Ducati - Consumer Decision Making Process

The Consumer’s decision making process is based upon how they conduct themselves when purchasing products or services. The decisions they make are laid out into five steps. Before the steps however, there are some other factors that can be taken into account. The first factor to take into account is psychological factors. This influences the consumer’s decision and is based upon a person’s personality traits. It’s these traits like self-confidence, dominance, sociability, defensiveness, adaptability, and aggressiveness that help decide whether the consumer will go through with the decision making process in the first place. The traits also help determine different feelings toward products and services and ultimately shape what type of buyer you are. “The relationship of basic personality variables to buying behavior has been investigated across a fairly wide range of products and services. In probably the best-known such study, Franklin B. Evans used the Edwards Personal Preference Schedule to test for personality differences between Ford and Chevrolet owners. His basic conclusion was that personality is of little value in predicting whether an individual owns a chevrolet or Ford” (Thomas et al., 1969). Although Evans discovered that there was little contribution from a personality point of view; researchers later on found that individual personality types would have a profound impact when conducting the decision make process. When comparing the Ducati Superbike to its competitors we get a similar picture to Evan’s study with the Ford and the Chevrolet. With the Ducati However, there is a predominantly different target market. The Ducati is a top of the line motorcycle that attracts thrill seekers all around the world who want to feel the roar of the italian made engine. Straight off the cuff Ducati customers are prepared to pay more for a premium product as they feel the need to want to push their thrills to the limit.

The buyer decision making process is split up into 5 steps. Need recognition, Information Search, Evaluation of Alternatives, Purchase Decision, and Post-Purchase Behaviour. This is the order in which a consumer will typically run through when making a purchase of some sort. Needs Recognition is the first step in the consumer decision making process and occurs when the consumer feels that are not satisfied and a need must be filled. Consumer’s feel that they need products and services in their life to fulfil certain needs, such as entertainment and pleasure. The first stage is considered ‘the problem stage’, as the need or want is missing and the product or service is ‘the fix’ to the problem. Someone who has a strong desire to buy the Ducati Superbike will be willing to pay extra because they feel that their need is worth the cost of the bike’s superior design and quality. Once the consumer has figured out that they need the Super Bike they move onto the second stage of the buyer’s decision making process. Information search is the second stage and consists of the need (Ducati Superbike) and also the alternative options or competitors in the market. In this case the Ducati is a speciality item that does not have many competitors, however, you can compare the Ducati Superbike to a Supercar like a Ferrari Lamborghini. If someone is willing to pay a large amount for the superbike they are probably also likely to purchase a fast car as well. This alternative product has a similar need to the Ducati Super bike.

The third stage involves evaluating the options or alternatives and outlines the differences of each options and the benefits of each as compared to each other. “So how does a consumer choose among these alternatives? The truth is that there are several processes at work inside the consumer's mind, forming beliefs and attitudes about all of the products to choose from. However these processes all "evolve" based on the individual's buying situation. The situation evolves from the set of attributes the consumer is choosing to evaluate products by” (The Market Media Life, 2015). “An Evaluation of Alternatives is the stage of the buyer decision process in where a consumer uses the information gathered in the Information Search to evaluate alternative brands in the product category” (The Market Media Life, 2015). When it comes to buying a Ducati you cannot undermine their superior quality and performance. “The Ducati Superbikes are the most advanced, most powerful twin-cylinder motorcycles ever built. They are the product of a team of designers and engineers who have combined their Ducati Motogp and World Superbike technologies to create the finest sport bikes in the world. From race-level engine specifications to World Championship-winning traction control, the results are pure excellence” (Fraser Motorcycles, 2011).

The fourth step of the consumer buyer decision making process is the actual purchase decision itself. The decision comes down to the previous three steps deducting your options down to one and considering you're motivated enough and still have the need to buy the purchase will take place. “The decision will depend on the information and the selection made in the previous steps based on the perceived value, product’s features and capabilities that are important to the consumer” (The Consumer Factor, 2011). The actual final decision still depends on other external factors like the quality of service from the place of purchase, the return policy and also any existing promotions for the product. Ducati is renowned for their great customer service. “In April of 2015 was the best sales month in Ducati's history. The company delivered 7,309 units to customers. For that kind of duty, the Ducati delivers the best combination of style and fun at a reasonable cost” (MacDonald, 2015).

