Segmentation Analysis of Buyer Behavior - Literature review Example

Student’s name) (Course code+name) (Professor’s name) (University name) Table of Contents 1.0.Executive summary 3 2.0.Introduction 3 3.0.Segmentation Analysis 4 3.1.Consumer behaviour theories in buyers choices and VWFS 5 4.0.Recommendations 8 4.1.The role of the managers in financial education 8 4.2.Accessibility of the websites 11 5.0.References 13 1.0. Executive summary The pride in every man in Australia has been the ownership of a vehicle, especially the Volkswagen brand. The choice has been necessitated by the Volkswagen Financial Services Australia (VWFS). This group has been the reason behind the dying need for the Volkswagen brand products in Australia owing to the flexibility of insurance covers and car loans offered to their clients. Once buyers have made a bid to commit to purchasing a product, they always have a strong need and desire to validate their choices and decisions regarding the product. 2.0. Introduction Buyer behaviour is the study of an individual or individuals and the processes they adopt to secure, select and dispose products, ideas, services to satisfy the impacts and needs that the processes have on the society and buyers (Howard et al., 1988). The dispositions are dictates of what the market trends are in terms of pricing are in free market system. Consumers’ characteristics and the demographics create a change in the needs and buying choices of the car sales products. The influence on the buying behaviour by the various players within the circle including the reference groups, family members and the society is also discussed in the project in the context of the real business world. Blackwell et al (2001) notes, in consumer markets, the familiarity in theorizing the buyers’ behaviour is of importance to solving real world business problems depicted in VWFS. It is for this fundamental aspect that an outline and analysis of such theories is conducted to show how the buyers’ behaviour influences the purchasing power trends for the VW products; financial loan, insurance and brands. 3.0. Segmentation Analysis The analysis of the consumers buying behaviour in Australia points out on the rigidities and strengths that experienced in the market. The segmentation analysis of the buyer behaviour is studied in terms of the market aspects of finance use, purchasing power, online purchasing and application, market snapshots, vehicle information search in the websites, financial experience at the motor dealership and insurance cover taken by the buyers (Howard et al., 1988). The search of the vehicles through car dealer websites has made it easier to obtain the relevant information regarding price and other related aspects including durability before making a choice to buy. The influence of the internet has tremendously changed the ownership in the automotive industry in Australia with carsales.com.au being a clogged site with buyers who have reached the final stage of acquisition. The irony of the segment is that the providers of the VWFS products had not won the buyers by giving an in-depth explanation regarding the terms and conditions of such products. Analyses in Australian motor vehicle industry have shown a similar and varied trend in the buyers’ behaviour at different levels of the buyers’ economic capacities. The reports availed from the motor vehicle industries have been used to generate conclusions regarding the financial providers to the purchase and the automotive brands. The analysis of the market of give the in-depth information of how various buyers use their finances to make a buying choice particularly after making a critical understanding of the value of the needs in a motor vehicle to the financial loan and insurance product offered by VWFS. In the market context, there is a clear outline as to how the financial institutions have significantly played a role in the buying choice, especially the large sums of money that ordinary buyers would not afford to own the best VW brands. Consumer behaviour is influenced by a multiple of factors including social, cultural, psychological and personal factors (Blackwell et al, 2001). The relevance of these factors in relation to their accommodative nature to the insurance and financial loans given at the dealership seemed workable. In a real business world, the factors combine with the relevant data provided by the secondary sources in to sustain stability and trends in the market. All these factors work in a various ways to develop brand and product preferences to the consumers in a more decisive manner (Haines, 1999). In a way these factors cannot be controlled directly by the marketers, therefore a study is an important factor in understanding marketing mix strategies to compel effectiveness in decision making. Consumer behaviour choice involves the buyer making a decision by recognizing the problem, evaluation of alternatives, purchase decision and post purchase decision. Consumers do not act in isolation to purchase but is dictated by the various players in making the choice. 3.1. Consumer behaviour theories in buyers choices and VWFS The buyer behaviour has been looked at in multi-dimensional approach to guide decision making. For all these approaches, all the variables including psychodynamic, economic man, behaviourist, humanistic and cognitive theories are discussed to show how man’s buying behaviour is influenced. In a real business world, the interplay of these factors is consequent in triggering demand and buying decisions. The economic man outlines the need for consumers to behave in a rational economic sense and be aware of the consumption options available. In regards to the options, the buyers should be able to choose the optimum goods and services. The social values and relationships influence the rationality of decisions made by the buyers. Haines (1999) posits in many occasions, individuals tend to strive in getting satisfied instead of the optimum choice. The psychodynamic concept posits that behaviour is directly influenced by biological factors through drives and instinctive forces which operate outside the conscious mind and thought (Haines, 1999). Psychodynamic concepts are applicable in the real business world by dictating the conduct of the business in a free market strategy. According to this; the buyer behaviour is largely influenced by biological drives but less by the environmental and individual cognition. The personality of individual is another instrumental factor which influences the capability of buyers to be swayed towards a given direction for products and services. The lucrative status of VWFS can influence the