Microsofts Stakeholder Analysis

Microsofts Stakeholder Analysis MICROSOFT CORPORATION Microsoft Corporation is an American multinational corporation headquartered in Redmond, Washington, that develops, manufactures, licenses, supports and sells computer software, consumer electronics and personal computers and services. The company founded by Bill Gates and Paul Allen on 4th April 1975 to develop and Its best known software products are the Microsoft Windows line of operating systems, Microsoft Office suite, and Internet Explorer web browser. Its flagship hardware products are Xbox game consoleand the Microsoft Surface series of tablets. It is the worlds largest software maker measured by revenues. 1.1THE OBJECTIVES This assignment is going to discuss about Microsoft Corporation stakeholders interests either in conflict or coincide, the mapping exercise and with analysis. Also the Porter’s Five Forces Model on Microsoft relating to competitions among the operators in the same industry and the approach this company adopted on its corporate social responsibility (CSR) and how the approach has been of competitive advantage to the organization. 2.0STAKEHOLDERS A stakeholder is anybody or group that has interest in a project or enterprise who could directly be affected by business operations or its outcomes. They can either be internal or external stakeholders as listed below (Johnson, Scholes Whittington, 2011):- (A).Those that are mostly affected by the business operations and outcomes are the investors, the customers, employees, suppliers and communities at large. According to (R. Edward Freeman, 1984) (B).Those who guide and influence the organization in carrying out the business specifically the government, regulatory authorities, non-governmental organizations and civil societies and the industry organization. According to (Archie B.Carroll, 1991). FIG.1: MICROSOFT CITIZENSHIP REPORT 2013 PG. 7 Microsoft recognizes its bigger responsibility in developing and sustaining relationships with diverse stakeholder groups, both internal and external to the organization. According to Microsoft Citizenship report 2013, stakeholders are categorized into two groups: those who are directly affected by the business operations and outcomes (namely, investors, customers, employees, suppliers, and the community at large) and those who guide and influence us in carrying out our business (specifically, government and regulatory agencies, non-government and civil society groups and industry organization). Investors Pursuant to the Corporate Governance (CG) Manual, it is the duty of the Board to promote and uphold stockholders’ rights such as the right to vote, pre-emptive right, right to timely receive relevant information, right to dividends and the appraisal right. The Board shall ensure that the company remains faithful to its undertaking to make timely disclosures of material information and transactions that could potentially affect the market price of the company’s shares. Customers Customers are important stakeholders at Microsoft Corporation because they are driven force of sales and revenue generation. Organization must provide products that are of high quality and at affordable price. Microsoft continually strives to satisfy its customers’ expectations and concerns regarding quality of service. They commit us to continually improve the way they do things to better serve their customers. Employees Microsoft is committed to the development and welfare of its employees. As the Company sustains its efforts in building a high performance culture to fully respond to the requirements of the new business environment, employees are continuously trained and developed to enable them to achieve excellent performance founded on our Corporate Mission. All employees are required to attend a 5-day training a year which is monitored on a monthly basis. Career development programs are implemented to ensure professional growth through skills and job enrichment opportunities, learning and development programs, performance management and promotion systems. Yearly employees are mandated to go for a 5-day mandatory training requirement. The training of employees are based on the competencies which are analyzed and evaluated every year to ensure that employees are equipped with the necessary skills and knowledge to handle the job. Each employee has its yearly Training Plan to address the gap on the competencies. Employees are compensated based on performance and over-all qualifications. Adequate provisions for medical, health and other essential benefits; and workplace safety are provided to promote employee welfare and well-being. Uprightness and impartiality are observed in conflict resolution. Human Resource (HR) Programs for the employees are continuously reviewed and enhanced to ensure their overall effectiveness and responsiveness. The Company is further committed in sustaining and/or further enhancing the high level of engagement of employees. Guided by the results of an employee engagement survey conducted, focused and deliberate initiatives are undertaken to help ensure employee job satisfaction and motivation. Employee communication is strengthened to keep employees well-informed on significant developments. Employees are likewise encouraged to give feedback and suggestions to Management to further improve on the yearly corporate governance, corporate and operational performance, thereby promoting employee accountability and empowerment. Commendations are given to employees who show exemplary customer service through published emails