Consumer Behavior and Their Buying Process - Essay Example

?Consumer Behaviour Organizations can survive as well as succeed, if it can reach its products or services to the intended s in an optimal way. To reach the customers, they need do a basic thing first, which is to understand the interests, needs, behaviours, etc., of the target customer base. That is, only if an organization is able to grasp the above mentioned aspects of customers particularly consumer behaviour and their buying process, they can come up marketing or enticing strategies accordingly. Consumer behaviour covers a lot of ground, as it is “study of the processes involved when individuals or groups select, purchase, use products, services, ideas or experiences to satisfy needs and desires.” (Solomon and Bamossy 2005). There is a contrary perspective as well, which is, organization can straight way come up with marketing strategies, and then influence the consumer behaviour. That is, if the organization makes an all out ‘attack’ on the customers’ sense organs of eyes, ears and even nose, they can influence or tune the consumer’s behaviour and their buying habits. Either way, it is of paramount importance to focus on consumers’ behaviour and come up with marketing strategies, so the organization’s product or service can be made an enticing one as well as an optimally selling and successful one. In that direction, the focus will be on the British product or brand of BMW’s MINI or MINI Hatch, explaining how its marketing mix elements driven by psychological and sociological drivers has been working together to influence consumer buying behaviour, and thereby aiding it to become one of the most successful consumer products of the world. Background Mini (branded initially as MINI, MINI Cooper and now as MINI Hatch) was originally a British automotive brand, but is now currently owned and manufactured by the German auto major, BMW Group. Due to its unique design and performance, Mini, since its launch in 1950s, became one of the most likeable and popular cars in Britain as well as throughout the world. It came under BMW’s control in 1994, when BMW purchased Minis’ then owner, Rover. However, with Rover facing massive losses at the turn of the millennium, BMW decided to sell Rover and thereby stop treating “'The English Patient”, as the struggling Rover subsidiary was nicknamed by the British Press. Even while selling off the Rover, BMW understanding the significance and potential of Mini as a brand made up its mind to hold it. They allowed Rover to sell out all the manufactured models, and when the last one was sold, the brand name 'Mini' got reverted to BMW. Under that brand name, BMW started manufacturing of its version at Oxford plant in Cowley, United Kingdom, thereby launching what came to be one of the most successful brand plus iconic products out of UK. BMW’s MINI as an optimal PRODUCT With BMW reworking and re-branding an already successful product of Mini, it had in its hand an optimal PRODUCT, when it launched it in 2000 at the Paris Motor Show. During the launch, BMW modified the brand name as MINI Cooper, with the letters of ‘Mini’ capitalized, along the addition of the name Cooper. Both these changes were done to give it a makeover and importantly to differentiate it from the Mini was produced by Rover. This fresh avatar of MINI was unrelated to the old Mini in the technical and configuration sense, but still retained certain key, successful and iconic features like the transverse 4 cylinders, along with front-wheel-drive configuration and importantly the iconic as well as the unique "bulldog" touch. Although, they incorporated certain old features, the new MINI was an advancement or forward evolution of the old car, as many technologically advanced aspects starting from the high powered engine to various technical and non-technical aspects were featured. BMW MINI’s designer Frank Stephenson had this to say, “The MINI Cooper is not a retro design car, but an evolution of the original. It has the genes and many of the characteristics of its predecessor, but is larger, more powerful, more muscular and more exciting than its predecessor.” (Paternie, 2002). By having such a product with good combination of features, BMW targeted the young professional group, well-to-do urbanites and also traditional mini enthusiast group. As it got good attention in line with the psychological driver with a strong launch, MINI was able to achieve the initial success, by selling close to 200, 000 units by 2002 and reaching 1 million by 2007. (Boeriu, 2012). All through this decade, BMW came up with newer models, in a lineup which spans classic hatchback, two-seat roadster and wagon. All those models were pitched to the above mentioned target group, along with the current focus on small families as well. Speaking of those product models, BMW has adjusted the original model for hatch and hardtop variants, and have also released special edition Mini Classic Cooper and Cooper Sports cars, along with Mini Cooper S Works, John Cooper Works GP Kit, Countryman Crossover, etc. (Boeriu, 2012). With a strong product with strong brand image, BMW in line with the sociological driver of social categorization, started focusing on their target customer base. They did categorization on the social factors of economic status or salary, location as well as the age. As mentioned above, they focused on salaried professionals and managers in their