Price, Consumer Behaviour and Marketing Activities Essay

Ferraris are a luxury good, known for their performance and prestige with de considerationines of up to 500,000. In this study there will be an effort to evaluate if a Ferrari would still be as desirable if it was available at 20,000. To do this we must examine the relationship mingled with the behaviours of consumers and worth with a further examination of marketing activities. Firstly we need to define what consumer behaviour, monetary value and marketing activities are, by understanding the consumer we cannister then create products that meets their wishes and inescapably which is vital in achieving success. An investigation of the Utilitarian (rational) consumption model will fol baseborn allowing the identification of driving factors that affect consumers decisions.This allows the introduction of Pricing, viewing towards perceived quality and value. The contrasting Hedonic view allows the introduction of socio-psychological factors on consumer behaviour such as individual isedity and social class. We must appreciate our level of mesh with the product and what factors this may cause. This will allow us to fully appreciate whether the permute in price will result in the Ferrari still being as desirable as when it was at a racyer price.The study of consumer behaviour is the study of the processes involved when individuals or groups select, barter for, use or dispose of products, service, ideas or experiences to satisfy needs and desires (Soloman et al, 2002, p4). Therefore by studying what factors affect how and why consumers make these consumption decisions, marketers may be able to understand and therefore correct to these decisions. Consumer behaviour incorporates ideas from many different disciplines such as psychology, sociology and economics. (Schiffman and Kanuk, 2000), in a marketing context we take note of all these concepts and try to come to a balanced answer. A full examination of consumer behaviour manifestations at how consumers maximise their utility (satisfaction) based on a make up-benefit analysis of price and product scarcity, this was concept of the Utilitarian or rational way of behaviour. (Baines et al, 2011). The key determinant is that the functional benefits must be groovyer than the costs expended.Very often we would class the cost expended as being the price paid for an item, this is a difficult term to classify but is best explained by Baines, Fill and Page (2011), (p331) we consider price as the amount the customer has to pay or exchange to receive a good or service. This however fails to mention that how consumers perceive a price-as high, as low, as fair- has a strong influence on both leveraging intentions and get satisfaction. (Schiffman and Kanuk, 2000, p 144). For example a passenger who paid 1 for his Ryanair flight will feel much satisfied one who paid 71 due to purchasing at a later date. Here we look at whether a Ferrari is still as desirable at a lower price, to do this we mu st examine how customers affect to a change in prices, known in economic terms as the elasticity of demand. This measure how much demand will shift as a result of a change in price. To do this we can look at how in rational thinking consumers wish the benefits to outweigh the costs, the benefits of acquire a new Ferrari may be the quality and value you get for the price you paid.However as each person has a different wished level of quality we use the term perceived quality, often based on informational cues that they associate with the product (Schiffman and Kanuk, 2000, p145). Looking at the relationship between the perceived qualities and pricing often it is view that price reflects quality (Baines et al, 2011). This is challenged by the aspect we take our perceived quality from many cues, not just price, such as more extrinsic value such as brand image. Therefore it can be classes that consumers use price as a surrogate indicator of quality if they have smallish or no informat ion to go on (Schiffman and Kanuk, 2000, p150). The idea of brand image as a cue introduces the more hedonic concept of feelings, desires and perceptions into the consumers decision.As already discussed prices and quality are not measured in purely rational terms they encompass our perceptions of the product, price and measure of quality. Our perceptions are personal to us and it is vital for marketers to understand what factors may affect these perceptions. To do this we must understand how consumption may be reasonless (hedonic) involving the multi-sensory, fantasy and emotional aspects of consumers fundamental interaction with products (Soloman et al, 2002, p37). This view stresses that we purchase products because of how they make us feel or look to separates. This is sometimes classed as emotional or socio-psychological buying (Baines et al, 2011). The stark difference between utilitarian and hedonic consumption can be seen in the process of proposition acquisition.We draw up a motive for acquiring the product this may be out of functional (rational) or desire (irrational) means. We then gather information on the product drawing up a shortlist of brands, followed by an evaluation of the proposition. When it comes to the purchase of the item it is important to consider the personal immenseness a person attaches to a given communication message (Baines et al, 2011, p 90) this is classes as the persons involvement. As discussed in Fill (2009, p174) the characteristics involved with involvement can be seen in three phases, that of contextual elements, the influencers and the outcomes. Our level of involvement with a product can play a role in the price fairness we perceive for this product. At states of low involvement where the purchase suggests little assay to the consumer (Fill, 2009, p176) we require little information and use past experiences to make our decisions.However at high levels of involvement where, a