Qualitative Research
It involves the exploration and the interpretation of the perceptions and behaviour of small sample of individuals, and the study of the motivators behind observed actions. (Palmer, 2009:148)
An advantage to qualitative research is the researcher gains more detailed and rich data in the form of comprehensive written descriptions or visual evidence.
Interviewing is a type of method Tammy would use to find out what views people hold; their views should be unbiased by evaluative responses on the researcher’s part. The researcher should choose an interview environment and the conditions in which the participants feel comfortable, secure, and at ease to speak openly about their view. This would help Tammy to become innovative and develop marketing strategies to improve customer satisfaction.
A disadvantage to this that the researcher interprets the research according to his or her own biased view, which skews the data gathered. This would give the Tammy researcher a subjective view of the study and its participants.
Articles/magazines
Fashion magazines help individuals to keep themselves informed about the current fashion and trends. Other magazines such as children magazines, women magazines, celebrity magazines etc help individuals to entertain themselves. Magazines would be a greater source of revenues for Tammy distributing the magazines and provide them profitable business.
The disadvantage is that magazines these days usually portray indecent images or values in the form of pictures of actresses and models etc. A little kid reading a fashion magazine might come across a lot of material that would not be suitable for him/her to read. This could explain why young children tend to address themselves as adults.
Marketing Information System
It can be defined as a system in which marketing information is formally gathered, stored, analysed and distributed to managers in accordance with their informational needs on a regular basis.
The four following functions managers undertake before decision making are:
- Intelligence
- Design
- Choice
- Implementation
The suitable type of decision making for Tammy would be management control decisions. It is where decisions are concerned with how efficiently and effectively resources are utilised and how well operational units are performing. Management control involves close interaction with those who are carrying out the tasks of the organisation; it takes place within the context of broad policies and objectives set out by strategic planners.
An example might be where Tammy observes their profits are declining due to a decline in the capacity utilisation of their clothing and footwear. The manager has to decide between alternative courses of action, including: increasing promotional activity e.g. sales, seeking out the prices of their competitors or researching and developing for new products. Management control decisions are more tactical than strategic.
- It is your view that managers at Tammy have no knowledge of customer behaviour theory and need to be more customer/market orientated if sales are to increase significantly. You have therefore decided to run a workshop for managers entitled ‘Understanding all our customers – how it can increase sales’. Provide details of the theories to be discussed at the workshop and the practical examples you would use to illustrate them. (Please note that your discussion should cover both individual and organisational customers).
The study of consumer behaviour is the study of how individuals make decisions to spend of what they buy, why they buy it, when they buy it, where they buy it and how often they use it. Also, it is the decision process and physical activity individuals engage in when evaluating, acquiring, using or disposing goods and services. (Kotler, 2009:43)
These are the theories that explore the various drivers that impel consumers towards their choice.
- Psychological models – focus on motives for buying and the process of learning
- Sociological models – consumer behaviour is determined by social forces that act upon them
- Economic models – focus on the consumer intent on maximising enjoyment from his/her purchases
Psychological
Customers are motivated to buy clothing and shoes from Tammy because of its recognition which can promote the brand to the public, it could be seen as a ‘status symbol’ to influence others to purchase. This could be applied to the Maslow Hierarchy of Needs because customers are motivated to satisfy their needs, and once it is achieved, they move on to the next; which explains why in affluent societies there is ever growing demand for goods which satisfy the higher order needs.
Sociological
Tammy’s clothing and shoes are made for younger children who are ages around five years and in correspondence it gives the parent’s choice of what they choose their children to wear. As children get older, they become more fashion aware especially from the external environment around them; this may include fashion trends on the high street, store catalogues and fashion magazines.
Economic
The consumer is a rational person, who tries to use his or her money income to derive the greatest amount of satisfaction, or utility, from it. Consumers want to get the most for their money or, to maximise their total utility. Rational behaviour also requires that a consumer not spend too much money irrationally by buying tons of items and stock piling them for the future, or starve themselves by buying food at all. Consumers all engage in rational behaviour.
A marketing-oriented organisation requires all of these departments to ‘think customer’ and to work together to satisfy customer needs and expectations (Palmer, 2009:26).
