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>.

Implications of integrating and/or fragmenting the Asian markets

There are numerous outcomes that can come from Old Spice engaging in either the integration or fragmentation of the Asian markets by the CPG manufacturer.

The integrated approach consists of companies such as Old Spice collaborating with a range of individuals such as vendors and business partners to find potential markets and cater the product to that region. CIO of British Airways Paul Corby describes the process as; “maintaining consistency of service, clarity of what the brand means, whilst being sensitive to a country’s needs”. Keeping this in mind when Old Spice enters the Asian market to distribute their various men’s health care products they need to ensure that they maintain their consistency across the board, and that they are considerate of the environment they are entering and how to cater for the demands in this region. Whilst Old Spices product of men’s health ware products are a universal necessity, the entry into the Asian market can be a complex equation. Whilst entry into such markets as Japan and China would mean access to a large population with a dispensable income, other countries such as Thailand or Indonesia have a vast poverty rate and low level incomes. Market Integration undertaken by Old Spice in this situation would be difficult but not unachievable, Old Spice would need to be sensitive to the cultural and religious differences between the two countries when undertaking promotional campaigns. For example such countries as China have restrictions on social media such as YouTube, the website plays a large role in the company's promotional campaigns as described earlier in the report, and would be a damaging blow on the success of Old Spice’s entry into this market. The implications of this would be that Old Spice would need to re-examine their marketing strategy in this country, but the nature of the integration system allows for companies to be faster and nimbler to changing opportunities. Whilst Old Spice’s prevailing social media campaign may be hindered, they can target other opportunities such China’s huge television audiences, with over 1 billion individuals (Wikipedia, 2016) tuning in to an array of programs.

Contrasting to this method the fragmented approach consists of organisations recognizing the diverse nature of the global market, and realising that whilst cultures, values and needs are different, they need to cater for their specific markets needs in order to be successful in a particular region. When engaging in this form of marketing Old Spice need to divide the market into four categories, psychographic, demographic, geographic, and behavioural segments (See Appendix 1.2). This allows for Old Spice to recognize and divide the market according to structure of the population, different countries acclamations, knowledge/usage/response to the product, and based on the various personalities of consumers. For example if Old Spice was to engage in this method they would need to gain an enormous and in-depth analysis of the chosen country, which would result in huge expenses due to the need to research the countries different segments appropriately.

Based on the implications discussed, Old Spice would be better suited to market integration as it allows for the company to seamlessly integrate and align their core values with that of their consumers and target market. This marketing technique is of the best interest to Old Spice as it will allow for the company to be more proactive rather than reactive to changing environments, to better maintain their products presence and dominance in the region.

Social media research facilitate the firm’s business growth in the global marketspace

Research of social media in the global marketspace can be beneficial for a business and its growth in the global market space. Statistics provided by Chaffey (2016) show that at January 2016, there were 2.307 billion active social media users across the globe, which is a 10% (219 million people) growth from January 2015. These figures show that social media is a profound channel of communication for businesses and a promising facilitator of growth. With social media use rapidly growing globally, businesses can capitalise on this to gain mass exposure for their brand. Social media research can help facilitate business growth by providing vital information to a firm’s strategy when choosing to actively advertise or participate in social media interactions. Old Spice can use social media research as a tool to obtain information about the male personal care market, such as personal behaviour of consumers, social behaviour, and the social aspects theory. More importantly, Netnographic studies and sentiment analysis.

Netnography is primarily a qualitative research method in studying behaviours of online communities and provides consumer insights in regard to a product or service.  “Netnography is essentially ethnographic research applied to the web” (Rocca, 2014). This research involves a business to follow conversations online between consumers about its products on its social media sites (Facebook, twitter etc.) and develop a data set that can be analysed for commonalities (What is netnography?, 2011) and using that information, the firm can determine common trends with certain cultures or with different age groups and adapt its strategy to further improve or maintain certain patterns of consumer reactions. By using netnographic as a research method, Old Spice can gain a better understanding of its consumers and how they receive the products being offered and their experiences with the products. For example, Old Spice may conduct netnographical research on its Facebook page, monitoring discussions on threads about its deodorants and may discover that some consumers react negatively to the odours that old spice offer and may discuss probabilities of new scents that they may desire or are using from other companies. Old Spice can take this information and discover a business opportunity to introduce new scents for its deodorants in addition to those currently on offer.

“Sentiment analysis and opinion mining is the field of study that analyzes people's opinions, sentiments, evaluations, attitudes, and emotions from written language.” (Liu, 2012). It is paramount that firms understand how consumers are talking about their products and understand how consumers are perceiving the brand and expressing that to other users or potential users. With the internet being the fastest and easiest way to express positive or negative opinions about products, it has become one of the main channels that consumers use to gain information about a product or brand pre purchase and use this information to come to a purchasing decision (Browning, 2013). Old Spice can use a sentiment analysis to track negative reviews, new product perception (suggestions for new products), brand perception (how consumers feel about Old Spice as a brand), and reputation management.

Social media research can facilitate business growth in the global marketspace by providing firms with the necessary information to further develop products and advertisements based on consumer opinions and input rather than guessing what consumers want.