consumer perceives an expected purchase that is not all of high personal relevance but also represents a high level of perceived risk (Fill, 2009, p 176), consumers will invest a great deal of time researching the item to reduce the perceived risk and will draw on extrinsic information and may draw more on hedonic terms. The relationship between price and involvement can be seen at both levels, at low levels price allows individuals to discriminate between low-involvement purchase decisions as price, packaging, and point of purchase displays and promotions work together to cue and stimulate an individual into trying a product. (Fill, 2009, p 180) At high levels of involvement price is not such a determining factor, with other factors playing a more significant role.Involvement does not juts affect the importance placed on price it also affects how a product is marketed to the consumer. This raises Ratchfords (1987) vistas of involvement being connectednessed with feeling and thinking. He sought to think how people sce ne about products and class them as high/low involvement and whether they were a product you bought rationally, what you thought of the product, or irrationally, how the product made you feel.In this instance the purchase of a Ferrari which would have been a high involvement/feeling product there is a need for emotional advertising (Baines et al, 2011, p91). With the shift in price it can be argued that the product has now became a high involvement/thinking product so more informative advertising is needed. Further associate between price, consumer behaviour and price can be seen in Fill (2009, p 181) arguing that at low levels of involvement consumers will decide upon their everyday brand until they notice a price promotion ,this then may be rifle there habitual buying pattern.As discussed earlier at high levels of involvement, more emotional and informative advertising is used there are many reasons for this including that factors such as lifestyle, social class and personality can all affect our hedonic consumption. In the sphere of personality there are three main approaches. Firstly the psychoanalytic approach Freud outlined how we are driven by subconscious drives in three parts our ID, Ego and Superego. It is argued that certain products are bought to fulfil our needs and urges such as the purchase of a Ferrari. The reduction of price may then not allow us to fulfil this urge. A differing approach is that of Trait theory, where we are classified by our types of personality. The purchase of a 500,000 car may be seen as fulfilling one personality type, by reducing the price to 20,000 the market segment may change and as car manufacturers market products on the basis of personality types (Baines et al, 2011, p96) this may change the whole marketing process and the way this process is presented.The final school of thought is the Self Concept Approach that we buy goods for the brand they represent and its relation to the buyers perception of their own sel f-concept or personality.(Baines et al, 2011, p96). In this model it may be argued that price is a determinant factor as we may buy to show we can pay high prices to others. Added to this is the idea that the brand gives you a self-image therefore a change in the price can affect the branding and may lead you to a different purchase decision. The price change may also change what reference group a Ferrari would belong to it may no longer be an aspiration so may become less desirable. The change in price may however be beneficial when looking at consumer behaviour in relation to lifecycle and social class. focus on lifecycle we hypothesize that people in the same stages of life purchase and consume similar kinds of products (Baines et al, 2011, p108), a500,000 Ferrari may fall into the stage of empty go up 1, where there is large disposable income, the shift downwards in price will allow a Ferrari to become more accessible to different stages of the lifecycle, olibanum making it mo re desirable to these groups. To conclude pricing, consumer behaviour and marketing activities are all linked. By determining whether the consumption is either rational or irrational we can investigate the level of involvement one may have with that product.This then allows us to look at how perceived values, price and quality link with the way the consumer behaves. As consumer behaviour study evolves from early emphasis on rational choiceto a focus on apparently irrational buying needs (Holbrook and Hirschman, 1982, p132) we are able to investigate other factors that may relate to consumer behaviour such as lifestyle, social class and what level of involvement is involved. As we can see in rational decisions there is a link between price and behaviour, with the benefits outweighing the costs, the same can be said at decisions of low involvement. However other extrinsic factors have to be considered when making higher involvement decisions. The decrease in price therefore may make t he Ferrari more desirable if you are making the purchase at a low involvement level however at a higher level other factors need to be considered to give a true representation of its desirability.Reference ListBooks and EbooksBaines, P. Fill, C. Page, A., (2011), Marketing, 2nd ed., Oxford Oxford University Press Fill, C. (2009), Marketing Communications Interactivity, Communities And Content., 5th ed., Harlow Pearson Education control Schiffman, L,G. and Kanuk, L,L. (2000), Consumer Behaviour, 7th ed., London Prentice Hall International (UK) Limited Solomon, M., Bamossy, G., Askegaard, S. and Hogg, M. K. (2006) Consumer behaviour a European perspective, 3rd ed., Harlow Financial Times. Lecture NotesC18FM1 2012/2013Online JournalsHolbrook, M, & Hirschman, E (1982),. The Experiential Aspects of intake Consumer Fantasies, Feelings, and Fun, Journal Of Consumer Research, 9, 2, pp. 132-140, Business Source Premier, EBSCOhost, viewed 22 October 2012.