and the President’s Awards which go with a cash prize to employees who meet the criteria of Customer Service Award, Great Idea Award and Quality Award. Communities Beyond the confines of our boardroom and corporate walls, Microsoft embarks on initiatives to help improve the lives of people in the communities. They do this by embedding corporate social responsibility in its business and engaging her employees through volunteerism initiatives. As a responsible corporate citizen, they contribute to building a sustainable society in partnership with non-government organizations, government institutions, and other civic organizations on projects that promote entrepreneurship, education and the environment. In line with this, Microsoft continued to build on the employee-driven volunteer program, â€Å"Save a Soul for Better Tomorrow: The Boys Town Orphanage in Pasay is one of the most successful Corporate Social Responsibility (CSR) endeavors of Microsoft. In December 2012, Microsoft instituted a donation drive among its employees and business partners in support of the relief efforts for Typhoon Pablo victims in Eastern Mindanao. Suppliers Microsoft aspires to maintain mutually beneficial relationships only with suppliers that uphold fairness, accountability, integrity and transparency in their own businesses. Microsoft is using the list of accredited suppliers of Microsoft which serve the requirements of Microsoft, from capital expenditures to operating expenditure items, as well as service requirements. Suppliers are required to undergo stringent accreditation process before they are authorized to do business with Microsoft. Among the criteria used for accreditation are legitimacy of operations, capacity for continuous business operations, quality and prices for goods and services, track record, compliance with regulatory bodies and transparency in relationship. Microsoft purchases, as a general rule, are made on the basis of competitive bidding through accredited and qualified suppliers. Environment As for the environmental responsibility starts from within Microsoft by adopting policies, standards and practices to make our workplace, not just a conducive environment for work, but a place that works toward the betterment of the environment as well. FIG. 2: THE MICROSOFT STAKEHOLDER MAPPING This is a tool of analysis that is use to analyze the level of interest of different types of stakeholders in an organization or in a project. It helps manager to prioritize various opinions, influences and interest to go into any project or business. It will display each stakeholder group interest in a particular project that can influence it either positively or negatively. Different stakeholder groups have different commitment and expectation from the organization, in which the manager has to meet and any conflict should be resolved amicably or diplomatically for the smooth running of the organization and if their opinion is the same, the better for the organization. 3.0 POTER’S FIVE FORCES MODEL ON MICROSOFT CORPORATION fig. 3: PORTER’S FIVE FORCES MODEL ON MICROSOFT CORPORATION (www.doughtycentre.info adapted from core values for the practice of public participation by the international association for public participation – pg.12) This model consists of five threats, which will be outlined and applied to Microsoft’s current situation below: 3.1.THREAT OF NEW ENTRY The threat of entry for Microsoft is relatively low for all of their divisions. In the personal computing business, they have a strong hold of the majority share of operating systems that are used by consumers. Currently, there is really only one main competitor with any real market share, which would be Apple and the Max OS Open source projects such as Linux do not currently pose much of a threat because it is much more of a tech niche market. Creating an OS can take years and requires expansive knowledge of computing. Microsoft has been building off of their knowledge from old versions of their OS’s for years. In this company, all voiced consumer interests and demands are being filled. There would be very little that a new firm could do to differentiate a new gaming console from anything this company currently do or will do with the next generation. It has also been producing these systems long enough to understand how to minimize its costs with the components they choose, leaving little chance for cost advantage. 3.2.THREAT OF RIVALRY The threat of rivalry is relatively low for Microsoft. From an operating system standpoint, there are not many competitors who make operating systems. Because of this, Microsoft does not feel that they need to constantly be surveying a large amount of companies to see what price or sales trends are occurring. Prices are rather static because of this. The only type of differentiation created between operating systems is what software it can run. However, the numbers of software packages that are only available on one platform are getting smaller every year. One thing to mention would be that Windows can be installed on Apple hardware, while Mac OS X cannot be installed on a large majority of non-Apple products (with the exception of building a Mackintosh which would require more knowledge than most casual computer users have.)However, the gaming division of Microsoft is under a high threat of rivalry from Nintendo and Sony. It is standard practice to make large price cuts to game consoles every six to twelve months as production costs decrease, and there is a constant â€Å"console war† going on. As soon as a console is released, a new one begins RD. 3.3.THREAT OF SUBSTITUTES Microsoft’s gaming division has a moderately high threat of substitute. I say this because there are two gaming audiences: casual and hardcore. A hardcore gamer will likely own multiple consoles to make sure they get to play every game they want to due to exclusive titles on separate consoles. This group would likely not contribute to a threat of substitute. However, casual gamers will easily substitute for a Nintendo or Sony console, or even just buy a few games on their smart phone. While Microsoft’s Xbox 360 offers many other services (Netflix, Hulu, YouTube, Last.fm, etc.) these services could be found elsewhere if someone is not interested in the games available on the console. 