middle-ages, mainly living in the urban areas. “MINI would likely appeal to urban upper-middle-class consumers, centering on ages 25-49, who shared what CP+B called "the MINI Mindset.” (HBS Case). They were focused because they fell in line with the motivation theory of Maslow’s Hierarchy of Needs. Maslow's theory implied that individuals will strongly desire for higher needs or materialistic things, only when their most basic level of needs are met. As the urban upper-middle class consumers including professionals and businessmen would have comfortably met the basic needs and could a reached a good financial as well as social status, and can desire for premium cars like MINI, they were aptly and successfully targeted, and still being targeted. (Schiffman and Kanuk 2010). Thus, it is clear that BMW ever since the launch of newer MINI version in 2000 has been coming up with various product models to target its main target groups, influenced as well as motivated by sociological and psychological drivers, and also by expanding its target group. BMW MINI’s Price When one focuses on the current PRICING of BMW MINI, it starts from ?14000 and reaches till ?30000 plus, thus in line with theory of premium pricing, and that brings in its target customers who favour “premium-ness” and quality. Although, pricing of the various MINI models depends on the technical specifications starting from the engine capacity, power, features, etc., for all the models, BMW is adopting the premium strategy. This strategy of premium pricing was not visible when BMW launched MINI in 2000, but only when sales picked up, it started adopting this strategy. That is, when BMW first launched the MINI in the UK market, it adopted subsidized pricing, considering the fact that it was replacing an old unsuccessful model – Rover’s Mini, and launching a sort of new model. When newer models are launched, companies will normally sell those products at subsidized prices to bring in the first customers, and so BMW also adopted the same pricing strategy. In that direction, BMW set a subsidized price for its base version of Mini-1. (Brooke, 2002). Then, after that initial phase, with MINI garnering a sizable share of UK’s market and importantly attracting the consumers’ minds, BMW reoriented its strategy. It avoided the subsidizing option and instead started to set a competitive price, which in course of time evolved to premium pricing, with the continued success of the various models and the brand. Importantly, in line with the psychological driver of perception, BMW continued its strategy as well as theory of Premium pricing. That is, with the UK people’s perception for quality undergoing major change, as they favoured high quality products, it reflected in BMW’s pricing. “There is considerable evidence that for many products and services consumers judge product/service quality by price.”(Foxall, Goldsmith and Brown 2005). Thus, if the price is high, the quality will be naturally high, and that perception was utilized by BMW to set premium prices to reflect the optimal quality, they offer. Europeans expected the subcompact cars to be cheap and affordable, however, BMW is the only company to be able to justify a premium price for its MINI cars, due to the quality it offers. (Egm Car Tech 2007). This focus on premium pricing is in line with sociological driver of values or brand value to be specific. As MINI has a long standing brand name, and also has incorporated optimum quality after the taking over by another strong brand of BMW, it has to be naturally slotted in the upper-echelons. Upper-echelons in the sense, BMW wanted to market it mainly has a luxury car, with premium pricing, so only the social sections who has the financial clout and importantly who understands and respects its brand value can buy the car. It does not want to compete in mass-scale manner, and instead wanted to maintain its ‘exclusivity’ with the luxury tag and premium pricing. “BMW is very clear about its targeting. It only targets the premium-priced cars and does not strive to compete in every segment of the auto industry. It avoids the high-volume market of middle-of-the-road vehicles and focuses strictly on the luxury sector.” (Pearson Education). For example, although MINI was smaller than Honda Civic, it is priced around €2,300 more than the later. Thus, it is can be understood that in line with sociological and psychological drivers, BMW has adopted premium pricing strategy and that strategy “has made BMW, despite its relatively small size, one of the world’s most profitable car makers.” (Boudette 2005). Point-of-purchase or Place aspect of BMW MINI After launching MINIs in various auto shows starting from Paris to Detroit, BMW started selling it in European countries including in UK, Germany, etc., followed by United States and then to other continents like Asia, through well entrenched BMW dealer network as well as through exclusive MINI dealer network, all of which constitutes the point-of-purchase or PLACE of BMW MINI. When MINI was about to launched in UK, the automotive market in UK was going through tough times, with many car companies shutting down and foreign MNCs choosing other European countries like Germany, France for setting their manufacturing plants. (Brierley, 2001). However, the launch of MINI was like whiff of fresh air, and also bucked the set trend. That is, although many MNCs opted for Germany, the famous German company of BMW