Assessment Consumer Behavior at Airline Company QANTAS - Case Study Example

Name Course Instructor Date Executive summary Advertisement campaign in relation to neoclassical theory of consumer, understanding what consumer behavior in terms of their wants and needs, not forgetting their personality, attitude, perception, is not only important to marketers whose main goal is to make profit but also to the government and its various regulatory agencies and the whole society. Such a theory is usually based on a consumer image as one of the highest rational decision maker that widely seeks to maximize customer satisfaction by way of providing an informed and reasoned analysis of utility and value. The consumer behavior is known to create strong assumptions which are based on both computational and informational bases of consumer theory. Contents Contents 2 1.0 Description of the advertisement 3 2.0 Market Group 4 3.0 Problem recognition 4 4.0 Neoclassical consumer theory 5 5.0 Application of neoclassical theory of consumer behavior 7 6.0 Conclusion 9 7.0 Work cited 10 Consumer Behavior 1.0 Description of the advertisement The advertising campaign is for an airline company QANTAS that has its base in Australia. It has a picture of a young girl having fun while watching a movie using the toy movie machine. The airline is targeting plane travelers by promising to offer the best flight entertainment. This according to the airline will be able to have them enjoy their journey through entertainment and not be able to realize how long the journey is. The airline promises to offer a travelling experience that will not only be luxurious but also memorable as the customers. The airline promises to provide a total of 1500 channels for the travelers to choose from. This will offer a chance for the travelers to sample from the channels they do have and choose the best that will offer them the generous entertainment (De Mooij, 2001). The picture used offers a sense of relaxation and enjoyment while at the same time travelling. The entertainment bit not only targets the old but all the ages as the flight has a variety of channels to choose from. The advertisement appeals to the consumer behavior as it has a changing effect that is purposed to have a change of belief and behavior for the consumers. The advertisement’s choice of the newspaper is great as it is widely accessible based on its affordability. In addition, the newspapers are not only accessible through print but online as well thus being able to reach a large target population (Kardes, 2000). 2.0 Market Group The advertisement targets the international travelers who in most cases will have to spend long travelling hours on board. These calls for the airline to provide and generate the greatest value for the travelers by making the long global travel much smoother, more rewarding and of great value. The airline attempts to offer solutions to the international travelers by offering a variety of an entertainment package for them to choose from. The airline thus through its advertisement promises to offer the highest quality travel entertainment travel of the greatest quality. The travelers who often use the fleet are often on business trips and other conferences and thus need entertainment channels that are able to offer more information related to their work (Rafee, May 2004). In addition to these, other travelers that are targeted may be accompanied by younger family members who are also included in the large entertainment package that they will choose from. This is to offer the international travelers with services that are meant to make them feel at home despite their destinations, religion, race or interests. This is in line with the customer expectations as most international travelers do want to travel to their preferred destinations with services of greater value. The travelers are thus able to enjoy their travel with all the privileges that their status entitles them. The advertisement also is meant to portray the excellence and innovativeness of the airline that is in line with the strong reputation that the firm enjoys (Kotler, 2001). 3.0 Problem recognition Based on the previous financial records, the firm identified the objectives it wants to achieve and retain its profitability nature. The objectives for the firm are to ensure long term profitability while ensuring the services for the customers are up to the required standards. In order to achieve the set objectives, it was advantageous and a requirement for the firm to increase its market share by purchasing the rights to have the airline airs the program on their carriers. This included payment for the fees and entering into negotiations with the various broadcasting stations and sign memorandum of understanding for this to occur. This was only possible after an evaluation of the performance of the firm given the additional products in comparison to the other airlines. Other relevant issues that the firm had to consider included the resources the firm had, other competitors in the same field, the strength of the competitors, the types of customers they anticipate and they have and need to retain, changes in the market and the effects of the new technology (Brown, Kozinets and Sherry, July 2003). The firm had to make an analysis of the advantages and disadvantages and the other options available including creation of more sitting space for the carriers. This will result into the design and creation of an implementation strategy as well as the modes through which it was to be monitored. The effecting of the comfort ability strategies for the consumers is to be followed by an evaluation that is aimed at gauging whether the results are desirable. Desirability will be based on the returns the strategy will have made. The indicators will be based on the amount of consumers attracted to the carrier after the introduction of the changes. The evaluation is necessary as the firm will be able to assess its productivity with a view of enhancing innovativeness (Arnould, Price and Zinkhan, 2004). 4.0 Neoclassical consumer theory The chosen campaign analysis is more suitable or blends well with the neoclassical consumer theory. According to Leon & Leslie (p.12) Neoclassical consumer theory is branch within microeconomics which highly concerns with the application of various classical models of microeconomics into consumer behavior. Such a theory is usually based on a consumer image as one of the highest rational decision maker that widely seeks to maximize customer satisfaction by way of providing an informed and reasoned analysis of utility and value. The neoclassical theory of consumer behavior is known to create strong assumptions which are based on both computational and informational bases of consumer theory. The main assumption based on the advertiser on Qantas way of entertainment is that; various consumer behaviors are widely characterized as the increase of expected life time utility which is usually subjected on budget conditions and constraints on the provided information (Leon & Leslie, p23). This theory indicates that various consumers’ behaviors are characterized as that solution which is discounted to several programming problems. For most economists, this defined approach has numerous notable attractions namely; it is theoretically tractable, it blends well