After the purchase there is a post purchase evaluation which looks at the “original needs (those who caused the buying behaviour). And whether he has made the right choice in buying this product or not” (The Consumer Factor, 2011). The consumer will most likely feel a sense of satisfaction for the product and the choice, or otherwise feel disappointed with the product. If the product has satisfied the need and the consumer is satisfied with the final product then he or she will minimise the stage of information search. This is because there is no need to go back and look for other products to fulfill that need. However, if the consumer was dissatisfied then they will need to repeat the 5 stages of the consumer buying decision process with alternative products so that they can fulfill that need properly. “Positive or negative, consumers will also be able to share their opinion on the brand. Whether in their family or by word-of-mouth. Or on a much broader scale now with social networks or on consumer product review websites. A tendency not to be overlooked because now with the Internet, an unhappy customer can have a strong power to harm for a brand” (The Consumer Factor, 2011). The importance for companies like Ducati to have the proper awareness of influencing the consumer in a positive manner is paramount to the buyer’s final decision. If the customer service is sub-par then the customer might think twice before purchasing the product. “That’s why it’s important for companies to optimize the customer experience, a guarantee an efficient customer service and a specific call centre are some of the assets that can be developed to improve post-purchase behaviour if there is any trouble with the product” (The Consumer Factor, 2011). Companies with a successful history like Ducati are renowned for their products quality and unique design. Ducati makes some of the best looking motorbikes with the most powerful engine in the world. This sets them apart from their competitors and allows the consumers to be sure they are purchasing a higher quality motorbike for the higher premium. “At Ducati, interest in business-to-business trade is slow because 85 percent of Ducati components are self-designed and ordered from suppliers in the Bologna region. But a percentage of parts, including spark plugs, chains, tires and lamps, may be purchased by joining Moto clusters, an online procurement system for the motorcycle industry that was set up last year by Giuseppe Narducci, Ducati's former head of purchasing” (Tagliabue, 2001). The Ducati Traction Control (DTC) system further underlines Ducati's technology flow from racing to production and demonstrates how solutions developed for the track can be applied to enhance safer performance on the road (Fraser Motorcycles, 2011).




References:

"Ducati." Marketing 2 Nov. 2011: 16. Academic OneFile. Web. 4 Sept. 2015.

Fraser Motorcycles, 2011, About Superbike: Ducati Superbike, viewed 2 September 2015, <http://www.frasermotorcycles.com.au/ducati/superbike>.

Hoffman, E. (1988). The right to be human: A biography of Abraham Maslow. Jeremy P. Tarcher, Inc.

Kenrick, D. T., Neuberg, S. L., Griskevicius, V., Becker, D. V., & Schaller, M. (2010). Goal-Driven Cognition and Functional Behavior The Fundamental-Motives Framework. Current Directions in Psychological Science, 19(1), 63-67.

McLeod, S. A. (2014). Maslow's Hierarchy of Needs. Retrieved from www.simplypsychology.org/maslow.html

Tagliabue, J 2001 "How Ducati roared onto the Internet. (marketing motorcycles)." New York Times 18 Apr. 2001: H14. Academic OneFile. Web. 7 Sept. 2015.

The Consumer Factor, 2011, The 5 stages of Consumer Buying Decision Process, viewed 2 September 2015, <http://theconsumerfactor.com/en/5-stages-consumer-buying-decision-process/>.

The Market Media Life, 2015, Marketing 101: The Buyer Decision Process, viewed 2 September 2015, <http://marketmedialife.blogspot.com.au/2013/03/marketing-101-buyer-decision-process.html/>.

Thomas S. Robertson and James H. Myers, 1969, 'Personality Correlates of Opinion Leadership and Innovative Buying Behavior', American Marketing Association, vol. 6. no. 2, pp. 164-168.