picked UK as the place for not only setting its manufacturing plant but also for the commercial launch of the first MINI in 2001. During the launch there was strong skepticism regarding how can German company can modify and re-brand an iconic British brand and make a success in UK. As the public in UK were enamored by the old Minis, they had no faith that BMW can make it a success. (Kiley 2004). This in line with the psychological driver of attitude, and when the target customer base as well as the general public have a particular or even stereotypical attitude, then the company had to put in optimum efforts to change that attitude. As discussed above, BMW with an optimal product, subsidized or competitive pricing backed with strong promotions, and importantly setting its manufacturing plant in UK itself instead of Germany was able to positively change the attitude of the public, thereby making a success in the crucial place of UK. Setting of the manufacturing plant at Cowley, UK had a positive effect in line with the theoretical model of “Country of Origin” effect. That is, the prospective customers could favor products, that too emotionally, if it is manufactured indigenously in their home country. With BMW making it a point to manufacture in UK by employing local employees, it created a favourable impact on the English public. In addition, it also boosted BMW’s dealership network in UK, as they were hoping for a successful vehicle in the small car segment. “A MINI dealer will know the car best, offer high standards of service and have the best access to parts. Speaking of parts, they can only offer JCW parts, which are officially recognised by MINI.” (Collins 2012).This effective role played by these dealers has also positively impacted the prospective customers and have facilitated or even forced them to make the buying decision. That is, in line with the sociological driver of peers and reference groups, one of the key determinants used by the prospective buyer of car, let alone MINI, is whether the dealer network particularly their service including their after-sales service is customer friendly and effective. To find that information about the dealer network, the prospective buyers could inquire from friends personally as well as experts, previous buyers, etc., through personal options or through online platforms or forums, and that is a further extension of this sociological driver of peers and reference groups. (Evans, Jamal and Foxall 2010). Although, dealers are main point-of-purchase and after-sales service, independent specialists have come up providing another place for BMW MINI. Their role involves offering a range of extreme and varied aftermarket modifications as well as accessories to give a unique look as well as to accentuate the features in the car. BMW’s Promotion When one focuses on the PROMOTIONAL aspect of MINI it provides varied and interesting perspectives, considering the fact that BMW has utilized and are still utilizing various promotional tools and avenues to reach its intended customer base. When it was launched in 2000, BMW promotional activities in UK focused on attracting the young crowd, even while enticing the traditional fans of Mini. Although, there were initial skepticism due to the attachment of German attachment to the quintessential British brand, BMW was able to overcome it and emerge successful with a promotional campaign that catered to both the young and the traditional segments. “July 2001 saw it hit the UK market - and to accompany the launch was an innovative marketing campaign, pitched directly at the young and well-to-do urbanites as well as their parents, who took the original to their hearts in the Sixties.” (Rendell, 2008). In that direction, they came up with a series of photos of MINI along with young models, set against the backdrop of historical or antique buildings as well as objects. This promotional strategy was in line with the psychological driver of combining the elements of old and the new, so, even while retaining and reflecting its old charm and iconic image, it showcased the technologically advanced and cool image. This successful strategy fitted with the theory of organizational learning, in which organizations will learn to adapt to the needs of the customers by coming with new or adaptive strategies even while holding on to the successful old strategies or aspects. However, this promotional strategy evolved or changed, when BMW shifted its’ marketing strategy in line with the changes in its targeting and brand positioning strategies. That is, from positioning and thereby branding it has an affordable iconic British car in the initial period of launch, BMW changed tracks and positioned it has “cool luxury car dominantly for a young segment”, and that reflected in its promotional activities. (Moiseieva 2013). Although, BMW continues to incorporate or slightly touch its historical iconic image during its’ promotional activities in UK, it kept that to minimum levels, and mostly adopted promotional activities, which are innovative, creative, and even sometimes ‘silly’. In line with innovative promotional activities, BMW created huge standalone billboards or billboards on huge buildings, in which it placed real size MINIs, along with creative wordings. Another key promotional strategy by BMW, which has helped it to reach widespread audience and importantly further strengthened its brand image is through the model of movie