, D., Hemphill, C., Saeed, M., & Methvin-Terry, J. (2004). McDonald's corporation case study. Minot State University Human Resource Management Bateman, T. S., & Snell, S. A. (2004). Management: The new competitive landscape. New York: McGraw-Hill. Leavitt, R. (2004). Fast food wisdom. Retrieved on March 23, 2005, fromhttp://www.itsma.com/News/ezine/2004/ezine0604.htm. McDonald's application of marketing mix. Retrieved on March 22, 2005, from . Mansell, J. (2005). Marketing basics: The marketing mix and product lifecycle. Retrieved on March 26, 2005, from . Murray, B. (2005). McDonald's Corporation Fact Sheet. Retrieved March 26, 2005, from http://www.hoovers.com/free/co/factsheet.xhtml. Newman, E. (2002). Marketing: Positioning yourself for success. Retrieved March 26, 2005 from http://www.businessnorth.com/marketing.asp. Read More