3.4.THREAT OF POWERFUL SUPPLIERS For both Windows and the Xbox 360, there is a relatively low threat of powerful suppliers. All of the resources that would need to be supplied to Microsoft by outside suppliers are available from a large number of firms. Blank media, circuit boards, processors, etc. are not in short supply in any way. Given the size and brand recognition that Microsoft has and the number of other suppliers available, many suppliers know they would have to offer a good price in order to work with them. None of the items supplied are necessarily unique, and the very few times that a supplier has tried to enter a videogame market through forward vertical integration, it has not gone very well. The only threat a supplier could hold is that the physical items needed by Microsoft are used in a wide variety of electronics. Memory chips, processors, hard drives, DVDs, capacitors, circuit boards, etc. are all used in everything now. However, a large number of game consoles have been sold by Microsoft (66 million units as of 1/9/2012.).This would suggest that the components inside each console would pass as a decent side of a supplier’s business. 3.5.THREAT OF POWERFUL BUYERS Microsoft has had deals with almost every major PC company (buyers in this instance) to include a copy of the latest Windows version as part of the cost of a pre-built PC. This has become expected from people buying non-Apple computers and if a buyer was to decide not to include this, it would probably lead to negative repercussions. There is room for tablets and some netbooks to run versions of IOS or Android OSs, but when some laptop manufacturers tried to switch from Windows being preinstalled to Linux, it did not fare well. The cost of having Windows included is also not a large amount of the cost of the computer, so it does not carry that much weight for the company building the machine. These attributes lead to a low threat from buyers.From a game console standpoint, the threat from buyers is low as well. The console gaming market is a multi-billion dollar industry and there are a large number of retailers who stock Xbox 360s. There is enough of an economic profit from consoles and associated merchandise to validate whole stores dedicated to just selling these items. The possibility of a retailer attempting to develop and distribute their own console is incredibly unlikely due to the cost and barriers. 4.0MICROSOFT – CORPORATE SOCIAL RESPONSIBILITY {CSR} FIG.4: MICROSOFT – CORPORATE SOCIAL RESPONSIBILITY {CSR} (http://www.businessrespect.net/definition.php by Mallen Baker) Compared to just a decade ago, it is now common for business people to talk about social responsibility and the importance of being good corporate citizens. Many business leaders today consider it critical to engage with shareholders, the communities in which their companies operate, and others affected by and interested in what they do. The diverse activities needed to respond to these expanded duties are widely referred to by the catchall phrase corporate social responsibility. It incorporates a host of concepts and practices, including the necessity for adequate corporate governance structures, the implementation of workplace safety standards, the adoption of environmentally sustainable procedures, and philanthropy. Take Microsoft CSR for example: -According to Microsoft 2013 Citizen Report,the company embarked on various CSR programs some of which are listed below: 4.1.GOVERNMENTS: Microsoft Corporation is working with community-based organizations and NGOs in China to increase employment opportunities for unskilled migrant workers, partnering with law enforcement officials in Canada to develop a customized system that helps police fight computer-facilitated crimes against children, collaborating in Latin America with the Organization of American States and its affiliate The Trust for the Americas to help people with disabilities gain the skills they need to start their own businesses and find employment, or working with leading companies and community organizations in Europe on a grants program to help small and medium sized enterprises improve productivity through technology, their commitment is the same: to make it possible for people to use technology to improve their lives. â€Å"Partnership and collaboration are at the center of how we do business, and that’s also how we work with governments and NGOs. It’s central to our commitment to provide leadership in our industry, to create a safe and secure computing environment, and to advance a worldwide knowledge economy that creates possibilities for hundreds of millions of people previously underserved by technology.† (Steven A. Ballmer Chief Executive Officer in the Microsoft 2013 citizen report). 