Business Model

CHAPTER NOTES

I.          Business Models

            * Material following the opening feature on Amie Street.

            1.  A business model is a firm’s plan or diagram for how it competes, uses its

                 resources, structures its relationships, interfaces with customers, and creates

                 value to sustain itself on the basis of the profits it earns.

            2.  It’s important to understand that a firm’s business model takes it beyond its

                 own boundaries.  Almost all firms partner with others to make their business

                 models work.

            3.  There is no standard business model, no hard-and-fast rules that dictate how

                 firms in a particular industry should compete. 

            4.  The term business model innovation refers to initiatives such as that

                 undertaken by Michael Dell that revolutionized how products are sold in an

                 industry. 

            5.  The development of a firm’s business model follows the feasibility analysis

                 stage of launching a new venture but comes before the completion of a

                 business plan. 

                 a.  If a firm has conducted a feasibility analysis and knows that it has a product

                      or service with potential, the business model stage addresses how to

                      surround it with a core strategy, a partnership model, a customer interface,

                      distinctive resources, and a approach to creating value that represents a

                      viable business model.

                 b.  At the business model development stage, it is premature for a new venture

                      to raise money, hire a lot of employees, establish partnerships, or

                      implement a marketing plan.  A firm needs to have a business model in

                      place before it can make additional substantive decisions.

A.    The Importance and Diversity of Business Models

1.      Importance of Business Models

a.        Having a clearly articulate business model is important because it

does the following:

-          Serves as an ongoing extension of feasibility analysis.

-          Focuses attention on how all the elements of a business fit together and constitute a working whole.

-          Describes why the network of participants needed to make a business idea viable would be willing to work together.

-          Articulates a company’s core logic to all stakeholders, including the firm’s employees

                           

b.       Once a firm’s business model is clearly determined, the entrepreneur

 should diagram it on paper (to the extent possible), examine it, and

 ask the following questions:

-          Does my business model make sense?

-          Will the businesses I need as partners participate?

-          If I can get partners to participate, how motivated will they be? Am I asking them work for or against their self-interest?

-          How about my customers? Will it be worth their time to do business with my company?

-          If I do get customers, how motivated will they be?

-          Can I motivate my partners and customers at a sufficient scale to cover the overhead of my business and make a profit?

-          How distinct will my business be? If I’m successful, will it be easy for a large competitor to step in and steal my idea?

-           

2.      Diversity of Business Models

a.       There is no standard business model for an industry or for a target

market within an industry.  For example, there are five distinct ways

that online companies make money.  These approaches, shown in

Table 6.1, are the core piece of their respective company’s business

models.

b.      There are always opportunities for business model innovation.  Think of Netflix in movie rentals, Wikipedia in encyclopedias, and Curves

International in fitness clubs. 

II.        How Business Models Emerge

1.      The value chain is a model developed by an academic researcher that many businesspeople as well as entrepreneurs use to identify opportunities to enhance their competitive strategies.

2.      The value chain is the string of activities that move a product from the raw material stage, through manufacturing and distribution, and ultimately to the end user.

3.      By studying a product or service’s value chain, and organization can identify ways to create additional value and assess whether it has the means to do so.

4.      Value chain analysis is also helpful in identifying opportunities for new businesses and in understanding how business models emerge.

5.      A firm can be formed to strengthen the value chain for a product, however, only if a viable business model can be created to support it.

III.       Potential Fatal Flows of Business Models

1.      Two fatal flaws can render a business model untenable from the beginning.

a.       A complete misread of customers.

b.      Utterly unsound economics.

IV.       Components of an Effective Business Model

            A.  Core Strategy

                  1.  The first component of a business model is the core strategy, which

                       describes how a firm competes relative to its competitors.  The following

                       are the essential components of a firm’s core strategy.

                       a.  Mission Statement.  A firm’s mission, or mission statement, describes

                            why it exists and what its business model is supposed to accomplish

                       b.  Product/Market Scope.  A company’s product/market scope defines

                            the products and markets on which it will concentrate. 

                       c.  Basis for Differentiation.  It is important that a new venture differentiate

                            itself from its competitors in some way that is important to its

                            customers.  If a new firm’s products or services aren’t different from

                            those of its competitors, why should anyone try them?

