PRODUCT

MANAGEMENT
Class 4 & 5
PM Syllabus Unit II

• Competitive Intelligence for Competitive Strategies

 Analyzing Category Attractiveness and Competitor Analysis
o Product Category Mapping (Aggregate market , category and
environmental factors)
o Assessing and analysing competitor objectives and strategy

 Analysing customers
 Who buys, what does the customer buy, Why does he buy and How does
the customer choose.
 Customer Participation
 Multiattribute Model of Decision making.
 Customer Value and Assessing the value of product/brand or service
 PM Syllabus Unit II
• Analysing customers
1. How does the customer choose?
2. Who buys
3. What does the customer buy
4. Why does a customer buy
5. Customer Participation
6. Multiattribute Model of Decision making.
7. Customer Value and Assessing the value of product/brand or service
How does the customer choose in B2C?
 yi ng
Bu
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Co Beh
How does the customer choose in B2C?
• Step 1 : Recognizing a problem or a need or an opportunity
• Step 2 : Information Search
• Step 3 : Evaluating brand alternatives
• Step 4 : Deciding what action to take
• Step 5 : Evaluating the purchase decision
How brand decision making works?
• Step 1 : Recognizing a problem or an opportunity
• Problem Recognition - Purchase decision begins with recognizing a problem that
creates a need/want or recognizing an opportunity that will provide a benefit not
previously thought of or considered possible
Understanding customer needs
• Marketers - > Maslow’s hierarchy of needs to analyse/determine which levels of
N/W their brands are most likely to satisfy.
• Products that focus on N/W :
1. Focus on the opportunity for a brand purchase
2. Focus on the problem that can be solved by the brand

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 CB & Consumer Motivation
Spontaneity, Creativity,
Acceptance, Wisdom,
Self
Respect, Self-esteem, Actualization
Status, Recognition,
Achievement, freedom Esteem Needs
Social, Belongingness,
Love, friendship, family
Emotional Needs
Personal Security, Health,
Employment resource,
Property
Safety & Security Needs

Basic Needs

Food, Shelter, Clothing, Sex, Work, Sleep, Rest

New sources of Consumer
Behavior/Needs
• New and atypical research
• Experience of developed countries
• Case studies
• Socio-cultural changes
• Easy availability of information
 How brand decision making works?
• Step 2 : Information Search
• Step 3 : Evaluating brand alternatives

Problem Solve the

Recognition Problem Search for
brand
Opportunity Take information
spotting advantage of
the
opportunity
Search for Develop
brand feelings
information about various
brands

Brand Getting the message past the senses into

Awareness the consciousness

Brand Understanding of a brand

Knowledge & it’s benefits
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Search for Develop
brand feelings
information about various
brands

Brand Getting the message past the senses into

Awareness the consciousness
+
Brand Understanding of a brand
Brand
Consideration
Knowledge & it’s benefits
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How brand decision making works?

• Increased BA & Increased BK -> Increased presence of a

brand in the customers information search.
• Common MC objective : Maintain Increased BA &
Increased BK in the target audience.

2 types of BA -> Recognition & Recall

Two types of BA

• Recognition : Identifying something & remembering

that you saw or heard of it earlier.
• Recall : A higher level of awareness , it is bringing back
something from memory.

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• In case recognition & recall does not give enough brand
information to make a purchase decision , past
experiences , personal sources (reference groups) ,
public sources (Consumer reports) , product
examination / trial ….

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Awareness Consideration Evoked
Set Set Set

Evoked
Set Group of brands that comes to the
mind when a person thinks of a product
category because the person has judged those
brands to be acceptable Or evaluated as
“Okay” to purchase.
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• Consumers casually build their Evoked Sets over a period of
time.

