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A Basic Model Of Consumer Decision Making Marketing Essay

The demographic environment is thought as the demographic factors that marketers used to analyze market styles by segmenting the targeted society. BusinessDictionary. com, 2013. It consists of six factors that happen to be; population ethnic mixture, education levels, people size and rate of development, age distribution and migration shifts and features.

According to information, Singapore Residents Progress Rate has lowered from 0. 9 to 0. 8 from 2010 to 2011 (Office Of Statistics Singapore [DOSS], 2012). However, the expansion rate is insignificant when compared with the Non-Residents which grew from 4. 1 to 6. 9 ( DOSS, 2012). As the majority of the non-residents are personnel that cater to the low end careers in Singapore, they don't earn high income and may find Singapore Airlines (SIA) very costly. Therefore, SIA notice as an opportunity to release a budget flight service to focus on this group.

The age circulation of the Singapore society also affects the marketing strategies of SIA's decision to launch Scoot. Singapore's society percentage for a long time between 45 and over accounted for 38. 4% (DOSS, 2012). That is a significant final result and this implies a trend to an ageing population. It is projected that by 2030, you will see a 2. 1 replacement percentage to each resident above get older 65 (Our Demographic Problems And What These Mean To Us, n. d. ). Therefore, in comparison to SIA, the lower cost fare of Scoot is able to focus on this band of consumers as many of the aged are retirees who might not exactly have the ability to spend the money for standard trip fare. This can be credited to reasons such as not having stable incomes, high medical and living expenses. The other band of people that may opt for cheaper solution fares are the young adults. They are simply aged between 15 to 34 and accounted for 28. 4% of the population (DOSS, 2012). They symbolize a chance for Scoot as their commitments to family, work and analysis means they could have to regulate their expenses. Thus, they may have lower purchasing electricity and might struggle to find the money for SIA's travel fares.

In addition, foreigners are projected to take up 50 % of Singapore's population by 2030 (Singapore Population Fifty percent Foreigners By 2030, 2013). This development can be attributed to the migratory activity of foreigners from growing countries such as India and China to Singapore. They come from different parts of China and India and present an opportunity for Scoot. Thus, this provides a wider targeted consumer group for marketers to market their services. Citing from the research study, it says that "Scoot, which will remain competitive in the growing low-cost travel sector, will fill up a distance that now exists within the group. " This band of commuters may travel back to their own countries on a yearly basis for festive periods or visiting of family members and would not desire a pricey trip to exotic countries for holiday seasons such as Europe or Japan. Therefore, SIA launched Scoot to provide low priced vacations for these increasing targeted consumers to increase its success. To further maximize its market potential, the case study also states that "Scoot can do longer plane tickets, to Australia, China, India and eventually Europe". Thus, SIA aims to create more opportunities by increasing services to the group.

The political-legal environment is defined as the legal and political factors that have an effect on marketing decision making strategies. The factors are; changes in business legislation and regulations, the number and power of special interest categories and market reforms and problem. The recent growth of special interest organizations over time may have added to SIA's decision to launch Scoot to serve the lower income consumers' needs. The groupings such as Circumstance (Consumer Connection Of Singapore) acts to protect the consumers' interest, inform and inform the consumers. In addition, it ensures business ethics within the company by advocating fairer legislation. Since SIA is an exclusive competitive firm without government intervention, it has to maintain regular good services to consumers. Since such consumerist activity is increasing and SIA being one of major airline company, it'll need to establish connections with consumers and formulate plans to increase consumers' interest and reduce customer claims.

With regards to the political-legal factor, Singapore is liberal in its aviation insurance policy and has continue to adopt this plan recently by signing contracts with an increase of countries such as United Kingdom, United States, United Arab Emirates, New Zealand and other countries (The impact of international air service liberalization on Singapore, 2009). This enables Scoot using its bigger aircrafts to take a flight to more locations and longer distances where other budget airline competitors cannot reach.