                            i.   From a broad perspective, firms typically choose one of two generic

                                 strategies (cost leadership or differentiation) to position themselves

                                 in the marketplace.

                            ii.  Firms that have a cost leadership strategy strive to have the lowest

                                 costs in the industry, relative to competitors’ costs, and typically

                                 attract customers on that basis.

                            iii. In contrast, firms with a differentiation strategy compete on the basis

                                 of providing unique or different products and typically compete on

                                 the basis of quality, service, timeliness, or some other important

                                 dimension. 

            B.  Strategic Resources

                 1.  A firm is not able to implement a strategy without resources, so the

                      resources a firm has affects its business model substantially.  The two

                      most important strategic resources are discussed below.

                      a.  Core Competency.  As defined in Chapter 3, a core competency is

                           a resource or capability that serves as a source of a firm’s competitive

                           advantage over its rivals.  Examples of core competencies include

                           Sony’s competence in miniaturization, Dell’s competence in supply

                           chain management, and 3M’s competence in managing innovation.

                       b.  Strategic Assets.  Strategic assets are anything rare and valuable that

                            a firm owns.  They include plant and equipment, location, brands,

                            patents, customer data, a highly qualified staff, and distinctive

                            partnerships.

                 2.  Companies ultimately try to combine their core competencies and

                      strategic assets to create a sustainable competitive advantage.  This

                      factor is one to which investors pay close attention when evaluating

                      a business.

            C.  Partnership Network

                 1.  A firm’s network of partnerships is the third component of a business

                      model.  New ventures, in particular, typically do not have the resources

                      to perform all the tasks required to make their businesses work, so they

                      rely on partners to perform key roles.

a.       Suppliers.  A supplier (or a vendor) is a company that provides parts

or services to another company.  Almost all firms have suppliers who

play a vital roles in the functioning of their business models.

                      b.  Other Key Relationships. Along with its suppliers, firms partner with

                           other companies to make their business models work.

                           i.  There are risks involved in partnerships, particularly if a single

                               partnership is a key component of a firm’s business model. 

                           ii. Many partnerships fall short of meeting the expectations of the

                               participants for a variety of reasons.  

           

C.     Customer Interface

1.  Customer interface – how a firm interacts with its customers – is the fourth

     component of a business model.  The type of customer interaction depends

     on how a firm chooses to compete.

     a.  Target Market.  A firm’s target market is the limited group of

          individuals or businesses that it goes after or tries to appeal to.

          i.  The target market a firm selects affects everything it does, from

              the strategic assets it acquires to the partnerships it forges to its

              promotional campaigns.

b.      Fulfillment and Support.  Fulfillment and support describes the way

a firm’s product or service “goes to market” or how it reaches its

customers.  It also refers to the channels a company uses and what level

of customer support it provides.

c.       Pricing Structure.  A third element of a company customer interface is

its pricing structure.  Pricing models vary, depending on a firm’s target

market and its pricing philosophy.

Production, product, selling, marketing and holistic marketing concept.

(a) Production Concept
Consumers will prefer products that are widely available and inexpensive. Managers of production-oriented businesses concentrate on achieving high production efficiency, low costs, and mass distribution.

(b) Product Concept
Consumers will favour those products that offer the most quality, performance, or innovative features. Managers focus on making superior products and improving them over time.

(c) Selling Concept
Consumers and businesses, will ordinarily not buy enough of the organization's products, therefore, the organization must undertake aggressive selling and promotion efforts.

(d) Marketing Concept
The company is being more effective than competitors in creating, delivering, and communicating superior customer value to its chosen target markets in order to achieve organizational goals.

There are three market orientations:
(i) Reactive market orientation·understanding and meeting consumer's expressed needs.
(ii) Proactive marketing orientation·researching or imagining latent consumer's needs through a probe-and-learn process.
(iii) Total market orientations · companies that practice both a reactive and proactive marketing orientations.

(e) Holistic Marketing Concept
This concept is based on the development, design, and implementation of marketing programs, processes, and activities that recognize the breath and inter dependencies of their efforts.

Holistic marketing recognizes that everything matters with marketing - the consumer, employees, other companies, competition, as well as society as a whole.

Customer Satisfaction

RULE:

IF PERCEPTION = EXPECTATION = SATISFACTION

IF PERCEPTION < EXPECTATION = DISSATISFACTION

Satisfaction
is a person's feelings of pleasure or disappointment resulting from comparing a product's perceived performance (or outcome) in relation to his or her expectations.