Increased
Evoked Set 1 , 2 , 3 , 4
share of
…………………7
wallet

Brand Loyalty

Marcom Getting a brand into the customers

Objective evoked set.
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How does the customer choose in B2C?
• Step 1 : Recognizing a problem or a need or an opportunity
• Step 2 : Information Search
• Step 3 : Evaluating brand alternatives
• Step 4 : Deciding what action to take
• Step 5 : Evaluating the purchase decision
Step 4 : Deciding what action to take

3 paths to decision making

• 1 Habit/Repeat path
• 2 Cognitive path
• 3 Emotional path

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3 paths to decision making

• 1 Habit/Repeat path
• Buy the brand that you bought before.
• Happens when brand meets or exceeds expectation.
• Shortest path

Recognize Make buying Review

P/O decision decision

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• This model of decision making Customer
• Brand selection becomes a habit Retention

• Repeat purchases
Brand
Loyalty

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• 2 Cognitive path
• Response is driven by reasoning judgement or knowledge.
Rationality Logic .
High involvement products
High element of risk
Expensive product
Unfamiliar product
Infrequently purchased products

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• Concern : Make a good decision
More information
More alternatives to be evaluated
More time

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• 2 Cognitive path : Buying a car

SWIFT DZIRE i20 Baleno Punch

CC
MILEAGE
Price
Comfort
Spares
Space
After
sales
Resale val

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• 3 Emotional path
• Decisions are driven by feelings and emotions.
• Buying decision is influenced by head & heart.
• Marketers assumption : Head Or Heart. Which one plays a
much more important role?

Coffee + Ambience +
Atmosphere + Service + Quality + Looks
Hygiene

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 Step 4 : Deciding what action to take

Evaluation Response Action

• Every response does not lead to action

• Customers may still be undecided on the purchase
• MC objective -> Motivate action

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 Step 5 : Evaluating the purchase decision
• The last step in brand decision making is brand evaluation by the buyer.

Satisfaction Repeat purchase

Evaluation Brand Loyalty
of Decision
Dissatisfactio Brand shifting
n
• Cognitive Dissonance.

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How does the customer choose in B2B?
Decision making unit

Initiators

Gatekeepers

DMU/
DMU/ Deciders

Buying
BuyingCenter
Center
Users

Buyers
Influencers
• Initiators : request the purchase item. Trigger the purchase process.
• Deciders : making the actual purchase decision. Key to the decision.
• Buyers : selecting the suppliers, managing the buying process, does not select the
actual product but greatly influences the parameters of that decision.
• Influencers : contributing to the formulation of product and supply specifications,
recommending vendors , evaluation of offerings
• Users : initiating as well as actually using the product. Involved in specification as
well as evaluation
• Gatekeepers : controlling type and flow of information
Product Management Class 6
Who buys?
• Segmentation -> B2C
• Segmentation -> B2B
What is a Market Segment?
• A market segment consists of a group of customers who share a similar set of
needs and wants.
Segmenting Consumer Markets