MacDonald, S 2015, Rev Zilla: Why the Ducati scrambler is the bike for you, viewed 2 September 2015, <http://www.revzilla.com/common-tread/the-ducati-scrambler-is-the-best-bike>.

Microsoft Lumia - Pest Analysis by Mitchell Formica

Macro force analysis (Pest Analysis)

Political

Microsoft is impacted by many political factors including government, regional and international levels. Some of the activities that Microsoft take part in can actually be thought of as a political issue. “Most notably, Microsoft has attracted the attention of governments and political parties due to antitrust-related issues. A recent probe by China’s State Administration for Industry and Commerce into the ways Microsoft distributes its Internet Explorer browser and Windows Media Player and sells its Office and Windows software in China can be mentioned as a relevant example of impact of a political factor” (Dudovskiy, 2015).

Economic

Microsoft’s economic factors are based around two things. The first is the global economic crisis of 2008, which caused a huge blow to the world economy. Under the impact of the economic crisis, Nokia’s share price fell sharply which just made a great offer for Microsoft to purchase as a low cost. The second is America’s tertiary industry occupied for about 78 % of GDP, which the contribution of high-tech owned the most, the technology is crucial for the US which is the power source of economic development (Microsoft Corporation’s Strategy, 2015).

Social

Nowadays people are relying more and more so on mobile phones. Microsoft is gearing towards this change by implementing there software upon the phone so that people do not have to use their laptop devices for bigger programs like the office suite. The mobile phone is become more than just a symbol of communication. It is now a multi-functional tool that enhances our day to day lives in many ways. It is also affecting the consumer in psychological ways as well, as we move into more dependence on phones we lose the skill of remembering multiple things or decrease in communication as we look to our phones instead of our peers.

Technological

“Walking in front of others is the only way to survive in the high-tech field and the fierce market competition. High-tech products have rapid upgraded and short life cycle, it inspires higher requires to enterprises’ special application software and ability of continuing to update the hardware configuration. Nokia as a former mobile phone giant obviously hold numerous patents, specialized technical personnel and technical reserves the phone which is an advantage to help Microsoft to develop on smart-phone industry” (Microsoft Corporation’s Strategy, 2015).  

References:

Dudovskiy, J 2015, ‘Microsoft PESTLE Analysis’, Research Methodology, http://research-methodology.net/microsoft-pestel-analysis/.  

‘Microsoft Corporation’s Strategy’ 2015, http://studymoose.com/microsoft-corporations-strategy-essay.

Is Henri Fayol’s management theory relevant today?

Henry Fayol is seen as a French pioneer, an industrialist thinker who took the world by storm with his management theories. Throughout the twentieth century and to this day, his ideas and theories are still well known and are used by management text authors and teachers who strive to keep the heritage of management alive. They use his theories and keep teaching the same business morals and knowledge that was originally taught by Fayol and many others, but in revised ways so that it fits in with current day situations and scenarios.

The business world of today comprises of many factors that managers need to take into account before stepping up to the task of running a department, or an organisation has a whole. These factors control how well an organisation runs and operates, and over time managers develop skills and knowledge based on the work of theorists such as Max Weber and Abraham Maslow who were motivators and pioneers of management principles in the 19th century. Among these theorists you will also find Henri Fayol, a strategist who was responsible for the corporate turnaround and who founded the six functions of management and 14 principals of management. He was instrumental in demonstrating new ways for mangers to guide their employees towards being more efficient in achieving goals. These theories are still used today in contemporary management all around the world. Even though over the years changes have been made to the theories and so today we see original six functions of management have been modified to become the five functions of management. The classic theories have been adapted to suit the new class of workers and their needs in the workplace.