If the performance falls short of expectations, the customer is dissatisfied. If the performance matches the expectations, the customer is satisfied.

If the performance exceeds expectations, the customer is highly satisfied or delighted.

Buyers form their expectations from past buying experience, friends' and associates' advice, and marketers' and competitors' information and promises.

The company must operate on the philosophy that it is trying to deliver a high level of customer satisfaction subject to delivering acceptable levels of satisfaction to the other stakeholders, given its total resources.

What is Marketing?

There are several definitions of marketing as described below:

(a) The American Marketing Association:
"Marketing is an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders."

(b) Marketing management is
"the art and science of choosing target markets and getting, keeping and growing customers through creating, delivering and communicating superior customer value."

(c) A social definition of marketing is that
"marketing is societal process by which individuals and groups obtain what they need and want through creating, offering and freely exchanging products and services of value with others."

Classified Competitors

1. Number of sellers
2. Degree of product differentiation
3. Presence or absence or entry
4. Mobility
5. Exit barriers
6. Cost structure
7. Degree of vertical integration
8. Degree of globalisation
   

Competitive Forces

1. Threat of intense segment rivalry
2. Threat of new entrants
3. Threat of substitute products
4. Threats of buyers' growing bargaining power
5. Threat of suppliers' growing bargaining power
   

Roles of Brand Elements

Brand Equity>Brand Elements>Roles

1. Easily recognized
2. Easily recalled
3. Inherently descriptive (permanent)
   
4. Persuasive (become aware)
   

Brand Elements

Creating Brand Equity>Choosing Brands Elements

6 criteria in choosing brand elements :

1. Memorable
2. Meaningful
3. Likeabilility
4. Transferable
5. Adaptable
6. Protectible
   

Needs and Trends

Analysing the Macroenvironment>Needs and Trends

FAD means
Unpredictable, short-lived and without social, economic and political significance.

TREND is
a direction or sequence of events that had some momentum and durability. Trends are more predictable and durable than fads. A trend reveals the shape of the future and provides many opportunities.

MEGATRENDS described as
large social, economics, political and technology changes (that) are slow to form and once in place, they influence us for some time between seven and ten years or longer.

Contents of the Marketing Plan

Developing Marketing Strategies and Plans>Product Planning>Contents of the Marketing Plan

The contents of the marketing plan are described below;-

1. Executive summary and table of contents.
The executive summary permits senior management to grasp the plan's major thrust. A table of contents that outlines the rest of the plan and all the supporting rationale and operational detail should follow the executive summary.

2. Situation analysis.
This section presents relevant background data on sales, costs, the market, competitors, and the various forces in the macro environment.
How is the market defined, how big is it, and how fast is it growing?
What are the relevant trends affecting the market?
What is the product offering and what are the critical issues facing the company?

Pertinent historical information can be included to provide context. All this information is used to carry out a SWOT (strengths, weaknesses, opportunities, threats) analysis.

3. Marketing strategy.
In marketing strategy, product manager defines the mission and marketing and financial objectives. The manager also defines those groups and needs that the market offerings are intended to satisfy.
The manager then establishes the product line's competitive positioning, which will inform the "game plan" to accomplish the plan's objectives. All this is done with inputs from other organisational areas, such as purchasing, manufacturing, sales, resources, to ensure that the company can provide proper support for effective implementation. The marketing strategy should be specific about the branding strategy and customer strategy that will be employed.

4. Financial projections.
Financial projections include a sales forecast, an expense forecast, and a break-even analysis. On the revenue side, the projections show the forecasted sales volume by month and product category.
On the expense side, the projections show the expected costs of marketing, broken down into finer categories. The break-even analysis shows how many units must be sold monthly to offset the monthly fixed costs and average per unit variable costs.

5. Implementation controls.
This section outlines the controls for monitoring and adjusting implementation of the plan. The goals and budget are spelled out for each month or quarter so management can review each period's results and take corrective action as needed.

A number of different internal and external measures must be taken to assess progress and suggest possible modifications. Some organisations include contingency plans outlining the steps management would take in response to specific environmental developments, such as price wars or strikes.