with traditional notion that describes economic rationality and finally, it highly generates definable predictions which are usually tested readily. Leon & Leslie maintain that, neoclassical consumer theory widely focuses on the following key aspects of consumer behavior; preference and demand, consumption versus production, substitution effect, income effect and elasticity. Preference assumes that customers have choices on how to spend their cash therefore acting as a factor towards demand which highly contributes towards consumer behavior. It is due to preference that consumers decide upon what and how much they intend to purchase (Leon & Leslie, p54). Neoclassical theory indicates that consumption and production widely affects consumer behavior. It indicates that consumer who purchases items for consumption are different to those who make purchases for production. Usually purchases that are made for consumption are driven by various sets of motivations and desires thus making the consumer consider different factors when making decision on what and how to consume which is not the case in purchasing for production. Based on substitution demand, the effect is considered to be central in understanding how certain changes in prices impact on consumer behaviors. It states that as the prices of commodities increases, consumer behavior may shift in that they will tend to substitute the commodity with one that is similar. They chose to spend their money on the other similar commodity provided it is cheap. The income effect is more similar to the substitution effect in that it also defines on how consumer behavior is widely determined by changes of commodity prices (David & Albert, p.12). As price of commodity increases consumer behavior tend to shift so as to re-examine his monetary situation whereby the immediate result is to purchase something of lesser value. Finally, is defined as how much change in commodity prices will result to change in consumer behavior. A commodity or service is considered to be elastic if changes in its price will result to change in consumption. 5.0 Application of neoclassical theory of consumer behavior In the case of the QANTAS advertisement, the selection of the mode of advertisement and the information that the firm intends to communicate to the consumers, it is evident that the consumer theory was in application. This is evident as the selection of the products to be provided to the consumers on board the flights were aimed at meeting customer satisfaction. The firm had to conduct an evaluation in to the consumer behavior to arrive at the innovative measures that will not only attract more customers but in return provide more profits for the company and give the customers the best service that is equivalent to their status (David & Albert, p.34). Based on the advertisement information, the neoclassical theory of consumer behavior was applied in the firm’s economics matters. The firm in relation to the theory addresses consumer behaviors by use of concept especially basing on both consumer surplus and preference. Consumer surplus is the excess amount that a consumer is willing to pay for a commodity widely focusing on the possibility of doing with the same commodity (David & Albert p.39). It is mainly described by the concept of diminishing marginal utility which is mainly experienced in the neoclassical theory. The purchase of extra incremental quantities of any commodity is expected to yield to the maximization of utility. The theory further assumes that a consumer will be more willing to pay more for the initial units he consumed as compared to those that follow that initial subsequent commodities. If the definite price paid for a commodity is understood to be its subsidiary price, then the addition of the differences connecting that price and the prices than one a consumer would be agreeable to pay for previous units within the consumption chain. The introduction of the entertainment package by QANTAS had to be based on the factors that affect the consumer behavior. In addition, the firm considered the non economical factors which include; cultural, social, individual and psychological factors as the whole flight experience was aimed at addressing these. The firm based their innovativeness by assessing the additives that are to be included that will be able to meet the consumers’ preferences while addressing the objective component of the budgetary constraints. This formed a basis on determining the goods that are more likely to be consumed by the consumers based on their affordability. This assessment had to be based on products that were more complete, better than the competitors, have a substitution marginal rate that is diminishing and transitivity (David & Albert p 78). The introduction of the products had to be of greater value and above those of their competitors and be able to surpass their expectations. The bundle that the firm is to be provided by the firm is to yield the utility maximization to the consumer. The evaluation process of the package is essential in this case as it will be able to measure the responses that will be given by the consumers in relation to the changes. Theses responses are to be determined by the price elasticities and income (David & Albert p 89). 6.0 Conclusion It is evident that assessment consumer behavior is vital for any business process. The ranges of products that are produced for the consumption have to meet the specifications and needs of the consumers. The neoclassical theory is thus effective in the provision of information on the consumer behavior like the non-monetary and economic factors. The theory basis consumer satisfaction on the impact the product is to have on the consumer base on the demand for it in the market. In this case, there was a need to have a customer satisfaction through flight entertainment. The success of the product will be based on the evaluation analysis of the responses and the effect the product will have on the firm’s profit income. It is imperative to note that the effective use of the Neoclassical theory of consumer behavior enhances the skills in the recognition of production and service delivery gaps that are aimed at increased customer satisfaction and maintaining the firm’s competitive advantage. 7.0 Work cited Leon, S. & Leslie, K. Consumer Behaviour, Upper Saddle River, U.S.A: Pearson Education, Inc. Pearson Prentice Hall. (2004) David, L & Albert, J. Consumer Behaviour, New Delhi: Tata McGraw Hill. (2002). Del, I. & Kenneth, A. Consumer Behaviour; BuildingMarketing Strategy, New York: McGraw-Hill Irwin. (2001). De Mooij, M. (2001) Convergence and Divergence in Consumer Behavior. Consequences forGlobal Marketing and Advertising. Unpublished doctoral dissertation. Pamplona: University of Navarra. Kardes, F. (2000). Consumer behavior and managerial decision making. New York: Prentice Hall. Kotler, P. (2001). A Framework for Marketing Management. Upper Saddle River, New Jersey: Prentice Hall. Rafee, A. (May 2004). “The key to targeting lies in users’ real behaviour.” New Media and Age. Arnould, E., l. Price, and G. Zinkhan. (2004). Consumers. Boston: McGraw- Hill/Irwin. Brown, S., R. Kozinets, and J. Sherry. (July 2003). Teaching old brands new tricks: Retro branding and the revival of brand meaning. 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