References:

What is netnography?, 2011, video recording, SAGE Publications, Inc., Thousand Oaks, CA. Viewed 10 May 2016, doi:http://dx.doi.org.ezproxy.lib.swin.edu.au/null.

Liu, B 2012, Synthesis Lectures on Human Language Technologies, May 2012, Vol. 5, No. 1 , Pages 1-167

Browning, V. So, K. & Sparks, B. A. (2013). The Influence of Online Reviews on Consumers’ Attributions of Service Quality and Control for Service Standards in Hotels, Journal of Travel & Tourism Marketing, 30 (1-2) 23-40.

Two way dialogue between the brand and consumers

“Old Spice, a decidedly old-school Procter & Gamble brand, unleashed a social media blitz so profoundly brilliant that it not only changed the rules of social network marketing, it may have written them for the first time” (Reiss, 2010). The old spice commercial brand revolutionised the social media scene transforming the brand right before the customer’s eyes. Using comedic marketing techniques together with a ‘shirtless, magnetic presence of actor Isaiah Mustafa’, we get a sense of the overwhelming presence of sex appeal, from the ‘former NFL wide receiver who goes big--very big--here’. Mustafa’s opening tagline which captivates listeners from the very get go. “Hello, ladies,” he thunders. “Look at your man. Now back at me. Now back at your man. Now back to me” (Lippert, 2010).

Since social media has come onto the scene, big named brands have been trying to get in the limelight. They do this because Social media is an important aspect of any brand. According to HubSpot, “social media produces almost double the marketing leads of traditional outbound methods” (Edgecomb, 2013). But how does this connect to two-way conversation? Well Old Spice created the lead by broadcasting a very interesting and captivatingly funny television commercial, which then people took to social media to talk about. Old Spice used this opportunity to further communicate their brand. They did this by taking to Youtube with personalised video’s for consumers and also posting funny comments on Twitter (See Appendix 1.1).

In the first three months of 2010 Old Spice captured 75% of all conversations about the product. Half of this Buzz was generated by women. So from this the Response Campaign was born. In two and a half days a team of developers and producers and creative geniuses created 186 video responses to fans and celebrities about questions on Twitter, Facebook, Reddit and more. “On social media, the “Responses” campaign was deployed mainly through Twitter and YouTube and delivered customized tailored content in a flash” (Top Ad Campaign of the 21st Century, 2015). These videos were then posted on Youtube sparking a social-media sensation that spread through thousands of people. On one day alone the campaign received 5.9 million Youtube views, after a week that rose to over 40 million views.

“Unlike a one-way conversation, where companies dominate the conversation and don't really engage, a two way conversation allows companies to interact and engage with consumers in a direct and responsive way” (Edgecomb, 2013). It’s not all about forcing your message onto the public, Old Spice new this and took comfort in knowing that their product was seen as ‘Cool’, and ‘Funny’. The once traditional aftershave brand label with ties to grandparents was reinvigorated into their new body wash product. Old Spice was marketed to the ‘average Joe’, they wanted to have a conversation with their customers says Paula Borowska. ‘Old Spice wanted to create a relationship, which the value of is irreplaceable’. (Borowska, 2013). In the commercials, the Old Spice Man would ask the audience for requests, revealing that they cared for their customers. This contributed to the overall success and the viral status of the commercial. Within the first six months of ‘the man your man could smell like’, sales increased 27%. The commercial itself made over 1.4 billion impressions (Borowska, 2013). Alternatively online Old Spice's Facebook page has gotten more than 7,000 comments (and 13,000 or so "likes"). Look again, at YouTube, where it's been viewed more than 3 million times” (Lippert, 2010).

For two-way communication to work over the internet the company needs to first direct 80% of communication towards adding value, and brand building. ‘Examples of these include, sharing news, ideas, educating and creating delightful content. The other 20% of communication should be focused on endorsing products and upcoming events’ (Edgecomb, 2013). This in-turn makes the company more personal and actually embodies the company's culture onto the public.

References:

Lippert, B 2010, 'Man, This Man Can Sell', Brandweek, vol. 51, no. 9, p. 20

Edgecomb, C 2013, ‘Social Media Marketing: The importance of two way conversation’, Impact, https://www.impactbnd.com/blog/social-media-marketing-the-importance-of-a-two-way-conversation

'Top Ad Campaign of the 21st Century', 2015, Advertising Age, vol. 86, no. 1, p. 0018.

Borowska, P 2013, ‘What can Old Spice teach us about effective marketing?’, Viral Marketing, Creative Guerrilla Marketing, http://www.creativeguerrillamarketing.com/viral-marketing/can-old-spice-teach-us-effective-marketing/

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.  

Swatch Segmentation - By Mitchell Formica

The Overall Market

The overall market of watches in Australia is comprised of five different buyer groups that are all interested in the different types of watches found in the market. The First type of buyer is the young impulsive consumers, who are the first to purchase a new line of watch that is deemed to be the next hot product on the market.  The Second type of buyer are the ones who follow trends and just buy what every else is because it’s the latest thing on the market. Thirdly there’s the older group who simply have good taste and a sense of style and after that there’s the university students and college students who can afford wealthier brands of watches on the market,and finally there are the fashionable senior citizens who wear the next best thing on the market. (Bplans, 2012).