Services Differentiation

Setting Product Strategy>Services Differentiation

The main service differentiators are described as follows:
(a) Ordering Ease: refers to how easy it is for the customer to place an order with the company.
(b) Delivery: refers to how well the product or service is brought to the customer.
(c) Installation: refers to the work done to make the product operational.
(d) Customer Training: refers to the training the customer's employees to use the vendor's equipment properly and efficiently.
(e) Customer consulting: refers to data, information systems, and advice services that the seller offers to the buyers.
(f) Maintenance and Repair: describes the service program for helping customers keep purchased products in good working order.
(g) Returns: an unavoidable reality of doing business

(i) Controllable returns ; results from problems, difficulties, or errors of the seller or customer and can mostly be eliminated with proper strategies and programs by the company or its supply chain partners. Improved handling or storage, better packaging, and improved transportation and forward logistics can eliminate problems before they happen.
(ii) Uncontrollable returns; It can't be eliminated by the company in the short-run through any of these means.

Product Differentiation

Setting Product Strategy>Product Differentiation

The seller faces an abundance of differentiation possibilities in terms of:

(a) Form: Many products can be differentiated in form·the size, shape, or physical structure of a product.

(b) Features: Most products can be offered with varying features that supplement its basic function. A company can identify and select appropriate features by surveying buyers and then calculating customer value versus company cost for each feature. Each company must decide whether to offer feature customisation at a higher cost or a few standard packages at a lower cost.
(c) Customisation: marketers can differentiate products by making them customised to an individual. Mass customisation is the ability of a company to meet each customer's 'requirements.
(d) Performance Quality: Most products are established at one of four performance levels: low, average, high, or superior. Performance quality is the level at which the product's primary characteristics operate. The manufacturer must design a performance level appropriate to the target market and competitors' performance levels. A company must manage performance quality through time.
(e) Conformance Quality: Buyers expect products to have a high conformance quality the degree to which all the product units are identical and meet the promised specifications.
(f) Durability: A measure of the product's expected operating life under natural or stressful conditions. Durability is a valued attribute for certain products. Buyers will generally pay more for products that have a reputation for being long lasting.
(g) Reliability: Buyers normally will pay a premium for more reliable products. Reliability is a measure of the probability that a product will not malfunction or fail within a specified time period
(h) Repairability: Is the measure of the ease of fixing a product.
(i) Style: Describes the product's look and feel to the buyer. Style has the advantage of creating distinctiveness that is difficult to copy. Strong style does not always mean high performance.

Product Levels: The Customer Value Hierarchy

Setting Product Strategy>Product Characteristics>Product Level

Marketer needs to address five product levels in planning its market offering. Each level adds more customer value, and the five constitute a customer value hierarchy.

(a) The fundamental level is the core benefit: The service or benefit the customer is really buying. Marketers must see themselves as benefit providers.

(b) At the second level, the marketer has to turn the core benefit into a basic product.

(c) At the third level, the marketer prepares an expected product, a set of attributes and conditions buyers normally expect when they purchase this product.

(d) At the fourth level, the marketer prepares an augmented(make greater/increase) product that exceeds customer expectations.

(e) At the fifth level stands the potential product that encompasses all the possible augmentations and transformations the product or offering might undergo in the future. Here is where companies search for new ways to satisfy customers and distinguish its individual offer.

Step 2: Determining Demand

Each price will lead to a different level of demand and therefore have a different impact on a company's marketing objectives:

(a) Price Sensitivity -
The demand curve shows the market's probable purchase quantity at alternative prices. The first step in estimating demand is to understand what affects price sensitivity. Customers are most price sensitive to products that cost a lot or are bought frequently. Customers are less price-sensitive to low-cost items or items they buy infrequently. They are also less price-sensitive when price is only a small part of the total cost of obtaining, operating, and servicing the product over its lifetime (total cost of ownership - TCO).

(b) Estimating Demand Curves -
Most companies attempt to measure their demand curves using several different methods.
(i) Surveys can explore how many units consumers would buy at different proposed prices.
(ii) Price experiments can vary the prices of different products to see how the change affects sales.
(iii) Statistical analysis of past prices, quantities sold, and other factors can reveal their relationships. These can be: Longitudinal or Cross-sectional.