The studies of management based on Henri Fayol’s theories are still relevant in today’s society, and are evident in almost every organisation. In almost every job there is an employer who delegates tasks and an employee to complete them. Fayol’s principles are relevant to the way in which these tasks are completed and the communication methods used to delegate them. In present time, managers have become less authoritative and are moving towards a newer style of management that is based on more two-way, collaborative communicate to employees. In recent times employees are allowed to make a bigger contribution to how tasks are completed and are even allowed to make decisions on behalf of the management. This move is a result of adaption and modification of management styles over time. Although changes have occurred, Fayol’s teachings still have significant relevance in the work place today.

Segmentation, Targeting and Positioning Analysis - On Apple iPhone 6

The main benefit that apple products deliver is communication and the search and need for information. Apple is able to satisfy both of these benefits through the iPhone 6. They market the iPhone as a sleek easy to use accessory that can deliver benefits and fill such voids in their consumers lives, such as communicating through email, social media, texting and talking as well as internet based searching and overall providing entertainment to a consumer. These benefits all fall under the product and market category of smart phones. Apple main basis for the iPhone segmentation include behavioral and psychographic. They are segmented into those who want to use the phone for self expression, convenience and also those consumers who are geared toward the technological capabilities of an iPhone. Apple is able to capture these segments and markets the iPhone to satisfy all of these benefits.  Behavioral segmentation also ties in with that of the loyalty status that Apple has been able to achieve with their most loyal customers being referred to as “iSheep” for unquestioningly following apple (David Glance). Apple geographic segmentation involves retail stores in all highly populated cities around the world and 88 official country websites, therefore allowing for a global presence, though mainly metropolitan. 

The iPhone is generally targeted to almost every demographic, its ability to customize the apps to suit your needs and interests made it desirable to all genders, ages, ethnicities, occupations and financial statuses.  The iPhone 6 and iPhone 6+ are the first iPhone’s to be marketed differently, in regards to the buyer’s social/professional working needs. iPhone user’s and Apple fan boys, as they are called fit into a very wide and diversified group of people. The demographic of iPhone’s or the iPhone 6 in particular relate to the overall education and income of the person the most (See Appendix Table 3.1 for information on demographics of iPhone users).

The diversity of the product makes it hard to pinpoint a certain group or niche that just use the phone, as nowadays most people will have a Smartphone product like the iPhone 6. Apple products, including the iPhone 6 are carefully positioned in order to allow customers to migrate up the product chain (Kate MacKenzie). As new products are released, such as the iPhone 6, features are updated and technology advances, positioning in consumers’ minds that apple is at the forefront of innovation. It has become an essential lifestyle product although it still keeps that luxurious consumer product value through its higher price, therefore appealing to a wealthier and high socio-demographic market, and allowing for consumers to position it in such a way. Therefore it’s positioned to appeal emotionally and both functionally to consumers as it is often marketed presenting features that can be used in order to achieve day to day challenges (Strategyn). 

Marketing Mix Strategy Analysis - On Apple iPhone 6

Product 3.1

The iPhone in general offers a wide range of benefits to the consumer such as web browsing, access to your emails or even taking photos or recording moments of your life to share the experience with others.  In addition, the iPhone provides entertainment from listening to music or downloading apps (games, restaurant finders, productivity apps).  The iPhone 6 would be classified as a consumer specialty product, bought to satisfy an individual’s personal needs or wants.  The iPhone 6 having covered the personal need for social networking, personal and work organization make it convenient for the consumer.  It also provides simplicity and customization used to reflect the particular individual which makes it cater to all ages, ethnicities and occupations.  The quality has improved tremendously, from previous iPhone’s being created from plastics and infusing metal and glass, apple has deviated from that and shifted to a design that is pure of metal, (anodised aluminum and stainless steel), providing that smooth and premium feel.  

The iPhone offers consistency in its features, but what makes it differ from other smart phones is its exclusive IOS operating system and apps only accessible on the iPhone (iTunes and apple store).  The packing of the IPhone 6 is simplistic indicative of a Smartphone which has yet be customized according to the personality and lifestyle of that customer who purchases the item.  Apple’s product line consists of the iPhone’s, iPad’s and Mac books.  The product line is narrow to ensure exclusivity thus lower risk of alternatives.  Apple intends to only introduce the iPhone and its variants (modifications) in the Smartphone market to ensure that cannibalism does not occur.  Apple is the iPhone company, generating 53% of its revenue and 70% of its profits from the iPhone thus only focusing on the iPhone line due to its established reputation and potential for maintaining profits.  Therefore, apple seeks to expand in other markets thus the creation of the apple watch.  