In Recent times Australia has seen a growth in the luxury watch marketincreasing to ‘25% from 2010 to 2012’. This staggering amount is due to the increase in wealth and the need for a high social status among people. However,this increase is still behind the rest of world although the need for watches will always be there as they are finding new and better ways to make and innovate watches today. (Stephen Lacey, 2013).

Segmenting the Watch Market

The segmentation of Watches in general is broken down into twomain parts. Demographic and Behavioural aspects that companies like Swatch and Rolex use to target and go to market with. When looking at thedemographicsegment for watches we focus on age and gender as they are the two main key areas. Age is an important variable when trying to match the style and look of the watch with the buyer and the age of a buyer can sometimes determine what their buying habits are like. For example a younger person would be more so attracted to a coloured watch and might have impulsive habits where-as an older person might like an more conservative look and might not want to buy it upon first look. The style and price of the watch is a key aspect nowadays, as a larger number of younger people are purchasing watch brands.  Gender is also a major aspect for manufacturers as they have to very different demographics to market towards. Male and female traditional watches are very different in style but nowadays watches can sometimes only be determined male or female by the colour. This is easy for manufacturers as they don’t have to change a lot on the design for both demographics. 

In the market today many organisations are changing the way they see the market, from a timeless keepsake to a more fashionable accessory. The watch industry has changed overtime due to the needs and wants of the buyers. Manufacturers are segmenting the market more diversely these days due to a larger population of possible targets. These targets or differences in people such as age, gender, behaviour or even psychographic needs are the reasons for a wider more diversified market. Nowadays we don’t just see the plain old business man wearing a stylish watch, but we also see the young hip culture wearing their own brands of watches too.

Manufacturers like Rolex and Swatch are finding it hard to compete with china’s watch market. China produces on average 663,000,000 million watches annually as compared to Swiss watches 29,200,000 million however, the Swiss watch makers still hold the largest percentage of market share as their watches are sold for $739 as compared to China’s watch price of $3 (Federation of the Swiss Watch Industry 2013).

‘Nowadays, Swatch is familiar with the fact that specialization in a chosen market is more profitable than trying to reach all consumers in the market. Therefore, the choice of its target market was made very carefully’ (Marketing Report Revised, 2010).The target customer of Swatch is from 18 to 30, even extends to middle-aged who advocated young mentality.  (Smiled, C et al, 2014). However, Swatch predominantly targets towards younger segments, primarily because of its youngish style (Dvog, 2012). Swatch focuses on both men and women. The colourful watches and different designs are sufficient to satiate the needs of customers. For example, men can choose the black watch and women can choose the pink one. There are also neutral styles for both men and women. (Smiled, C et al, 2014). I think Swatch should stay where they are in the segmentation strategy as they have clearly found a target market that suits their product, their segmentation strategy which comprised of opening up to a new market that watches has no previously marketed towards allowed them to find a gap in the market. This new gap created a stream of attention when Swatch made this decision in the mid-80s. ‘Their main goal was to produce an artistic, low-cost and high-tech watch. This turned out to be a very successful concept and they became the world’s largest watch producer. This position made it possible to extend their range of products and to use a differentiated strategy’ (Marketing Report Revised, 2010).Theirmain audience are enthusiastic and positive toward new product releases and will come back and buy the latest and best on the market(Dvog, 2012).People buy a Swatch because it is economical and in good quality, furthermore they buy it for fashionable decoration. Swatch breaks through the single functions of watch, using the combination of style and gorgeous colours to catch consumer’s eyes. (Smiled, C et al, 2014).

References:

Bplans, 2012, “Export Watch Manufacturer Business Plan”, Grutzen Watches, viewed 12 May 2014. http://www.bplans.com/export_watch_manufacturer_business_plan/market_analysis_summary_fc.php

Dvog 2012, “Swatch/Business and Industry”, Papercamp, viewed 12 May 2014

http://www.papercamp.com/essay/64290/Swatch

Federation of the Swiss Watch Industry 2013, “Wrist Watch Industry Statistics”, StatisticsBrain, viewed 12 May 2014

http://www.statisticbrain.com/wrist-watch-industry-statistics/

Marketing Report Revised 2010, English 2/Blogger, viewed 12 May 2014

http://english2pcs.blogspot.com.au/2010/05/marketing-report-revised.html

Smiled, C Lu, Z Cloud, G 2014, “The Segmentation Analysis of Rolex and Swatch”, Baidu, viewed 12 May 2014

http://wenku.baidu.com/view/9222daa6dd3383c4bb4cd24d.html

Stephen Lacey 2013, “Luxury watch sales are booming in Australia as $650,000 timepiece finds a home/Time Is Money”, Traveller, viewed 12 May 2014 http://www.smh.com.au/travel/experiences/luxury/time-is-money-20130419-2i4c8.html

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