(c) Price Elasticity of Demand -
If demand hardly changes with a small change in price, we say the demand is inelastic. If demand changes considerably, demand is elastic.Demand is likely to be less elastic under the following conditions:

(i) There are few or no substitutes or competitors.
(ii) Buyers do not readily notice a higher price.
(iii) Buyers are slow to change their buying habits.
(iv) Buyers think the higher prices are justified.

If demand is elastic, sellers will consider lowering the price. A lower price will produce more total revenue as long as the costs of producing and selling more units do not increase disproportionately Price elasticity depends on the magnitude and direction of the contemplated price change.

It may be negligible with a small price change but substantial with a large price change. It may differ for a price cut versus a price increase.

Selecting the Pricing Objective

Setting the Price > Step 1: Selecting the Pricing Objective

The company first decides where it wants to position its market offering. The clearer a firm's objectives, the easier it is to set price.

The five major objectives are:

(a) Survival -

Companies pursue survival as their major objective when they are plagued with overcapacity, intense competition, or changing consumer wants. Survival is a short-run objective.

(b) Maximum Current Profit -
Many companies try to set a price that will maximise current profits. They estimate the demand and costs associated with alternative prices and choose the price that produces maximum current profit, cash flow, or rate of return on investment.

(c) Maximum Market Share -
Some companies want to maximise their market share. The following conditions favour setting a low price:

(i) The market is highly price-sensitive, and a low price stimulates market growth.
(ii) Production and distribution costs fall with accumulated production experience.
(iii) A low price discourages actual and potential competition.
(d) Maximum Market Skimming - Companies unveiling a new technology favour setting high prices to maximise market skimming. This is also called market-skimming pricing, where prices start high and are slowly lowered over time. Market skimming makes sense under the following conditions:
(i) A sufficient number of buyers have a high current demand.
(ii) The unit costs of producing a small volume are not so high that they cancel the advantage of charging what the traffic will bear.
(iii) The high initial price does not attract more competitors to the market.
(iv) The high price communicates the image of a superior product.

(e) Product-Quality Leadership -
A company might aim to be the product quality leader in the market. Many brands strive to be affordable luxuries‰·products or services characterised by high levels of perceived quality, taste, and status with a price just high enough not to be out of consumer's reach.

(f) Other Objectives -
Non-profit and public organisations may have other pricing objectives. Whatever the specific objective, businesses that use price as a strategic tool will profit more than those who simply let costs or the market determine their pricing.

Setting the Price

Step 1 ; Selecting the Pricing Objective
Step 2; Determining the Demand
Step 3; Estimating Costs
Step 4; Analyzing Competitors Costs, Prices and Offers
Step 5; Selecting a Pricing Method
Step 6; Selecting Final Price

Psychographic Segmentation

Psychographics is the science of using psychology and demographics to better understand consumers.

In psychographic segmentation, buyers are divided into different groups on the basis of lifestyle or personality or values. One of the most popular commercially available classification systems is SRI Consulting Business Intelligence's VALS framework.

The major tendencies of the four groups with high resources are:

(i) Innovator - Successful, sophisticated, active, "take-charge" people with high self esteem. Purchases often reflect cultivated tastes for relatively upscale, niche-oriented products and services.

(ii) Thinker - Mature, satisfied, and reflective people who are motivated by ideals and who value order, knowledge, and responsibility. They seek durability, functionality, and value in products.

(iii) Achiever - Successful, goal-oriented people who focus on career and family. They favour premium products that demonstrate success to their peers.

(iv) Experiencer - Young, enthusiastic, impulsive people who seek variety and excitement. They spend a comparatively high proportion of income on fashion, entertainment, and socialising.

The major tendencies of the four groups with lower resources are:
(i) Believers - Conservative, conventional, and traditional people with concrete beliefs. They prefer familiar, U.S. products and are loyal to established brands.

(ii) Strivers - Trendy and fun-loving people who are resource constrained. They favour stylish products that emulate the purchases of those with greater material wealth.

(iii) Makers - Practical, down-to-earth, self-sufficient people who like to work with their hands. They seek U.S.-made products with a practical or functional purpose.

(iv) Survivors - Elderly, passive people who are concerned about change. They are loyal to their favourite brands.