Geographic
Geographic

Demographic
Demographic

Psychographic
Psychographic

Behavioral
Behavioral
Demographic Segmentation
Age
Age and
and Life
Life Cycle
Cycle
Life
Life Stage
Stage
Gender
Gender
Income
Income
Generation
Generation
Social
Social Class
Class
The VALS Segmentation System
http://www.strategicbusinessinsights.com/vals/presurvey.shtml
What is VALS
• The basic tenet of VALS is that people express their personalities through their
behaviors.
• VALS specifically defines consumer segments on the basis of those personality
traits that affect behavior in the marketplace.
• Rather than looking at what people do and segregating people with like activities,
VALS uses psychology to segment people according to their distinct
personality traits.
What is VALS
• The personality traits are the motivation—the cause.
• Buying behavior becomes the effect—the observable, external behavior prompted
by an internal driver
VALS segments
• VALS places adult consumers into
one of eight segments based on
their responses to the VALS
questionnaire. The main dimensions
of the segmentation framework are
primary motivation (the horizontal
dimension) and resources (the
vertical dimension).
VALS segments  Innovators are successful,
sophisticated, take-charge,
people with high self-esteem.
Because they have such
abundant resources, they
exhibit all three primary
motivations in varying degrees.
They are change leaders and
are the most receptive to new
ideas and technologies.
Innovators are very active
consumers, and their purchases
reflect cultivated tastes for
• Image is important to Innovators as an expression of their taste, independence, and
personality.
• Innovators are among the established and emerging leaders in business and government,
yet they continue to seek challenges.
• Their lives are characterized by variety.
• Their possessions and recreation reflect a cultivated taste for the finer things in life.
VALS™
Innovators
Motivated by ideals, achievement,
and self-expression
• Possess both high income and self-
esteem
• Change leaders most receptive to
new ideas and technologies.
•Active consumers: buy upscale
products and services.
VALS segments
 Thinkers are motivated by ideals.
They are mature, satisfied,
comfortable , and reflective
people who value order,
knowledge, and responsibility.
They tend to be well educated and
actively seek out information in
the decision-making process. They
are well-informed about world and
national events and are alert to
opportunities to broaden their
knowledge..
• Thinkers have a moderate respect for the status quo institutions of authority and
social decorum, but are open to consider new ideas. Although their incomes allow
them many choices, Thinkers are conservative, practical consumers; they look for
durability, functionality, and value in the products they buy.
VALS™
Thinkers
Motivated by Ideals
Mature, satisfied, comfortable, and
reflective.
 Well-educated and informed.
 Moderate respect for the status
quo, but will consider new ideas.
 Practical consumers: look for
durability, function, and value.
VALS segments
 Achievers
Motivated by the desire for
achievement, Achievers have
goal-oriented lifestyles and a
deep commitment to career and
family. Their social lives reflect this
focus and are structured around
family, their place of worship, and
work. Achievers live conventional
lives, are politically conservative,
and respect authority and the
status quo. They value consensus,
predictability, and stability over
risk, intimacy, and self-discovery.
• With many wants and needs, Achievers are active in the consumer marketplace.
Image is important to Achievers; they favor established, prestige products and
services that demonstrate success to their peers. Because of their busy lives, they
are often interested in a variety of time-saving devices.
VALS™

Achievers
Motivated by their desire for
achievement
• Goal-oriented lifestyles and deep
commitment to career and family.
•Live conventional lives, respect
authority and the status quo.
•Image is important and they value
established, prestige products that
demonstrate their success.
VALS segments
 Experiencers are motivated by
self-expression. As young,
enthusiastic, and impulsive
consumers, Experiencers quickly
become enthusiastic about new
possibilities but are equally quick
to cool. They seek variety and
excitement, savoring the new, the
offbeat, and the risky. Their energy
finds an outlet in exercise, sports,
outdoor recreation, and social
activities.
• Experiencers are avid consumers and spend a comparatively high proportion of
their income on fashion, entertainment, and socializing. Their purchases reflect
the emphasis they place on looking good and having "cool" stuff.
VALS™

Experiencers
Motivated by self-expression
•Young, enthusiastic, compulsive
consumers
•Seek variety, excitement, and new
opportunities.
•Avid consumers who spend a
comparatively high proportion of
their income on fashion,
entertainment, and socializing.
VALS segments
 Believers
Like Thinkers, Believers are
motivated by ideals. They are
conservative, conventional
people with concrete beliefs based
on traditional, established codes:
family, religion, community, and
the nation. Many Believers express
moral codes that are deeply rooted
and literally interpreted. They
follow established routines,
organized in large part around
home, family, community, and
social or religious organizations to
which they belong
• As consumers, Believers are predictable; they choose familiar products and
established brands. They favor national products and are generally loyal
customers.
VALS™

Believers
Motivated by Ideals
•Conservative, conventional people
with concrete beliefs.
•Deeply rooted moral codes.
•Follow established routines
organized around home and
community.
•Favor national products and are
loyal customers.
VALS segments
 Strivers
Strivers are trendy and fun loving.
Because they are motivated by
achievement, Strivers are
concerned about the opinions
and approval of others. Money
defines success for Strivers, who
don't have enough of it to meet
their desires. They favor stylish
products that emulate the
purchases of people with greater
material wealth. Many see
themselves as having a job rather
than a career, and a lack of skills
and focus often prevents them
• Strivers are active consumers because shopping is both a social activity and an
opportunity to demonstrate to peers their ability to buy. As consumers, they are
as impulsive as their financial circumstance will allow.
VALS™