Currently the iPhone life cycle has fallen between the growth stage and maturity stage.  In terms of its growth stage, the demand of the iPhone series is growing significantly therefore producing greater profits (See Appendix Table 3.2 for figures on sales for iPhone’s).  It led to greater global market share and net profit.  However it can also be said that the iPhone series has reached the maturity stage due to the annual product changes the iPhone undergoes which is more towards cosmetic changes than substantial. With the IPhone series, the diffusion of innovations is widely consisted of the late majority.  Consumers being influenced through word of mouth and social influence of friends or family who already own the iPhone. Apple had never intended to sell their iPhone’s at a low price.  The primary objective was to sell a phone which provided a great experience through differentiation and uniqueness.  Initially from a profit oriented pricing objective through selling a small number of products which were designed with innovation shifted to a more sales oriented pricing objective.  This allowed apple to focus on gaining market share regionally and globally.

Price 3.2

Apple uses a skimming pricing strategy. Selling the iPhone 6 at a high price attracts premium customers where they seek to be unique by purchasing products with the highest price and therefore gaining a status symbol.  Apple selling their iPhone 6 at a high initial price attracts first those who are willing to pay at a high price (innovators group).  Once the first set of customers are satisfied, the price is gradually lowered in order to making it more affordable and thus catering to a larger consumer base.  The disadvantages of the skimming pricing strategy, that if price were lowered abruptly, the innovators group will feel ripped off and therefore generate negative publicity hovering around Apple’s skimming pricing strategy; it may spark a pricing discrimination.  The objective of lowering prices of their iPhone’s after the first round purchases usually from the innovator groups may be seen as price discriminating.  Although the practice isn’t illegal, it may trigger a PR backlash.  As mentioned above, the first wave of buyers may feel rip off thus reflecting badly on Apple.  There’s a possibility that it may result in a negative image for apple (See Appendix Table 3. 3 for figures on capacity vs. price).

Place 3. 3

Apple Inc uses a number of suppliers and logistical components to get their final product to the consumer.  However, Apple uses a slightly different route than most companies.  Supply Chain Planning at Apple Inc is the classic example of New Product Development Process (NPD).  It's the integration of R&D, Marketing and various functions under supply chain management (Suplychainopz, 2015).  Apple uses a five stage model from the start of a product to completion.  The first is research and development, which Apple takes very seriously spending more than 2 Billion yearly.  Next is conceptual training which takes some time to get right, Apple focuses heavily on the design of the product to make it look its best.  The channel structure for Apple consists of two parts direct and indirect.  The direct channel is part of the online web store that Apple provides which customers can access and buy straight from their home and get the product delivered to their door (Supply Chain Picture See Appendix 3. 4).                                                                                         

Whilst the indirect channel consists of sourcing, manufacturing, warehousing, distribution and retail where customers can go to their nearest store and buy it from there.  More than 50 percent of their workers exceeded these rather low limits.  In fact, working conditions at Foxconn, Apple’s partner for final assembly and some core components, have been bad enough that Apple has gotten a bit of a black eye from press reports of accidents, suicides, and labour strife (Banker, 2012). The distribution intensity for Apple is very high as their products have a huge hype before they are lunched therefore Apple needs to produce the new product in large quantities before shipping so as not to run out in retail stores or online delays in shipping (See Appendix Table 3. 5 for sales figures for first quarter).  Apple has 93 suppliers; dealing with all of these is not an easy task however Apple manages to keep track of every stage of the process through to completion.  Some of Apple’s channel relationships are Foxconn who handle final assembly of the products and Elpida who create flash memory for iPhone’s (Banker, 2012).