Behavioural Segmentation

Identifying Market Segments> Bases For Segmenting Consumer Markets>Behavioral Segmentation

In behavioural segmentation, marketers divide buyers into groups on the basis of their knowledge of, attitude toward, use of, or response to a product. People play five roles in buying decision: initiator, influencer, decider, buyer and user.Different people are playing different roles, but all are crucial in the decision process and ultimate customer satisfaction.

Many marketers believe behavioural variables listed below are the best starting points for constructing market segments:
(i) Occasions: can be defined in terms of the time of day, week, month, year, or other well-defined temporal aspects of a consumer's life.

(ii) Benefits: Not everyone who buys a product wants the same benefits from it.
(iii) User Status: Every product has its nonusers, ex-users, potential users, first time users, and regular users.
(iv) Usage rate: Light, medium, and heavy product users.
(v) Buyer-Readiness stage: unaware, aware, informed, interested, desire, and intend to buy.

(vi) Loyalty status:

Hard-core loyals consumers who buy only one brand all the time.
Split loyals consumers who are loyal to two or three brands.
Shifting loyals consumers who shift loyalty from one brand to another.
Switchers consumers who show no loyalty to any brand.
Attitudes The five attitudes about products are: enthusiastic, positive, indifferent, negative, and hostile.

Risk in Buying and Consuming a Product

1. Functional risk
2. Physical risk
3. Financial risk
4. Social risk
5. Psychological risk
6. Time risk

5 stage model>Purchase decision>Intervening factors>Unanticipated factors

5 Stage Model of Buying Decision Process

5.3.1 Problem Recognition
The buying process starts when the buyer recognises a problem or need. The need can be triggered by internal or external stimuli. Marketers need to identify the circumstances that trigger a particular need so that they can develop marketing strategies that trigger consumer interest.

After enrolling in the university, students require themselves to own a notebook to complete
assignment given by the lecturer. Those who yet to own one, will recognize this as their problem that is to find the right notebook at an affordable price with good features.

5.3.2 Information Search
An aroused consumer will be inclined to search for more information. Two types of arousal:

Milder state is called heightened attention where a person simply becomes more receptive to information about a product.

Active information search where a person looks for reading material, going online, etc. to learn about the product.

(a) Information Sources
Major information sources to which consumers will turn fall into four groups:

(i) Personal. Family, friends, neighbours, acquaintances.
(ii) Commercial. Advertising, Web sites, salespersons, dealers, packaging, displays.
(iii) Public. Mass media, consumer-rating organisations.
(iv) Experiential Handling, examining, using the product.

Consumer receives the most information a about a product from commercial sources (i.e. marketer-dominated-sources). The most effective information often comes from personal sources or public sources that are independent authorities.

Commercial sources normally perform an information function, whereas personal sources perform a legitimising or evaluation function.

(b) Search Dynamics
Through gathering information, the consumer learns about competing brands and their features. Marketer identify the other brands in the consumer's choice set so that it can plan the appropriate competitive appeals.

In addition, the company should identify the consumer's information sources and evaluate their relative importance. Asking consumers how they first heard about the brand, what information came later, and the relative importance of the different sources will help the company prepare effective communications for the target market. For example, before buying the notebook, students will browse through the Internet to search for information about the notebook that being sell at an affordable price with good features. They may also ask friends for
recommendations.

5.3.3 Evaluation of Alternatives
Consumer evaluation processes include:
Trying to satisfy a need.
Looking for certain benefits from the product solution.
Sees each product as a bundle of attributes with varying abilities for delivering the benefits sought to satisfy this need.

(a) Beliefs and Attitudes
Evaluations often reflect beliefs and attitudes. Through experience and learning, people acquire beliefs and attitudes. These in turn influence buying behaviour.

(i) Belief - a descriptive thought that a person holds about something.
(ii) Attitude - a personÊs enduring favourable or unfavourable evaluation, emotional feeling, and action tendencies toward some object or idea. Attitudes put people into a frame of mind. Attitudes lead people to behave in a fairly consistent way toward similar objects. Attitudes can be very difficult to change.