Strivers
Motivated by achievement
•Trendy and fun loving.
•Concerned about the opinions of
others.
•Money defines success.
•Active consumers who are as
impulsive as their financial
circumstances will allow.
VALS segments
 Makers
Like Experiencers, Makers are
motivated by self-expression.
They express themselves and
experience the world by working
on it-building a house, raising
children, fixing a car, or canning
vegetables-and have enough skill
and energy to carry out their
projects successfully.
• Makers are practical people who have constructive skills and value self-
sufficiency. They live within a traditional context of family, practical work, and
physical recreation and have little interest in what lies outside that context.
• Makers are suspicious of new ideas and large institutions such as big business.
They are respectful of government authority and organized labor, but resentful of
government intrusion on individual rights. They are unimpressed by material
possessions other than those with a practical or functional purpose. Because they
prefer value to luxury, they buy basic products.
VALS™

Makers
Motivated by self-expression
•Express themselves and experience
the world by working on it.
•Practical people who have
constructive skills and value self
sufficiency.
•Buy basic products and prefer value
to luxury.
VALS segments
 Survivors (Strugglers)
Survivors live narrowly focused
lives. With few resources with
which to cope, they often believe
that the world is changing too
quickly. They are comfortable with
the familiar and are primarily
concerned with safety and
security. Because they must focus
on meeting needs rather than
fulfilling desires, Survivors do not
show a strong primary motivation.
• Survivors are cautious consumers. They represent a very modest market for most
products and services. They are loyal to favorite brands, especially if they can
purchase them at a discount.
VALS™

Survivors
No strong primary motivation
•Few resources
•Primarily concerned with safety and
security
•Cautious consumers
•Loyal to favorite brands, especially if
they can purchase at a discount.
 Behavioral Segmentation
Decision Roles Behavioral Variables
•Initiator •Occasions
•Influencer •Benefits
•Decider •User Status
•Buyer •Usage Rate
•User •Buyer-Readiness
•Loyalty Status
•Attitude
The Brand Funnel Illustrates Variations in
the
Buyer-Readiness
• Aware
Stage
• Ever tried
• Recent trial
• Occasional user
• Regular user
• Most often used
Figure 8.3 Behavioral
Segmentation Breakdown
Segmenting for Business Markets
Demographic
Demographic

Operating
OperatingVariable
Variable

Purchasing
Purchasing Approaches
Approaches

Situational
Situational Factors
Factors
Personal
Personal
Characteristics
Characteristics
 Steps in Segmentation Process
Needs-based segmentation

Segment identification Marketing-Mix

Segment attractiveness Strategy

Segment profitability

Segment positioning

Segment acid test

Effective Segmentation Criteria
Measurable
Measurable

Substantial
Substantial

Accessible
Accessible

Differentiable
Differentiable

Actionable
Actionable
 Demography Geography Psychography Behaviour

• Starbucks
• Louis Phillipe
• Kelloggs
• Maggi
 yi ng
Bu
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 CB & Consumer Motivation
Spontaneity, Creativity,
Acceptance, Wisdom,
Self
Respect, Self-esteem, Actualization
Status, Recognition,
Achievement, freedom Esteem Needs
Social, Belongingness,
Love, friendship, family
Emotional Needs
Personal Security, Health,
Employment resource,
Property
Safety & Security Needs

Basic Needs

Food, Shelter, Clothing, Sex, Work, Sleep, Rest

Consumer Perception, Attitudes, and Learning
Mind
Psychological
Sight Screen
Motivation Perception
Personality Attitude
Sound
Education
Beliefs
Taste Habits
Family
Touch Country
Culture
Community
Smell
Emotions

Attenti
Interest Desire Action
on
 CONSUMER ATTITUDE
FORMATION AND CHANGE
Attitude – What can Marketers do about it?

 Marketers would want to know what is driving

consumer behaviour?
 Attitude research – strategic marketing solution
 Proposed new product idea, target audiences reaction
to new promotional theme, reaction to a proposed
change in the packaging
 What Are Attitudes?
A learned predisposition to behave in a
consistently favorable or unfavorable manner
with respect to a given object.