4.2.CUSTOMERS: As an industry leader, Microsoft recognizes its responsibility to help make the Internet safer and computing more secure. Their ultimate goal is to help create an environment in which adults, children, businesses, and other organizations can enjoy the full benefits of the Internet without concerns about their safety, privacy, or security. Meanwhile, they continue to work toward that goal with the help of government, industry, and law enforcement partners worldwide, and to help consumers and their customers understand what they can do to protect themselves and their systems. Microsoft has done a lot to improve product quality and engineering excellence over the last few years. Every year, 15,000 Microsoft developers, testers, and program managers attend mandatory training on how to write more secure code. They have also integrated security into their software development process. The results have been a significant decrease in the number of security bulletins issued for products like Windows XP and Windows Server 2003 and a significant increase in the security of their esteemed customers’ systems. 4.3.LOCALCOMMUNITIES: Microsoft Local Language Program: This provides people access to technology in a familiar language while respecting linguistic and cultural distinctions. The program aims to empower individuals in local communities to create economic opportunities, build IT skills, enhance education outcomes, and sustain their local language and culture. 4.4.EMPLOYEES: Microsoft is widely recognized as a leading company for offering one of the strongest and most comprehensive compensation and benefits packages in the US. They start with competitive pay, bonuses, and stock awards to eligible employees based on individual performance. Then they add on unique offerings that might surprise you. Here’s a bird’s-eye view: Leading health wellness care: Medical hospitalization: Industry-leading health coverage, more than many other companies offer. Vision care: one annual eye exam and reimbursement for one pair of glasses or contacts per calendar year. 24 – hours health line: receive useful, easy – to –understand information and so much more, including life insurance, disability insurance, accidental death and dismemberment insurance, group legal coverage, dependent and healthcare flexible spending accounts, office ergonomics’ support etc. You can notice that the company is trying to create a good environment at the office by providing all the staff with good conditions to work and develop themselves. I now recall the word of Jack Welch that says: â€Å"The recognition of the contribution of each employee, recognition for each employee the right to have a voice and a role in the success of the company – is the source of true performance. The source from which it can improve not gradually, but significantly† CONCLUSION In conclusion, Microsoft being the foremost organization in the information and technology industry worked at its humble beginning in 1975 by Mr. Bill Gates and his youth mate Mr. Paul Allen which has a rapid growth history and finally became a public quoted company in 1986 and have since remained dominant in the IT industry and is affecting people’s life all over the world positively with business partners globally and also providing aids and rescue services on emergencies through its corporate social responsibility programs and can be regarded as employer of first choice REFERENCES CSR Report. (2012). Microsoft Release 2012 Citizenship Report. Retrieved on February 9, 2012 from http://www.csrwire.com/report/1272/-Microsoft-Release-2012-Citizenship-Report.html Andrews, K.R. (1971), the Concept of Corporate Strategy, Dow-Jones Irwin, Homewood, IL. Blomback, A. Wigren, C. (2009), Challenging the importance of Size as determinant for CSR activities; Management of Environmental Quality: An International Journal Vol. 20 No. 3 PP. 255-270; Carlisle, Y.M. and Faulkner, D.O. (2004), Corporate social responsibility: a stages framework, European Business Journal, Vol. 16 No. 4, pp. 143-52. Carroll, A.B. (1991), The pyramid of corporate social responsibility: toward the moral management of organizational stakeholders, Business Horizons, Vol. 34 No. 4, pp. 39-48. http://www.businessrespect.net/definition.php by Mallen Baker http://www.microsoft.com/about/corporatecitizenship/en-us/reporting/ Carroll, A.B. (1999), Corporate social responsibility Garriga, E. and Mele, D. (2004), Corporate social responsibility theories: mapping the territory, Journal of Business Ethics, Vol. 53, pp. 51-71. Gyves, S. OHiggins, E. (2008), Corporate Social Responsibility: An avenue for sustainable benefit for society and the firm? Society Business Review Vol. 3, No. 3, pp. 207-223; Henderson, D. (2005), The role of business in the world today, Journal of Corporate Citizenship, Vol. 17, pp. 30-2. Hirschland, M. (2005), Taking the Temperature of CSR Leaders, Business for Social Responsibility, San Francisco, CA. http://www.codeproject.com Karnani, A. (2010). The case Against Corporate Social Responsibility. Wall Street Journal. Retrieved on February 9, 2013 from http://online.wsj.com/article/SB100.html www.doughtycentre .info – adapted from core values for the practice of public participation by the international associationfor public participation – pg.12 David Thompson. Help employees achieve a work/life balance//URL: http://goo.gl/4Fdh3.28.01.2013. 1

Decision Making and Consumer Essay