(b) Expectancy-Value Model
The expectancy-value model of attitude formation posits that consumers evaluate products and services by combining their brand beliefs·the positives and negatives - according to importance.
Marketers apply the following strategies to stimulate greater interest in alternative brand:

(i) Redesign the computer. This technique is called real repositioning.
(ii) Alter beliefs about the brand. Attempting to alter beliefs about the brand is called psychological repositioning.
(iii) Alter beliefs about competitors' brands. This strategy, called competitive depositioning, makes sense when buyers mistakenly believe a competitor's brand has more quality than it actually has.
(iv) Alter the importance weights. The marketer could try to persuade buyers to attach more importance to the attributes in which the brand excels.
(v) Call attention to neglected attributes. The marketer could draw buyers' attention/ neglected attributes, such as styling or processing
speed.
(vi) Shift the buyer's ideals. The marketer could try to persuade buyers to change their ideal levels for one or more attributes.
For example, after collecting information on the notebook, students will have several brand of notebook that suits their expectation, that is of their interest. At this phase, they will evaluate those brands of notebook based on the set criteria.

5.3.4 Purchase Decision
In the evaluation stage, the consumer forms preferences among the brands in the
choice set. The consumer may also form an intention to buy the most preferred brand. In executing a purchase intention, the consumer may make up to five subdecisions:
(i) Brand.
(ii) Dealer.
(iii) Quantity.
(iv) Timing.
(v) Payment-method.
For example, at this stage students have made up their decision to buy which notebook. They will purchase identified notebook according to their most preferred brand that they afford to buy and have good features.

(a) Non-Compensatory Models of Consumer Choice
Consumers may not always want to invest so much time and energy to evaluate brands. They often take „mental shortcuts‰ that involve various simplifying choice heuristics. With non-compensatory models of consumer choice, positive and negative attribute considerations do not necessarily net out.
(i) With conjunctive heuristic method, the consumer sets a minimum acceptable cut-off level for each attribute and chooses the first alternative that meets this minimum.
(ii) With the lexicographic heuristic method, the consumer chooses the best brand on the basis of its perceived most important attribute.
(iii) With the elimination-by-aspects heuristic method, the consumer compares brands on the attribute selected and brands not meeting this attribute are eliminated.
(iv) Consumers do not adopt only one type of choice rule and may combine two or more decision rules.
(b) Intervening Factors
Two general factors can intervene between the purchase intention and the purchase decision:

(i) Attitudes of others. The extent to which another person's attitude reduces the preference for an alternative depends on two things
The intensity of the other personÊs negative attitude toward the consumerÊs preferred alternative.

The consumer's motivation to comply with the other person's wishes.

(ii) Unanticipated situational factors that may erupt to change the purchase intention.

Preferences and even purchase intentions are not completely reliable predictors of purchase behaviour.

Consumers may perceive many types of risk in buying and consuming a product:

Functional risk - The product does not perform up to expectations.
Physical risk - The product poses a threat to the physical well being or health of the user or others.
Financial risk - The product is not worth the price paid.
Social risk - The product results in embarrassment from others.
Psychological risk - The product affects the mental well-being of the user.
Time risk - The failure of the product results in an opportunity cost of finding another satisfactory product.

Marketers must understand the factors that provoke a feeling of risk in consumers and provide information and support to reduce perceived risk.

5.3.5 Post-Purchase Behaviour
Marketers must monitor post-purchase satisfaction, post-purchase actions, and post-purchase uses as the consumer might experience dissonance about their purchase.

For example, students experience satisfaction or dissatisfaction after purchase the identified notebook. If they have positive experience with the notebook, they
experience satisfaction and vice versa.

(a) Post-purchase Satisfaction
Satisfaction is a function of the closeness between expectations and the product's perceived performance. If performance falls short of expectations, the consumer is disappointed; if it meets expectations, the consumer is satisfied; if it exceeds expectations, the consumer is delighted. These feelings make a difference in whether the customer buys the product again
and talks favourably or unfavourably about it to others.

(b) Post-purchase Actions
Satisfied consumers more likely to purchase the product again and tend to say good things about the brand to others. Dissatisfied consumers may abandon or return the product. They may seek information that confirms its high value. They may take public action by complaining to the company, going to a lawyer, or complaining to other groups (such as business, private,
or government agencies).

Private actions include deciding to stop buying the product (exit option) or warning friends (voice option).

(c) Post-purchase Use And Disposal
Marketers should also monitor how buyers use and dispose of the product. One opportunity to increase frequency of product use occurs when consumers' perceptions of their usage differ from reality. Marketer needs to know how the consumer disposes of the product once it is used.