The monetary environment is defined as the economic factors that impact the marketing decision making strategies. The economic factors include income distribution and savings, credit debt and credit availability of the population. According to reported, the income levels of all classes have increased over the years. The median regular monthly household income has increased from 5, 600 SGD per month per household in 2010 2010 to 6, 310 SGD monthly per household in 2011 (DOSS, 2012). Although median income has increased, most the increment is due to a raise in the income for the higher income group. The middle and low income groups might possibly not have higher income and might even be worse off due to inflation. The abundant are getting wealthier and the poor are receiving poorer. Hence SIA can cater to the wealthier consumers who want premium flights services and Scoot can focus on people who need to travel at a budget air travel (Scoot: Asia's Newest Low-Cost Flight, 2012).

The other factor is Singapore population's cost savings, arrears, and credit availability. The Singapore current economic climate has contracted in the 2nd 1 / 4 in 2011 induced by the monetary crisis that occurred in 2008 (Singapore may avoid technical tough economy but downside hazards remain, 2011). This uncertain prospect of the market combined with inflation rate at 5. 7%, (Global recession likely, Singapore says, 2011) may have added to SIA's release of Scoot. With higher inflation rate and slower financial progress, people may worry about the future and cut back on unnecessary expenses. Consumers might want to travel by other cheaper alternatives hence, demand for SIA's air travel services will decrease.

However, the trend of Singapore's future current economic climate and inflation rate remains uncertain as economists have forecasted that for 2013, median inflation rate for CPI would be high at 3. 0% (Monetary Specialist Of Singapore, 2012). Singapore's GDP forecasted expansion is expected to be between 1% to 3% indicating a sluggish economic expansion ( Singapore market expected to develop 1-3% in 2013, 2012). Thus, most the folks in Singapore are most likely going to save lots of more and spend less on luxury goods and services like expensive air fares that will lead to a reduction in the demand for SIA flights. As disposable income reduces, more people would opt for budget airlines such as Scoot, Tiger Airways and Jetstar Asia for air visiting. This presents a chance for Scoot to expand its services. However, it could be a danger if rivals' charges of seat tickets are comparatively lower and market continues to reduce in the foreseeable future.

Question 2

All companies which render services to customers should be highly sensitive to their own service quality and achieved level of customer satisfaction. Service quality is the totality of features and characteristics of something or service that carry on its capacity to satisfy explained or implied needs (Kotler, Keller, Ang, Leong, & Tan, 2009). Companies' shows may flunk, meet or go over customers' objectives. Therefore, companies' performances and customers' targets determine customer satisfaction which is customer's emotions of pleasure or disappointment resulting from comparing a product or service's recognized performance (or results) with regards to his / her objectives (Kotler et al. , 2009).

A business entity's main aim ought to be to generate consistent revenue for its shareholders or owners. Suffered profitability is achieved when companies deliver revenue streams that exceed the price streams of appealing to, offering and servicing the customers over time (Kotler et al. , 2009). Scoot is a budget airline which strives to be lasting, at the same time retaining and growing its market share through guaranteeing desired service quality and reaching client satisfaction.

For cost lowering purposes, Scoot emphasizes to its customer that they are no-frills. With removing certain features that are prominent in full-service airlines, it is inevitable that customers can make comparisons and mark down the service quality of Scoot's flights. Scoot has made conscious attempts to distance itself from its father or mother company - Singapore Airlines (SIA), as well concerning create deeper impressions in its customer that it is a budget air travel, by featuring its cabin team to wear casual crew uniform (Kaur, 2011). By using Boeing 777 aircrafts, Scoot provides its customers with more lower leg space and rooms in the aircrafts to go. Thus giving Scoot a comparative edge over its budget airlines, which usually operate smaller aircrafts.

Air travelers are anticipated to become more hands-on when they travel on budget airlines. With no dedicated customer support platform open to these air travelers, they have to find their way the budget airlines' websites and online systems themselves, in order to obtain information or make amendments to their bookings. With large pool of available resources and experience, SIA has an efficient and detailed online system for its customer. With the introduction of SIA, Scoot can discuss with SIA's service providers on how to design and execute a user-friendly online system, which is affordable at exactly the same time.

Even though Scoot will not respond to claims from its customers, they must observe the claims and use corrective and precautionary measures, in order to keep up or even improve service quality. Also, Scoot can provide Feedback varieties to its customers. This gives quick and appropriate information on the service quality, at relatively low costs.