cognitive powers of buyers in making decisions in buying. Moreover, attitudes can significantly change the buying behaviour of individuals by getting the preferences in buying to suit the attitudes. Buyer behaviour knowledge has manifested itself to influence behavioural cognitive component. The buyer behaviour has been realized to be cognitive factor as is portrayed by Blackwell et al., (2001) in his book Consumer Behaviour pg 234 ‘There is a pressing need in the field to balance the rational, cognitive side of marketing thought and practice with new ideas and research on the emotional facets of marketing behaviour’. In cognitive powers of an individual, volition is a key aspect in buyers purchase intentions. The egoistic and the altruistic motives of individual are critical deciders in buyers’ decision making process. This is embedded in the motive that individuals derive from their social class in making choices about their purchasing behaviour. The cognitive resources therefore are drivers of choice when choosing products to purchase. The financial loans and covers offered by VWFS hence has been a game changer in the minds of many Volkswagen brand cars owners in Australia today (Bagozzi et al., 2002). The human cognitive powers aligned to make decisions that would in the ultimate end cause reliability and despondence; a move that offering the loan to the car owners seem to provide to the buyers with the speed and reliability that the buyers would want. The data provides an analysis of the choices consumers make throughout the path to purchase in dependence to the financial loans offered by the Volkswagen dealership. In Australia, the path to purchase is a complex one which involves the buyers going through rigorous process from developing the purchase list of the brands of vehicles they want to buy to the stage of making the choice to buy the product. In the intermediate, there are processes involving considering the list of vehicles he/she intends to buy and the acquisition of the finances to buy the product. The perception the buyers attach to the financial loans made available to the consumers can trigger their buying choice towards owning automobiles related to the Volkswagen brand. Automotive finance online have been on the rise in the recent past with a considerable number opting to its use in the future. They key milestones to the drive test is an impetus that bring the customers close to buying (Erasmus et al., 2001). With the financial loans accessible online, the buyers find it easy to access and to apply for them hence most of them opt to online purchase of the Volkswagen in preference to other brands. Therefore, Volkswagen automobile through an understanding of the consumer buyer knowledge and the accessible loans, have substantially increased their selling capacity to a marginally extrapolated levels (Bagozzi et al., 2004). 4.0. Recommendations 4.1. The role of the managers in financial education Communication as a campaign strategy should be adopted by the car-sale companies to ensure their products purchasing power is maintained and buyers’ loyalty is retained. Car sales dealers have a task to fulfil in allowing customers to feel confident enough to go for their products and brands. As such, it is therefore necessary to come up with advice and recommendations that would suit the desires and lifestyle of the buyers. The key implication in this context and buyers analysis is the understanding of the buyers’ behaviour. Additionally, it is the dealers need to ensure that their sales person should be endowed with the capacity to turn things around by availing the relevant information to the buyers to influence their choice. A number of recommendations have been developed to help sustain and capture the buyers’ choices to the VWFS products. In fact, changing the habits in the industry is a caution to decreasing margins, improving VW brand loyalty, new mobility diversity and innovation, better discounts to buyers, increased homogeneity in VW products and a standardized pricing. Managers need to explain the nature of the products that are offered to maintain the enthusiasm of the customers to continue utilizing the products. The VWFS products are sold to the buyers by the business managers who are located in the dealerships and the sales managers who are the responsible for facilitating the sales of the cars to the buyers once their acceptance of the financial loan product is approved. Customers, whom the VWFS products were designed to help, need a comprehensive financial education to understand the operations of the product and inform their decision making. As Persky (2000) notes, the customers targeted by the financial products are heterogeneous as they are distinguished from one another by their social class, education level, age and sex. The level of education would facilitate the importance attached to having a financial product for acquiring a Volkswagen car brand in context to the distinction in the cadre. With little education, the buyers would take much effort to comprehend the need to take an insurance cover product for a new purchase made for security of the unforeseen calamities. The education offered to the customers regarding the need to take the VWFS products will help change their buying behaviour in comparison to the case when little or no education was offered and the customers left to choose on their own. The perception given to the product by the buyers would be negative and so would be the dwindling demand for Volkswagen cars. The social class play an inevitable role in influencing the buyers’ behaviour towards a particular product. As is pointed out by Bagozzi et al. (2002), an understanding of the buyers’ social class would need the intervention of the managers to boost the sales at the dealership. Managers therefore need to do a survey assessment of the social class of the consumers before deciding who to recommend the products for. The sales of different categories ranging from the less expensive to the sophisticated brands need a survey of the social and economic class of the customers. It is therefore imperative upon the managers to tailor their products towards capturing all the social class to bridge the discrimination gap. This approach will proactively boost the attitudes of the consumers and make them gain insights as to why the products that are offered to them are superior to all the other products in the market by the competitive automobile brands. The brands of cars that consumers would acquire from the market are immensely inclined towards gender. In Australia, the ease of financial loans acquisition varies with gender. It is therefore an