Palmer (2009:6) says there are three components of market orientation which are customer orientation, competitor orientation and inter-functional orientation.
Customer orientation requires that a company understand not only the present value to the customer, but also how this is likely to evolve over time.
Competitor orientation is when a firm should work at how well its competitors are able to satisfy buyers’ needs. Inter-functional orientation requires that the organisation draws upon and integrate its human and physical resources effectively and adapt them to meet customer needs.
Tammy should understand the awareness of ethics because the buyer who purchases their products could have a cause of concern from where the products were made from, despite the fact Tammy produce such quality products yet wonder what the working conditions in India are like. It could be the thought that the workers are being exploited into working for longer hours for minimal wage prices, which can also disrupt the user’s behaviour especially if they have moral issues about ethics. An example is that generic brands being bought by Primark would not concern the buyer because it would be obvious that the workers are working at a lower wage rate since they have cheaper quality products.
Decision making unit is where few purchase decisions are made by an individual without reference to others (Kotler, 2009: 46). Usually, other people are involved in some sort of role and have a bearing on the final purchase decision. A number of roles can be identified among people involved in the decision process such as influencers, gatekeepers, buyers, decision-makers and users.
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Influencers – The people who influence the decision making process, either directly or indirectly, by providing information and criteria for the evaluation of alternative buying actions. Influencers can work inside the company or act as external advisers.
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Gatekeepers – People who control the flow of information to others within the company and the decision making unit. For examples, buyers may have the authority to prevent salespeople from seeing users and deciders.
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Buyers – In the case of industrial goods and services, low-budget items that are not novel may be left to the discretion to the buyer. In this way, office stationery may be contracted by a buying clerk within the organisation without immediate reference to anybody else.
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Deciders – Those with the authority to approve purchases. The decider is likely to be a senior manager where a complex purchase or company policy is involved. Otherwise, in more routine purchases, the buyer is usually the decider.
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Users -The people who ultimately use the product or service. It is likely that they will be concerned primarily with product performance and ease of use.
If a salesperson (gatekeeper) goes to another retailer, they would want to find out that person that makes the decisions. An example would be if Tammy was an expensive brand, the financial manager (decider) could decline the offer of the products being sold into the store maybe due to the company finances, although the buyer likes their product. Therefore, the influencer can make negotiations with the decider that would both benefit both companies and fulfil their needs, i.e. Gap selling Tammy’s clothing.
Furthermore, Tammy has many buyers as well as ‘Barrett’s and Dolcis’ through the footwear they provide, however due to their internet sales declining, it has stagnated sales because of the ‘greater need for customers to ensure a good fit’. A way of Tammy increasing their sales is by ensuring their users can get an exchange for their shoes for a fitted size and also a way to satisfy their buyers is by providing them a range of sizes of footwear.
- Tammy would like to develop a range of clothing that will complete in the emerging ‘high quality casual wear’ market for children. This trend has partly been set by celebrities such as David Beckham dressing their children in high quality, casual designer children’s clothing. Outline factors that should be considered before setting price for this new range? How will different objectives affect the pricing of the range? Lastly, recommend and justify a pricing strategy for the new range of clothing.
The factors that could be considered before setting price are:
- Quality, brand, and recession
- Price of cotton, labour costs and promotional activities
Quality
It can be considered because according to the price/quality relationship, it is believed by most consumers that a sign of good quality could be a sign of relatively high price. This relates to Tammy because of their unique feature which is ‘durability’ which came from the ‘tough Indian cotton’ which meant that more consumers are to depend on that price/quality and the premium price they are prepared to pay.
Brand
It can have a large effect on the price that customers will pay. Brands therefore add value to a basic product or service by enabling the product or service to command a higher price or higher market share than an unbranded equivalent. Tammy has a reputation for offering ‘hard wearing’ products which gives them a reasonable image for the company brand. However, competitors like Primark are seen as ‘generic’ because of their cheap branding and quality of their clothing, although it is a popular company.
Recession
It has an effect on the economy as well as prices because during a recession, it is accompanied by a drop in the stock market, an increase in unemployment and a decline in housing market. Tammy should acknowledge the economy before setting prices because as a consumer, they are more price-sensitive since they have less disposable income which means that they are unable to spend on desirable clothing and could alter to buying cheaper clothing. Also, as an organisation, there is less spending which means a fall in sales will lead to a fall in revenues and in the long-term, if low sales continue, it would lead the business in bankruptcy or being purchased by another firm.