Like most if not all budget airlines, Scoot does not offer flight deals which include free in-flight entertainment, food and beverages. With the limited services provided, it is difficult for Scoot to achieve client satisfaction. Therefore, Scoot must concentrate on constantly enhancing its performances, as well as to mitigate the objectives of its customers. SIA is world renowned to provide great services to its customers, therefore meeting or even exceeding the anticipations of its customers. Scoot can leverage on SIA's encounters and methods, as well as the trainings regimes provided to its staff, in order to achieve similar results and have a pool of well-trained staff.

Scoot has vigorously tried to shed the public impression of it being a subsidiary of SIA. The online marketing strategy of Scoot has to continue in this collection, that is to distance itself from high quality, full-service carriers and to be in the same market as other budget airlines. Scoot can distance itself from full-service companies, by having its customer to board and alight from its aircrafts in the same airline terminals also employed by other budget airlines. This may also prevent customers from using "full-service carrier" goals, to guage the performances of Scoot.

Scoot will be able to achieve fuel-efficiency by using Boeing 777 aircrafts. This allows Scoot to get lower costs than its rivals who are employing more aged and less fuel-efficient aircrafts. With higher savings from less petrol ingestion, Scoot should pass on some of the cost-saving advantages to its consumers. For example, Scoot are able to lessen its air ticket prices due to lessen costs. This will enable Scoot to keep up and capture a greater market talk about through securing clients from its challengers.

With the improvement in technology and the popularized use of interpersonal advertising, many companies have turn to social marketing and internet to market their products and services. Scoot has positively attempted to portray a energetic and young image. Therefore, they must further bolster this image, as well as to reach out to better market of prospects, by discovering and using the social media program. For example, Scoot can engage fresh-faced foreign stars with positive images who are lively on the communal media platforms, to be their spokespersons in locations where they wish to gain better market show. This couples with an increase of internet marketing spending, could assist Scoot to attain out to greater variety of air travelers who are not based in Singapore.

Budget airlines like Scoot face mammoth duties in achieving desired degrees of client satisfaction and service quality, while trimming costs and making the most of earnings to ensure suffered profitability. With concerted attempts in providing basic and necessary services, as well as enhancing performances and lowering goals, Scoot can secure its customer basic and reduce operating costs which will in turn lead to Scoot interacting with its primary goal of earning regular revenues and profits.

Question 3(a)

With the option of a wide range of selections for air traveling, which includes budget and full-service airlines, air travelers will make thorough comparisons to select the most value for money option for leisure travel and business purposes.

The method from knowing a need to gratifying it is shown in Figure 3. 1 which really is a form of cognitive learning that depicts the five-stage decision making process model. The definition of consumer learning is "the process where individuals acquire the purchase and utilization knowledge and experience they apply to future related behaviour" (Belch, Belch, & Guolla, 2011).

Figure 3. 1 A simple model of consumer decision making. (Source)

According to Bauer, "Consumer habit will involve risk in the sense that any action of any consumer will produce effects which he cannot assume with anything approximating certainty, plus some of which at least are likely to be annoying" (1960, p. 24). Thus, effects and uncertainty are the two basic factors that are being used to determine the level of identified risks. Bauer strains that his main concern is merely with subjective (recognized) risk rather than "real life" (objective) risk. This is because consumers will only buy a product that he thinks to be good and trustworthy.

Perceived risk might not be actual risk but the amount of risk a consumer feels that could be incurred when he purchases a certain product from a certain supplier (Kotler et al. , 2009). The potential risks include practical, physical, subconscious, financial and time dangers.

Functional risk occurs when the merchandise is not up to consumers' recognized degree of service. As Scoot is a subsidiary of Singapore Airlines (SIA), the majority of us will expect it to be exceptional. However, Scoot is a budget air travel and hence, like all other budget airlines, its priority is to provide cheap air transport. The basic air fare covers only transportation from one indicate another. So, one has to pay for whatever is desired. The utilitarian procedure is to ensure that all costs are reduced to the minimum amount which allows the air travel to be low, yet, profitable. Thus, consumers who expect regular amenities on budget airlines will be greatly disappointed.