important consideration that the financial loans and insurance cover need to be flexible to allow equal number of males and females to access them to increase the overall VWFS available for buying and covering the cars. The elderly in the society need a deeper understanding of the financial products offered by VWFS before making a choice as regards to the best product in the market. It is therefore important that sales managers come up with advertisement that would be educative and captivating to the prospective buyers. For majority of the buyers, making next purchase is a decision which requires a careful thinking to allow them makes the right purchase which satisfies their financial ability and lifestyles. However with the variety of brands to choose from, finding the best brand can be quite challenging which requires a won loyalty of the buyers. It is recommended that to improve this loyalty, there is need to model the product in such a way that it gives the buyers the maximum value. The VWFS products need to be flexible to the elderly to win their loyalty and buying behaviour. The mode of application for the products should allow the elderly to make quick decisions even in their absence as a majority of this group will find it difficult to access information through websites or travel long distances to the dealership. 4.2. Accessibility of the websites As a marketing strategy, the Volkswagen brand managers need information regarding where the buyers get their information. This would be an important aspect for critical planning as knowing the needs of the customers at every stage is crucial for their interactions and design. Prior to buying, majority do a considerable research online or by visiting the dealership to ascertain the products and brands availability. The website should be tailored such that, its accessibility connects the willing buyers to the brands offices. The web should be one source that, any connection to it alerts the office for an instant communication with the buyers. Strategically, gaining a broad perspective of the market digitization is complementary to the education offered to avert a customer’s buying behaviour (Persky, 2000). In addition, the data provided shows that the car comparisons are not frequently visited in comparison to the Auto manufacturer and car review sites. This would imply, there is need for VW to establish a strong link between them and the VWFS product offered and the Auto manufactures as a marketing strategy. It is the argument held by the consumers that the best placement of the Auto manufacturers websites in helping them gain the desirable sense of the array of the products that need to be captured by the VW for modification. Conversely, the youths are increasingly connected in search of information to guide their decisions in choosing the best automobile (Erasmus et al, 2001). The websites are increasingly being used by the buyers to develop shortlists and compare the financial and insurance products. In the context of car sales, the search sessions need to be made available to the buyers by responding to their application within a shorter period to prevent them from looking for other options elsewhere. The Volkswagen brand needs to customize their website to the buyers demand and improve on accessibility. As a recommendation, an effective and efficient web strategy that incorporates search engine full optimization and captivating advertisements need to be availed to consumers to influence their buyer behaviour. The websites need to be user friendly to allow virtually all the prospective buyers access. A continuous advertisement of the VWFS on the dailies would be a breakthrough to the VW brand as this would market the product and made the information regarding its availability accessible. Overall, digitization of the purchase journey is an effort that needs an elaborate development and enhancement to incline the buyers’ behaviour to utilizing their products. In a competitive market, like the case in Australia, a consumer engagement is an iterative process that appropriately needs to be rigorous to win their purchasing choices. Payment logistics need to be streamlined to accommodate the income of the buyers by spreading it out in some considerable time. In addition, there should be convenience in the amount payable towards the loan and the length of payment. However, better repayment terms may only serve the interest of the VW brand if the lending capacity is maintained at a responsible level to avoid incurring numerous losses (Blackwell et al., 2001). In regards to this, an obligation to bind to the pre-contractual disclosures is mandatory and responsible to the buyers and dealers. There is also need to create structures that would allow the loan approvals that resonate to the customers’ demands. The flexibility within which a given brand offers its products is determinant to drawing buyers closer to the product or not (Persky, 2000). A flexible payment module can swing the consumer buying behaviour to buy the Volkswagen. In fact majority of the buyers are willing to purchase from where the terms are flexible and the mode of payment is within their reach. The dealers convincingly need to work tireless to avert the buyer pre-trigger which considerably would vary from a buyer to another. The trigger to purchase a new vehicle arises from an interplay of factors which is admirably the need to satisfy a customer’s zeal. The triggers including the need for performance, a better fuel efficiency, avert unreliability, and need for a spacious care. The dealers need a platform with the buyers which can capture all these details in order to improve on those that will give optimum usage of their VWFS product. 5.0. References Bagozzi, R., et al.(2002). The Social Psychology of Consumer Behaviour. Buckingham: Open University Press. Bagozzi, R., et al.(2004). A comparison of leading theories for the prediction of goal-directed behaviours. British Journal of Social Psychology, 34, (4) 437-461. Blackwell, R., et al.(2001). Consumer Behaviour. 9th ed. Orlando: Harcourt Press. Erasmus, A., et al. (2001). Consumer decision-making models within the discipline of consumer science: a critical approach. Journal of Family Ecology and Consumer Sciences, 29, 82-90. Haines, G. (1999). Book Review: The Theory of Buyer Behaviour. Journal of the American Statistical Association, 65, (331) 1406-1407. Howard, J, et al. (1988). Theory of Buyer Behaviour. In: H. H. Kassarjian and T. S. Robertson, eds. Perspectives in Consumer Behaviour. Glenview IL: Foresman Persky, J. (2000).Volkswagen Revolution. The Journal of Economic and Financial Analysis, 9, (2) 221-231. Read More