What major psychological processes influence consumer responses to the marketing program? * How do consumers make purchasing decisions? * In what ways do consumers stray from a deliberate rational decision process? Contents Introduction4 What influences Consumer behavior? 5 Cultural factors5 Social factors6 Personal factors7 Key psychological processes9 Motivation9 Perception10 Learning11 Emotion12 Memory12 The buying decision process14 Behavioral decision theory & behavioral economics20 Introduction The aim of marketing is to meet and satisfy target customers’ need and want better than competitors. Marketers must have a thorough understanding of how consumers think, feel, and act and offer clear value to each and every target consumer. Successful marketing requires that companies fully connect with their customers. Adopting a holistic marketing orientation means understanding customers-gaining a 360-degree view of both their daily lives and the changes that occur during their lifetimes so the right products are always marketed to the right customers in the right way. So we are going to explore individual consumer buying dynamism. Model of Consumer beha-vior Model of Consumer beha-vior Fig 1. 1 Fig 1. 1 The starting point for understanding consumer behavior is the stimulus-response model shown in figure 1. 1. Marketing and environmental stimuli enter the consumer’s consciousness, and a set of psychological processes combine with certain consumer characteristics to result in decision processes and purchase decisions. The marketer’s task is to understand what happens in the consumer’s consciousness between the arrival of the outside marketing stimuli and the ultimate purchase decisions. What influences Consumer behavior? Consumer behavior is the study of how individuals, groups and organizations select, buy, use and dispose of goods, services, idea or experiences to satisfy their needs and wants. A Consumer’s buying behavior is influenced by cultural, social, and personal factors. Cultural factors Culture is the fundamental determinant of a person’s wants ;amp; behavior. Each culture consists of smaller subcultures that provide more specific identification and socialization for their members. Subcultures include nationalities, religions, racial groups and geographic regions. Virtually all human societies exhibit social stratification, most often in the form of social classes, relatively homogeneous and enduring divisions in a society, hierarchically ordered and with members who share similar values, interest and behavior. Social Classes Upper uppers Upper uppers Lower uppers Lower uppers Upper middles Upper middles Middle Middle Working Working Upper lowers Upper lowers Lower lowers Lower lowers Social factors Such as Reference groups, Family and Social roles and statuses affect our buying behavior. Reference groups A person’s references groups are all the groups that have a direct or indirect influence on their behavior * Membership groups * Primary groups * Secondary groups * Aspirational groups * Dissociative groups Groups having a direct influence are called membership groups, some of these are Primary groups with whom the person interacts continuously and informally such as family, friends, neighbors and coworkers. People also belong to Secondary groups such as religious, professional and trade-union, which tend to be more formal and require less continuous interaction. People re also influenced by groups to which they don’t belong. Aspirational groups are those a person hops to join; Dissociative groups are those values or behavior an individual rejects. Marketers must determine how to reach and influence the group’s opinion leaders opinion leaders are often highly confident, socially active. Family There are two families in the buyer’s life: * Family of orienta tion consists of parents and siblings * Family of procreation the person’s spouse and children Rules and status Role consists of the activities a person is expected, each role in turn connotes a status Personal factors Personal characteristic that influence a buyer’s decision include * Age and stage Our taste of food, clothes and recreation is related to our age. Marketers should consider critical life events or transitions like marriage. * Occupation and Economic Circumstances Marketers try to identify the Occupational groups that have above-average interest in their product and services and even tailor product for certain Occupational groups. Both product and brand choices are affected by economic circumstance: 1. Spendable income (level, stability and time pattern) 2. Savings and assets (percentage that is liquid) 3. Debts 4. Borrowing power 5. Attitudes toward spending and saving * Personality and self-concept Personality set of distinguishing human psychological traits that lead to relatively consistent and enduring response to environmental stimuli (buying behavior). Like self-confidence, dominance, autonomy, deference, sociability, defensiveness and adaptability. Brand personality is a specific mix of human traits that we can attribute to a particular brand. 1. Sincerity 2. Excitement 3. Competence 4. Sophistication 5. Ruggedness * Life style and values Life style is a person’s pattern of living in the world as expressed in activities, interests and opinions. The ‘’ whole person ‘’ interacting with his/her environment. Life styles are shaped partly by whether consumers are money constrained (lower-cost product) or time constrained (multi-tasking). Consumer decisions are also influenced by core value the belief systems that underlie attitudes and behavior. Core values go much deeper than attitudes and behavior, people’s choices and desires over the long term. Key psychological processes Four key psychological process: Motivation, Perception, Learning, and Memory Motivation We all have many needs at any given time. Needs are: 1. Biogenic arise from physiological states of tension such as hunger. 