If a person believes that eating a certain product can be bad for him or his family members, then this is a physical risk recognized and he would probably never ingest that product. When venturing with budget airlines, the usual complaint would be limited space and uncomfortable seats. When one has to sit in a cramped airplane with little moving space for a few hours, it could be very uncomfortable and may cause backaches and other small pains or even death (space adaption symptoms). These are physical risks of exploring with budget airlines that travellers should avoid.

Psychological risk is thought as "the product that influences the mental well-being of the user" (Kotler et al. , 2009, p. 186). Some traditional consumers may believe that traveling in bigger aircrafts would provide them with more sense of security and comfort. Hence, they would avoid by going by budget airlines such as Scoot.

If one acquisitions a product and it is defective, he will incur financial losses when he must pay extra money to correct or find a replacement. Hence, the price exceeds the worthiness of the product. If one intents to travel by budget air travel, then he must be prepared to carry extra cash in case he gets jammed in a international country when his airline flight is delayed or cancelled. It is because budget airlines do not provide other recompense besides ticket refund. That means, one needs to pay for whatever expenditures incurred, whether it be lodging or purchase of another solution to fly to the next destination. It really is assumed that budget air plane tickets experiences frequent delays and cancellations. Thus, it is commonly believed that you need to avoid budget flights to avoid financial risks.

Moreover, with repeated cancellations and delays for budget flight is time squandered. One must wait around indefinitely or buy another air ticket, which requires more time and effort. Furthermore, you can miss an important appointment which can have undesirable results.

Question 3(b)

In order to beat the perceived risks, marketers should know that consumers are worried about risks that they believe are true rather than necessarily real. As per Gordon Allport (1935), "Attitudes are learned predispositions to respond to an subject in a constantly favorable or unfavorable way. ". Consumers hold attitude toward a lot of things that are vital to the marketing consultancy. Moreover, their behaviour indicate their thoughts, assessment and behavioral tendencies towards a product. Therefore, we have to change the consumers' attitude regarding budget airlines.

To overcome identified hazards, Scoot could release statistics of the amount of customers' satisfaction, of light delays, cancellations and the amount of money saved compared to the cheapest trip available. This is done through the marketplace research process in which marketers could identify the situation caused by the five recognized risks and provide decision alternatives. When consumers realise that the level of statistics shown is really similar to other regular carriers, plus the incentive of the amount of money saved, they will feel more motivated to travel on Scoot. The proven performance will help to build customers' self confidence in Scoot's capacity to meet their expectations. Hence, the recognized functional risk is resolved.

The development of competitors such as Tiger Airways, Jetstar, Airasia and Webjet may affect consumer's purchasing decision with extremely competitive prices and numerous attractive special offers. Scoot marketers could identify the consumers' needs and would like and apply differentiation strategies through product improvement, better services and well trained employees. Some of the frequent grievances while flying budget airlines are poor services, cramped areas and uncomfortable recliners. Scoot uses product differentiation by offering wider areas in planes and convenient car seats. Also, there are pictures of the aeroplanes interior uploaded in their website to allow visitors to see their offerings. Additionally, on-line discussion boards or "memo planks" on Scoot's website allows consumers who have used Scoot's service to post their reviews and share their encounters. This online marketing strategy could alleviate the traditional consumers' psychological risk. Included in these are good and bad activities and tips when soaring Scoot. The reviews and control system also allows Scoot to observe its results such as client satisfaction and retention rate and sales. This can also allow Scoot to adapt to a change in consumers' objectives such as better services or technological access. In this manner, Scoot has addressed perceived physical hazards of the consumers.

The purpose of using budget airlines is to save lots of money. It defeats the reason if consumers have to pay extra money to be able to continue with the voyage. However, periodic delays are inevitable and the most detrimental case situation would be jammed without accommodation. Since budget airlines support with minimum expenditures, it is impossible to make allowance for lodgings. Thus, Scoot will make a list of cozy edges or cafes that offer comfortable resting venues at least or cost-free for the travellers as a guide. Hence, the consumers will not need to invest extra money on contingency plans. This will certainly reduce financial threat of a consumer.

It holds true that delays and cancellations are possible when traveling on budget plane tickets. This is because budget journey operates like a bus and vacations the identical path to and fro often daily. Slight delays could occur but, after an extended day, the minor delays become significant when many delays build up into major time lapse and even cancellations. However, delays may possibly also eventually any regular air plane tickets. So, it should be made very evidently to individuals that punctuality is very important and any delays will influence subsequent flights. As Scoot target consumers are the young and young in mind, a comic strip could be utilized to demonstrate this situation to make it fun however, not offensive.