Price of cotton
It is important because it is the sole raw material that is needed to produce clothing, especially for Tammy since ‘most of its garments were made’. The price of cotton is increasing by 50%; however this has little effect on the company because of its price elasticity of demand being price inelastic. It would lead to Tammy no choice but to continue its clothing being by produced by cotton because there are fewer substitutes although synthetics could be used, also it would lead to the price of clothing increasing.
Labour costs
Labour productivity estimates can be used to develop labour market policies and to monitor their effects. Likewise, trends in productivity estimates can be used to understand the effects of wage settlements on rates of inflation or to ensure that such settlements will compensate workers for realized productivity improvements. The wages that the Indian workers get could increase which gives an incentive for them to continue producing cotton and so forth, leading to Tammy increasing the price of their clothing in order to make profits and revenues.
Promotional activities
Promotional activities, for instance a ‘pull’ strategy could require high spending on advertising and consumer promotion to build up consumer demand for a product, i.e. using celebrities such as David Beckham to dress their children in high quality, casual designer clothing to promote the brand image. Tammy could possibly do sales in the winter for instance, Dec/Jan because they could cut sale prices by doing 50% off deals to increase sales from their customers.
In the short-term, since Tammy has fewer competitors, it gives the company an incentive to raise prices because of the price elasticity of demand. Also, the market could be risky at the beginning, therefore in order to survive; Tammy should raise prices so that they can obtain revenues and profits for the company. However, in the long term, there will be potential competitors within the market, and therefore Tammy would have to lower their prices to set in line with their competitors. This means that they would have to forgo their profits and increase their sales and market share.
There are five pricing strategies which are:
- Price skimming
- Premium pricing
- Penetration pricing
- Value-based pricing
- Product-line pricing
The practice of price skimming involves charging a relatively high price for a short time where a new, innovative, or much-improved product is launched onto a market. The objective with skimming is to skim off customers who are willing to pay more to have the product sooner; prices are lowered later when demand from the early adopters falls.
Premium pricing is the practice of keeping the price of a product or service artificially high in order to encourage favourable perceptions among buyers, based solely on the price. The practice is intended to exploit the tendency for buyers to assume that expensive items enjoy an exceptional reputation or represent exceptional quality and distinction.
Penetration pricing involves the setting of lower, rather than higher prices in order to achieve a large, if not dominant market share. This strategy is most often used businesses wishing to enter a new market or build on a relatively small market share.
Value-based pricing is a method of pricing products in which companies first try to determine how much the products are worth to their customers. The goal is to avoid setting prices that are either too high for customers or lower than they would be willing to pay if they knew what kind of benefits they could get by using a product.
Product-line pricing is a collection of product items that are related by the type of raw materials used, similar technology used, or merely as a common-sense grouping. A truly effective product line should be customer-focused and therefore should link to the range of needs of the particular segment/s targeted by the firm.
I would recommend product-line pricing because Tammy could exhibit their clothing by using a dummy with an outfit to bring out attention to their customers because products like clothing have a short life cycle; therefore they need to be sold as a collection than individually. As a children’s company, they can provide different ranges of clothing, i.e. for males, a matching shirt, jeans and matching shoes for a lower price as an outfit rather than buying each of them separately. Also, they could do promotional deals, i.e. buy 2 shirts and get one free is like an extra feature offered in order for the consumer to pay. This would draw enough interest in the primary product that the upgraded product (the free shirt) will be sold at a greater price based off in the basic primary product.
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References
Agriculture and Consumer Protection (2011) Marketing Information Systems [Online]. Available at: [Accessed: 21 May 2011]
Blurtit (2011) Magazines [Online]. Available at: [Accessed: 21 May 2011]
Kotler, P. (2009) Marketing Management. Indianapolis, Ind.: Prentice Hall; London: Pearson Education [distributor] 2009
Palmer, A. (2009) Introduction to Marketing: theory and practice. Oxford: Oxford University Press 2009
Tutor2u (2011) Consumer Behaviour [Online]. Available at: [Accessed: 21 May 2011]