Promotion 3. 4

Promotions and advertisement for the majority of Apple’s products, including each generation of the iPhone tend to follow a similar pattern that focuses on endorsing the latest Apple product as being ahead of the game, at the fore front of any brand new technology and the most streamlined, efficient and modern product on the current market place.  Apple’s leading objective in regards to promotion and advertising of the latest Apple product, such as the iPhone 6 and 6 Plus, is set it apart from other Smartphone’s, tablets or personal computers on the market by suggesting it’s superiority over competitive brands and products as “the next evolution of… phone” (Sloane 2014). Under the umbrella of ‘Promotions’, there are 5 elements that are used including Advertising, Direct Marketing, Public Relations, Personal Selling and Sales Promotion.  Advertising, in regards to the iPhone 6 and 6 Plus focused on how the iPhone can be used for all types of activities, such as photography, and not strictly as a mobile phone device, as seen in the “Shot On iPhone 6” advertising campaign, where billboards all over the world revealed stunning images that were taken by those who own an iPhone 6 (Apple Insider 2015).  

This advertising campaign concentrated on the idea that the iPhone 6 is a Smartphone for everybody, with unlimited options for your own interests. Direct Marketing when it was first introduced focused on sending brochures in the mail so individuals could send order forms in the mail, or later order products over the phone instead of visiting a physical store to purchase them.  Over the years this has naturally adapted to Direct Digital Marketing where individuals get emailed offers in place of traditional mail and purchase products over the internet instead of over the phone or via mail order (The Free Dictionary, 2015).  Apple has taken advantage of the online buyer/consumer culture by launching an online store where you can buy all of their products, including the iPhone 6 and 6 Plus (Apple Store 2015). The third element of Promotions is Public Relations.  As Apple is already a globally recognized brand, almost any new product they produce is guaranteed to be newsworthy, however Apple’s Public Relations team still ensure that what they want to be known about the product will be, for example the iPhone 6 and 6 Plus’ larger screens and different shape to the previous generations of iPhone’s.  

Apple’s outstanding use of the media, whether it be print (magazines, newspapers), electronic (TV, radio) or social media (Facebook, Twitter) helps attach the audience to the product almost immediately, communicating what they need and how the iPhone 6 and 6 Plus cater to those needs.  By connecting directly to the consumer, Apple’s Public Relations team promote all of the goals that are wanted within advertisings, such as portraying it as top of the range software and creating a hype for the product to be launched around the world (CP Communications, 2012).  Personal Selling, also known as face to face selling (Business Dictionary, 2015) is used by Apple, particularly in their Apple Stores when an employee doesn’t have brand competitor’s products within the store to contend with for the customers purchase. The last element of Promotions is Sales Promotion, one element that is not particularly used by Apple.  Sales Promotion refers to any deals, sales or discounts on products.  Apple uses a “no-discount pricing strategy” (Farfan, 2015), which means Apple products, tend to be the same price online, in an Apple Store or in a store with various brands no matter what.  Deals are generally only given to products when an updated version of the product is being released, for example the iPhone 5 going down in price slightly with the release of the iPhone 6 and 6 Plus.  The higher the price of a product generally exhibits an idea of sturdiness in regards to the product, and Apple has the backing power to use the no-discount pricing policy as it is their customer service after the initial purchase of the product that validates the hefty price tag to consumers (Brindha, 2014). Integrated Marketing Communications (IMC) is an approach to promotions where different forms of marketing are used separately, but support the goals and objectives of the other marketing campaigns (Business Dictionary, 2015).  Apple uses IMC exceptionally due to their attention to detail shown within their products, and advertisement campaigns.  Apple focuses on things becoming simpler, not more complicated, which is seen in their minimalistic product design and marketing campaigns (Brindha, 2014).  All aspects of marketing the product are seen as individual strategies, however all work together to support one another, for example the App Store supports the iPod app, which in turn supports the iTunes store.  Integrated Marketing Communications adds another level to Apple’s promotions and marketing, which is what they aim to show within their campaigns for their many products including the iPhone 6 and 6 Plus.