2. Psychogenic arise from psychological states of tension such as the need of recognition. Three of the best-known theories of human motivation: Sigmund Freud, Abraham Maslow, and Frederick Herzberg. * Freud’s Theory Behavior is guided by subconscious motivations * Maslow’s Theory Behavior is driven by lowest, unmet need Fig 2. 1 Fig 2. 1 Maslow’s Hierarchy of Needs Maslow’s Hierarchy of Needs * Herzberg’s Theory Behavior is guided by motivating and hygiene factors. It has two implications: 1. Sellers should do their best to avoid dissatisfiers. 2. The seller should identify the major satisfiers or motivators of purchase in the market and then supply them. Perception Perception is the process by which we select, organize and interpret information inputs to create a meaningful picture of the world. Perceptions are more important than reality because perceptions affect consumer’s actual behavior. People emerge with different perceptions of the same object because of three perceptual processes: * Selective attention Selective attention means that marketers must work hard to attract consumer’s notice * People are more likely to notice stimuli that relate to a current need * People are more likely to notice stimuli they anticipate * People are more likely to notice stimuli whose deviations are large in relationship to the normal size of the stimuli * Selective distortion Is the tendency to interpret information in a way that fits our preconceptions. Selective distortion can work to the advantages of marketers with strong brands when consumers distort neutral or ambiguous brand information to make it more positive. Selective retention We are likely to remember good points about a product we like and forget good points about competing products. It explains why marketers need to use repetition. * Subliminal perception Learning ((When we act we learn)) Learning induces changes in our behavior arising from experience. Learning theorists believe learning is produced through the interplay of drive s, stimuli, cues, responses ;amp; reinforcement. Drive is a strong internal stimulus impelling action. Cues are minor stimuli that determine when, where ;amp; how a person response. Discrimination means we have learned to recognize differences in sets of similar stimuli ;amp; can adjust our responses accordingly. Learning theory teaches marketers that they can build demand for a product by associating it with strong drives, using motivating cues ;amp; providing positive reinforcement. Hedonic bias occurs when people have a general tendency to attribute success to themselves ;amp; failure to external causes. Emotion Consumer response is not all cognitive ;amp; rational; much maybe emotional ;amp; invoke different kinds of feelings. A brand or product may make a consumer feel proud, excited, or confident. An ad may create feeling of amusement, disgust, or wonder. Memory * Short term memory (STM) a temporary ;amp; limited repository of information. * Long term memory (LTM) a more permanent, essentially unlimited repository. All the information ;amp; experiences we encounter as we go through life can end up in our long-term memory. Associative network memory model views LTM as a set of nodes ;amp; links. Nodes are stored information connected by links that vary in strength. A spreading process from node to node determine how much we retrieve ;amp; what information we can actually recall in any given situation. In this model, we can think of consumer brand knowledge as a node in memory with a variety of linked associations. The strength of these associations will be important determinant of the info we can recall about the brand. Brand association consist of all brand-related thoughts , feelings , perceptions , images, experiences , beliefs , attitudes ;amp; so on that become linked to the brand node. State farm mental map State farm mental map Fig 2. 2 Fig 2. 2 Memory process Memory is a very constructive process, because we don’t remember info ;amp; events completely ;amp; accurately. Memory encoding describes how ;amp; where info gets in the memory. The strength of the resulting association depends on how much we process the info at encoding ;amp; in what way. Memory retrieval is the way information gets out of memory. 1. The presence of other product info in memory can produce interference effects ;amp; cause us to either overlook or confuse new data. 2. The time between exposure to info ;amp; encoding has been shown generally to produce only gradual decay. 3. Info may be available in memory but not be accessible for recall without the proper retrieval cues or reminders. The buying decision process The five stage model of buying process: 1. Problem recognition 2. Information search 3. Evaluation of alternatives 4. Purchase decision 5. Post purchase behavior 1. Problem recognition The buying process starts when the buyer recognizes a problem or need triggered by internal or external stimuli. Marketers need to identify the circumstances that trigger a particular need by gathering information from a number of consumers. 