A learned predisposition to behave in a

consistently favorable or unfavorable manner
with respect to a given object.
The attitude “object”

• Includes specific consumption-or marketing related

concepts such as product, product category ,brand,
service, possessions, product use, price, package… etc.
• An attitude “can be conceptualized as a summary
evaluation of an object”

Consumer attitude towards online shopping

Consumer attitude towards mobile services
Attitudes are a learned predisposition

• Attitudes are learned

• Attitudes are formed as a result of prior direct
experience with the object, word-of-mouth,
information acquired from others, or from
advertising.
• Favorable or unfavorable
• Attitudes have a motivational quality -> for or
against
Attitudes have consistency

• Attitudes are relatively consistent

• Despiteconsistency, attitudes are not permanent and
can change.
Attitudes occur within a situation

•Events or circumstances that, at a

particular point in time, influence the
relationship between an attitude and
behavior.
Structural Models of Attitudes

•Tricomponent Attitude Model

•Multiattribute Attitude Models
•The Trying-to-Consume Model
•Attitude-Toward-the-Ad Model
A Simple Representation of the Tricomponent Attitude
Model

Cognition : The
knowledge and
perceptions that are
acquired by a
combination of direct
experience with the
attitude object and
related information
from various sources
 Tri component Attitude Model
• Cognition : Comparative
data, Facts and figures, Price,
others experiences.
A Simple Representation of the
Tricomponent Attitude Model

• Affect :
• A consumer’s emotions
or feelings about a
particular product or
brand
• Favorable or Unfavorable
• Good or Bad
• Emotionally charged
states
A Simple Representation of the
Tricomponent Attitude Model
• Conation:
• The likelihood or
tendency that an
individual will
undertake a specific
action or behave in a
particular way with
regard to the attitude
object
• Actual behavior itself
• Consumers intention
to buy
Multiattribute Attitude Models

• https://www.youtube.com/watch?v=70-Fpp
9J0CY
• Attitude models that examine the
composition of consumer attitudes in
terms of selected product attributes or
beliefs
Multiattribute Attitude Models

The attitude-toward-object model

Attitude is function of evaluation of
product-specific beliefs and evaluations
Multiattribute Attitude Models

The attitude-toward-behavior model

Is the attitude toward behaving or acting
with respect to an object, rather than the
attitude toward the object itself
The Trying-to-Consume Model

•An attitude theory designed to account

for the many cases where the action or
outcome is not certain but instead reflects
the consumer’s attempt to consume (or
purchase).
Attitude-Toward-the-Ad Model

•A model that proposes that a consumer

forms various feelings (affects) and
judgments (cognitions) as the result of
exposure to an advertisement, which, in
turn, affect the consumer’s attitude
toward the ad and attitude toward the
brand.
Attitude-Toward-the-Ad Model
Issues in Attitude Formation

•How attitudes are learned

•Conditioning and experience
•Knowledge and beliefs
•Sources of influence on attitude formation
•Personal experience
•Influence of family
•Direct marketing and mass media
•Personality factors
 Strategies of Attitude Changes
1. Changing the Basic Motivational Function
2. Associating the Product with an Admired
Group or Event
3. Resolving Two Conflicting Attitudes
4. Altering Components of the
Multiattribute Model
5. Changing Beliefs about Competitors’
Brands
Functional Theory of Attitudes

UTILITARIAN
VALUE-EXPRESSIVE FUNCTION:
FUNCTION:
Expresses consumer’s
Relates to rewards
values or self-concept
and punishments

EGO-DEFENSIVE
KNOWLEDGE
FUNCTION:
FUNCTION:
Protect ourselves from external
Need for order, structure,
threats
or meaning
or internal feelings
Four Basic Attitude Functions

• The Utilitarian Function

• We hold certain brand attributes because of it’s utility
• Product is helpful in the past -> +ve attitude
• Showing the consumer a utilitarian purpose -> can
change customer from unfavorable to favorable
Four Basic Attitude Functions

• The Ego-defensive Function

• Consumers want to protect their self-images from inner
feelings of doubt
• Ads for cosmetics and fashion clothing acknowledge
this need-> increase their relevance thus a favorable
attitude
Four Basic Attitude Functions

• The Value-expressive Function

• Attitudes are an expression or reflection of consumers
general values, lifestyle, and outlook
Four Basic Attitude Functions

• The Knowledge Function

• Individuals have a strong need to know and understand
• Marketers satisfy the need to know and improve
consumers attitudes towards brand by emphasizing
advantages over competition