In conclusion, recognized dangers are what consumers believe that are true however, not necessarily real. In order to defeat these perceptions effectively, we have to understand their concerns and help them to correct their perceptions and gain a good Scootitude. Hence, we gain attention from hesitant potential prospects and preserve current customers.

Question 4

Every business needs effective strategies to meet ever changing requirements of the market. For just a business to be lasting, it needs to meet its customers' expectations and create a lasting relationship. This implies it needs to satisfy the customers' recognized value (CPV) which is "the difference between your prospective customers' evaluation of all the benefits and all the costs of the offering and the recognized alternatives" (Kotler et al. , 2009, p. 133). Hence, long-term strategies must be executed to cultivate strong customer relationships.

Customer romantic relationship management (CRM) is essential in cultivation of long term customer relationship. It really is thought as "the process of carefully managing complete information about individual customers and all customers "touch factors" to maximize customer loyalty" (Kotler et al. , 2009, p. 144). You will find four ways to good CRM that happen to be: identify its potential customers and customers, differentiate customer in conditions of the needs and their value to the company, interact with specific customers and customize products, services, and messages to each customer (Kotler et al. , 2009).

When reserving air tickets on-line, consumers are already supplying their personal stats to the airlines. The info includes: gender, time frame of labor and birth, billing address, nationality, passport quantity and repayment methods. We can use the client data base to recognize the various market types and establish effective communications to the individual consumers. Through such data mining, we can identify the craze and sections to forecast the needs and wants of different consumers. The consumers could be segmented into different nationality, gender and age group distribution.

With the marketplace segmentation, Scoot could distinguish customers in conditions with their needs and principles brought to the business. Scoot has limited financial resources, so it must appeal to more good customers, and preserve profitable existing customers. To be able to build customer devotion, Scoot need to use special benefits for permanent customers.

The main purpose for venturing with budget flight is to save lots of money. Customers will have their personal accounts with Scoot after successful purchase and they will have the ability to access this bill to check their trades. Hence, Scoot can focus on this point by allowing consumers understand how much they may have saved by frequently traveling with Scoot. The total amount saved will be translated to reward points for prize redemptions. Devoted customers will be able to redeem rewards with Scoot and its own overseas lovers like getting free vehicles at pick up points and drop off at desired places. This can make customers feel privileged they are rewarded for his or her devotion. This also serves as a one-stop complete portal that provides cost benefits to these loyal customers by giving cheap lodging options and low priced solution prices to tourist destinations far away, offered by working lovers of Scoot. This is in line with Scoot's goal of providing low priced and no-frills travel for consumers and maximise customer identified value.

Scoot must interact with specific customers in order to understand the requirements of different customers and put into practice changes where required. However, a budget flight is working within budget constraints; hence it will not be viable to maintain a person service office to amuse consumers' enquiries and complains. Arranging fees or administrative fees usually incurred when online transactions are performed. In order to encourage consumers to fill questionnaires and review forms designed by Scoot, Scoot may offer customers waiver of the fees when they book air tickets, after the completion of the questionnaires and review forms. With incentives, consumers will be more prepared to provide feedbacks which can help enhance Scoot's services.

With data accumulated from these surveys, Scoot can customise marketing communications to each customer by mailing them information only for what they want in. This allows Scoot to recognize and differentiate customers in conditions of their needs and desires. These include special offers for several locations that are appealing, special occasions in certain countries and new interesting happenings in certain countries. So, consumers won't feel frustrated when receiving email trailers but will be anticipating what Scoot can provide them.

In finish, while Scoot can lookout for potential consumers and offer them some encouragement to be its customers, the focus is still to establish and strengthen long-term romantic relationship with current customers. So, Scoot needs to identify prospects and customers to distinguish their choices and allocate resources effectively to improve profitability and sustain customers simultaneously. Connection is essential to understand customers' requirements that may allow Scoot to customize their services to devoted customers who'll continue steadily to patronize Scoot using its incentives and loyalty programmes which maximizes recognized customer value.

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