2. Information search Information sources * Personal: family, friends†¦etc. * Commercial: ads, web sites †¦etc. * Public: mass media †¦. etc. Experiential: handling, examining†¦etc. Search dynamic by gathering information, the consumer learns about competing brands ;amp; their features. Successive Sets in Decision Making: 3. Evaluation of alternatives * Some basic concepts will help us understand consumer evaluation process: First, the consumer is trying to satisfy a need. Second, the consumer is looking for a certain benefits from the product solution. Third, the consumer sees each product as a bundle of attributes with varying abilities to deliver the benefits. Belief is a descriptive thought that a person holds about something. Attitudes a person’s enduring favorable or unfavorable evaluations, emotional feelings, ;amp; action tendencies toward some object or ideas. Attitudes put us into a frame of mind: liking or disliking an object, moving toward or away from it. Expectancy-value model The consumer arrives at attitudes toward various brands through an attribute evaluation procedure, developing a set of beliefs about where each brand stands on each attribute. The expectancy-value model of attitude formation posits that consumers evaluate products ;amp; services by combining their brand beliefs according to importance. . Purchase decision In executing a purchase intention the consumer may make up to 5 sub decisions: Brand, Dealer, Quantity, Timing, and payment method. It is a Step between Alternative Evaluation and Purchase. Non-Compensatory Models of Choice: Conjunctive heuristic: the consumer set a min acceptable cutoff level for each attribute ;amp; chooses the first alternative that meets the min standard for all attribute. Lexicographic heuristic: the consumer chooses the best brand on the basis of its perceived most important attribute. Elimination-by-aspects heuristic: the consumer compare brands on an attribute selected probabistically ;amp; eliminates brands that don’t meet min acceptable cutoffs. Intervening factors Steps purchase intention between and Purchas: Steps between Alternative Evaluation and Purchase Steps between Alternative Evaluation and Purchase Fig 3. 1 Fig 3. 1 Attitudes of others Depends on 2 things: 1. The intensity of the other person’s negative attitude toward our preferred alternative. 2. Our motivation to comply with the other person’s wishes. Unanticipated situational factors may erupt to change the purchase intention (Perceived Risk): 1. Functional risk: the product doesn’t perform to expectations. 2. Physical risk: the product poses a threat to physical well-being or health of the user or others 3. Financial risk: the product isn’t worth the price paid. 4. Social risk: the product results in embarrassment in front of others. 5. Psychological risk: the product affects the mental well-being of the other user. 6. Time risk: the failure of the product results in an opportunity cost of finding another satisfactory product. 5. Post purchase behavior Marketer must monitor post purchase satisfaction, actions, uses ;amp; disposal. Post purchase satisfaction Satisfaction is a function of closeness between expectations ;amp; the product’s perceived performance. If performance falls of expectations the consumer is disappointed; if it meets expectations the consumer is satisfied; if it exceeds expectations, the consumer is delighted. Post purchase actions Satisfied consumer is more likely to purchase the product again ;amp; will also tend to say good things about the brand to others. Dissatisfied consumer may abandon or return the product. Private actions include deciding to stop buying the product (exit option) or warning friends (voice option). Post purchase uses ;amp; disposal Marketers should also monitor how buyers use ;amp; dispose of the product. Fig 3. 2 Fig 3. 2 How buyers use ;amp; dispose of the product How buyers use ;amp; dispose of the product Moderating effects on consumer decision making The manner or path by which a consumer moves through the decision-making stages depends on several factors including the level of involvement ;amp; extent of variety seeking. * Low-Involvement Decision Making Petty ;amp; cacippo’s elaboration an influential model of attitude formation ;amp; change, describe how consumers make evaluation in both low ;amp; high involvement circumstances. Central route in which attitude or change stimulates much thought ;amp; is based on consumer’s diligent, rational consideration of the most important product information. Peripheral route in which attitude formation or change provokes much less thought ;amp; results from the consumer’s association of a brand with either positive or negative peripheral cues. Marketers use 4 techniques to try to covert low involvement product into one of higher involvement: 1. They can link the product to an engaging issue. 2. They can link the product to a personal situation. 3. They might design advertising to trigger strong emotions related to personal values. 4. They might add an important feature. * Variety-seeking buying behavior Here consumers often do a lot of brand switching. Brand switching occurs for the sake of variety rather than dissatisfaction. The market leader will try to encourage habitual buying behavior by dominating the self-space with a variety of related but different product versions, avoiding out-of-stock conditions, & sponsoring frequent reminder advertising. Behavioral decision theory & behavioral economics Behavioral decision theory (BDT) has identified many situations in which consumers make seemingly irrational choices. 1. Decision heuristics. 2. Framing. 3. Mental accounting. * Decision heuristics 1. Availability heuristic consumers base their predictions on the quickness & ease with which a particular example of an outcomes comes to mind. 2. Representative heuristic consumers base their predictions on how representative or similar the outcomes are to other examples.