placements. Movies being a mass medium being watched by majority number of people, utilizing it and placing products during the movies can reach those high numbers of people. MINIs were prominently used in the movie Italian Job released in 2003, as the script involved a heist using smaller and better maneuverable cars. It was a remake of a successful 1969 film by the same name, and was a highly anticipated film, and so to utilize its potential, BMW stuck deal with the Paramount Pictures to “donate” around 32 cars exclusively for the film (officially there were no news of BMW offering money for featuring their cars). BMW gave Paramount Pictures around 32 Minis for the chase scenes, with the major Mini roles being taken by Chili Red Mini Cooper S, a Pepper White Mini Cooper, and an Indi Blue Mini Cooper. (Bennett). In addition, during the movie premieres in UK, USA and other countries, as part of promotional activities, BMW arranged a convoy of privately owned MINIs. With the film also being commercial hit, this promotional strategy was a major success, and as expected, BMW saw a surge in the popularity and importantly sales of the MINI after the 2003 movie was released. “Sales of the Mini in 2003—the year in which The Italian Job was theatrically released—had increased 22 percent over the previous year.” (Erik 2011). When it comes to the sociological driver of celebrity endorsers, BMW have not used them as they rely on and thereby promote the quality and performance of the MINIs rather than celebrity endorsements. Despite that policy, many celebrities use or get featured in MINIs and that are prominently featured in various mediums. For example, the picture of English Prime Minister David Cameron driving two millionth MINI off Oxford production line was featured in different mediums. Although BMW does not promote it officially, they are benefited by it, as it optimizes its brand value Conclusion From the above analysis of product or brand of BMW MINI, it is clear that it is clear that BMW ever since its modification, re-branding and re-launching of MINI in 2000, has formulated and implemented effective strategies. Starting from modifying and coming up with strong product, it followed firstly a subsidized pricing and then premium pricing, and with the aid of efficient dealer network and importantly optimal promotional activities, has successfully sold many MINIs and in the process has elevated its brand image even further. Having achieved such a success by coming up with strategies based on consumer behavior particularly psychological and sociological drivers, it can travel on the same optimum path by continuing those strategies and importantly coming up with improved versions of those strategies. References Bennett, M. New Italian Job. [Online] Available from http://www.miniregister.co.uk/TheRegisterMay2003.html(accessed on December 21, 2013) Boeriu, H., 2012. The History of the MINI Cooper. [Online] Available from http://www.bmwblog.com/2012/07/05/the-history-of-the-mini-cooper/(accessed on December 21, 2013) Boudette, NE., 2005. BMW's Push to Broaden Line Hits Some Bumps in the Road. [Online] Available from http://online.wsj.com/news/articles/SB110531231199821082(accessed on December 21, 2013) Brierley, D., 2001. Britain clocks off: why the car plants of tomorrow are being driven Abroad. [Online] Available from http://www.independent.co.uk/news/business/news/britain-clocks-off-why-the-car-plants-of-tomorrow-are-being-driven-abroad-676995.html(accessed on December 21, 2013) Brooke, L., 2002. Mini: The real story; BMW's new British-Bavarian brand launches a new concept — the premium small car - Cover Story. [Online] Available from http://www.sandymunro.net/articles/Automotive_Industries_-_Real_Story_Of_The_Mini.pdf(accessed on December 21, 2013) Collins, M., 2012. New Mini: All Models 2001 to 2006. Veloce Publishing Ltd, London.. Egm Car Tech., 2007. Fiat charges premium price for new 500. [Online] Available from http://www.egmcartech.com/2007/07/05/fiat-copies-bmw-charges-premium-price-for-new-500/(accessed on December 21, 2013) Evans, M, Jamal, A and Foxall, G., 2010. Consumer Behaviour 2nd Edition, Wiley, New York. Erik., 2011. Top 40 Product Placements of all time: 20-11. [Online] Available from http://brandsandfilms.com/2011/01/top-40-product-placements-of-all-time-20-11/(accessed on December 21, 2013) Foxall, GR., Goldsmith, RE and Brown, S., 2010. Consumer Psychology for Marketing, Volume 1. Thomson, London HBS Case. Target Customers. [Online] Available from http://www.andrew.cmu.edu/user/pclary/temp/9-505-020/target.html(accessed on December 21, 2013) Kiley, D, 2004, Driven, John Wiley and Sons, New York. Moiseieva, M., 2013. Mini Cooper: Marketing Strategy, Digital Marketing, Brand & Ethics. CRIS - Bulletin of the Centre for Research and Interdisciplinary Study. Vol. 2013, No. 1, pp. 93–113 Paternie, PC., 2002. Mini. MotorBooks/MBI Publishing Company Pearson Education. Case Study: BMW. [Online] Available from http://wps.pearsoned.co.uk/ema_uk_he_kotler_euromm_1/126/32286/8265285.cw/content/index.html(accessed on December 21, 2013) Rendell, J., 2008. Anglo-German success. [Online] Available from http://www.aronline.co.uk/index.htm?r50storyf.htm(accessed on December 21, 2013) Schiffman, L and Kanuk, L., 2010. Consumer Behaviour 10th (Global) Edition, Pearson, London. Solomon M and Bamossy, G., 2006. Consumer Behaviour: A European Perspective, FT Prentice Hall, London. Read More