Backwood Mail Order Case Essay

Backwoods is a mail order company that is into camping supplies and outdoor clothing. Gerald Banks, the operations manager of the customer service division, is interested in training his 40 employees in the customer orders group to be more effective in handling customer complaints and problems. The organizational structure is as follows: The customer orders division has 40 employees and four supervisors whereas the shipping division has 32 employees and 3 supervisors. The employees are evenly divided into two shifts – A day shift and a night shift. The customer orders division is responsible for recording customer orders and check availability of each item ordered. The orders are then transferred to the shipping division which is in charge of ensuring the product is shipped to the customers. The constraint to be kept in mind before designing the training program is that service should not stop to their customers. The problems as identifies by a needs assessment specify that majority of the errors resulting in merchandise return is because of incorrect entry of size in the computer. Based on this the goals of the training program include reducing merchandize returns and creating a positive image of backwoods in the minds of its customers and employees. Questions 1. Write several clear, measurable objectives for the training to be delivered to the employees in the customer order group. The needs assessment output indicates problems to be addressed according to the organizational and task analysis. Before setting measurable outputs, the company first needs to perform person analysis as well to identify whether there are some employees who are excellent with certain attributes but lack at certain different aspect. Since the customer order group is the main point of contact for the customers, it is imperative that the quality of customer interaction should improve. Apart from telephone etiquette training, the customer order group should also have deep knowledge about the product portfolio. Keeping this in mind, we suggest the following objectives for the training. a. Development of in depth knowledge about the product portfolio: This objective should make sure that every customer service representative is abreast on the products and the different SKU’s of that product. This will need interaction with the products team, and periodical evaluation will be required for the same. b. Ensuring better data entry by rechecking customer knowledge of sizes: Because 78% of the merchandise returns are due to problems with size, features, and/or color selections, representatives must be trained in data entry, as well as order verification. Most of the problems can be eliminated by order verification and probably a sample, or description of the product. Also a habit of being inquisitive needs to be inculcated amongst the employees so that they ensure that the customer is aware about the different sizes in the different products. c. Being polite and prompt in handling customer complaints: A polite and prompt response from the employee will help in improving customer experience and would thus aid in creating a better image of the company. Also this will reduce the clutter that is caused in the workplace which will  further increase productivity and improve order time. d. Improving the company image and boosting employee morale The company branding has to be improved among the customers so that there can be many more repeat orders. To this extent, representatives have to be trained on the discount/promotional offers, product superiority etc. Career opportunities have to be explained and performance reviews should be setup so that employees are content as well. 2. Develop a recommendation for the training plan that includes the training techniques that should be used and the length of training Since customer orders department interacts with customers on a daily basis, the training technique will primarily consist of an off the job training program conducted in batches so that customer orders can be simultaneously fulfilled. Off the Job training phase in batches: a. Simulation and Virtual Reality techniques are recommended with every employee getting a chance to face a simulated customer complaint call and on the basis of their performance, feedback would be given. b. The training program should have classroom instructions and role plays. This will be helpful in customer interactions, and telephone etiquette. The classroom training session should include representatives from the product department, wherein the participants have an opportunity to clarify real life questions. Role play would include dealing with difficult customers, call forwarding etc. Since each hour of classroom training would require 6 hours of designing, this is an ideal combination. c. It should have an e-learning component. This will include information on the product portfolio and product usage. This component can also include data entry techniques to facilitate timely feed and retrieval of data. d. There should be a peer training component too, wherein star performers in the job would be asked to train newcomers and freshers. e. Cross functional training should be offered to the order processing as well as shipping department, since each department should be aware of the processes in the  other. f. Rewards should be planned for in the training program for the most improved employee. This would help incentivizing the process. A batch plan is recommended, since at any point of time, we cannot have all the customer representatives busy in training. Identification of time slots with lesser load should be done, and batches of 5 would be ideal so that the floor wouldn’t be completely empty at any point in time. Given an 8 hour window, a training of 1 hour every day for two weeks would be ideal to cover the required objectives. This will then be followed up with the on the job component. On the job training phase: This is essentially a follow up phase wherein some of the calls of the employees would be recorded and feedback will be provided on the same. There will also be occasional surprise calls from HR posing as customers. Lastly cards with learning of the training program should be placed on the desk of each employee. This will also act as an effective way to evaluate the training program. 3. Offer a plan for evaluating the training program. Describe the criteria that will be used and the design you will employ. We propose the widely accepted four-level framework for evaluation of the training program. Phase 1: Reaction of trainees: A simple questionnaire can be used to record the response of the trainee with his ratings on the training program. A few sample questions could be: a. What were your expectations out of the program? Were they met? b. How would you rate the time allotted to the training program? c. How would you rate the instructor? d. How would rate the design of the program? Phase 2: Learning of the trainees: The performance of the trainees can be gauged and recorded before the training program. The evaluation criteria would be the average number of errors in the past month and knowledge about product. These scores can then be compared with post training scores to evaluate the effectiveness of the training program. Phase 3: Observation of trained employees: This can be done by recording some of the calls of the employees and occasional surprise calls from HR posing as customers. The improvement in their performance with respect to promptness and politeness of response can help in evaluating the training program. Customer interaction and communication effectiveness should also be evaluated by supervisors. Also feedback can be taken from customers as well. Phase 4: Return on investment: The return on investment can be measured by calculating the savings in cost due to reduction in the number of returns. Also increased number of orders due to better customer satisfaction can be considered in considering the payoff from the training program. This can then be compared with the cost of the training program to measure effectiveness.

Service Operations Management Cathay Pacific Airways Case...

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