Understanding the Importance of Consumer Behavior - Assignment Example

First Last Number 16 September Understanding Consumer Behavior TASK Importance of consumer behavior. Improvement in technology and changing demands of the individuals has raised the importance of analyzing consumer behavior. A proper examination of consumer behavior provides the necessary information about the diverse needs of the customers and scope to examine the consumption pattern. The needs of the customers are fulfilled by providing them the required products and/or services. The Glendale Hotel has faced gradual decline in its business and therefore, it becomes essential to analyze consumer behavior in order to improve the present position. The service provided by concerned hotel is the most crucial factor for retaining customers’ loyalty and increase overall visits. For the success of the service industry, it is essential to offer the products and/or services according to the needs of the customers. Moreover, in order to face the increased completion in the hotel industry, it is necessary to examine the pattern of consumer behavior (Rani 52-61). Behavior of an individual is influenced by a number of factors including culture, social group, family members and other factors. A proper identification of the factors that are likely to influence the behavior of the customers enables the marketers to develop appropriate strategy for the development of the hotel business. The main aim of the hotel industry is to fulfill the needs of the customers and the studying consumer behavior facilitates the development of best products as well as offering unique services. Another factor that is most crucial and is likely to affect the buying decision is the prices of the products. The buying decision of the customers is linked with the price factor. Therefore, for this purpose of examining consumer behavior, it is likely to identify the preferable price of services offered. In addition to this, analyzing consumer behavior enables the marketers to identify the most suitable promotion method that has the potential to attract the potential customers as well as retain the existing ones (Rani 52-61). Consumers’ needs, motivation and values. Motivation is one of the important factors that are likely to influence consumer behavior, which in turn affects the purchase decision. Motivation enables an individual to undertake certain measure that has the potential to satisfy the needs and wants. In the context of consumer behavior, analyzing the motivation factors of the individuals is likely to be beneficial in attaining competitive advantage as compared to other hotels operating in the area. For instance, in the hotel industry, the increase in number of booking is likely to indicate that the customers are in motivated stage. The level of motivation also affects the buying behavior of the individuals. The theory of motivation is linked with the needs of the consumers. The motivated behavior of the customers is dependent on the need factor (Yahaya “Abraham Maslow: The Needs Hierachy”). Maslow’s need hierarchy theory identifies the factors that have the potential to affect consumer behavior. Moreover, the gap between availability and what the customers actually want assists in identifying the motivated behavior that has the potential to affect the need factor. The need theory designed by Maslow is arranged in a form of hierarchy. Human needs have been classified as physiological, safety, social, esteem, and self-actualization. The physiological needs of the customers are those that are essential for life for instance air and water. The physiological needs of the customers are to be fulfilled before satisfying other needs. The safety and security needs of the customers are to be fulfilled in order to avoid any kind of emotional or physical harm to the customers. Some of the essential safety and security needs are financial strength, job security and other needs. According to the theory, safety and security needs of the customers have to be satisfied before moving to other needs (Yahaya, “Abraham Maslow: The Needs Hierachy”). Fulfillment of the lower level needs is followed by the social needs. The social needs of the customers are associated with the communication process between peers and family members. The social needs are followed by esteem needs that majorly involve factors that include achievement, self-respect, recognition and many more. Self-actualization need is the last level of the motivation hierarchy and is followed by growth in opportunity. The needs are fulfilled according to their importance to the customers. Moreover, satisfaction of one need is followed by next level of hierarchy and the former stops to act as a motivating factor (Yahaya, “Abraham Maslow: The Needs Hierachy”). The need of the consumers is also affected by the demand for the products. The need acts as a motive when it directs an individual to gain full satisfaction. Therefore, in order to encourage the customers to visit the Glendale Hotel, it is essential to develop a need in the customers’ mind, so that it acts as motivating factor and influence the decision process. The Glendale Hotel has faced decline in business due to a number of factors (Yahaya, “Abraham Maslow: The Needs Hierachy”). Therefore, it becomes essential for the hotel industry to the implement innovative promoting strategy with the intention of increasing awareness among the customers with respect to the market demand. Culture is another factor that is likely to affect consumer behavior. Some of the important cultural factors include values, beliefs and other norms possessed by individuals. The values and beliefs possessed by each individual are different and are likely to influence the buying decision of the customers. Culture is an external factor that influences the buying decision of the customers and is essential to develop an effective marketing strategy (Yahaya, “Abraham Maslow: The Needs Hierachy”). Consumer behavior and marketing strategy. The hotel industry faces a number of challenges with respect to marketing products and/or services. Therefore, it becomes essential to identify the demand of the customers to retain the existing and to attract potential customers. The behavior of the customers determines the success of the industry in the long run. The study of consumer behavior is effective in designing appropriate marketing strategy that is essential for maintaining the profitability as well as long term relations with the customers. In addition to this, the importance of hotel service and the impact of external environment also affect the marketing strategies (Rani 52-61). The convenience and availability of service at a particular time is likely to affect the behavior of the customers. For instance, providing online booking facility along with the manual system is likely to improve customers’ perception about the services offered. The quality of service is most essential factors that influence customer behavior. Moreover, the quality of service defines the level of satisfaction that in turn indicates the fulfillment of needs. Some of the external factors that determine customers’ behavior are the location of the hotel, which are also identified to be influencing the decision. Apart from the external atmosphere of the hotel, the behavior of the employees is another factor that affects customers’ loyalty. In this respect, maintaining friendly relation with the customers also enables the business in retaining the customers for a longer period of time (Costa and Nóbrega, “The influence of customer oriented behavior on quality service”). Consumers are recognized to be influenced by different factors that include values of products and/or services and peers as well as family members’ involvement. For instance, getting a positive response from other customers has the potential to affect the behavior of others. The hotel services are tangible in nature and therefore, the customers have prior regard for quality while making a purchase of a service and/or products. Apart from quality, the price of the service is other factor that determines customers’ behavior. The intangible nature of services makes it difficult for the customers to judge the quality of service prior to experiencing it. Determining customers’ behavior enables the marketers to identify affordable and willing price of the products. Therefore, it becomes essential for the marketers to provide accurate and relevant information about the services that have the potential to encourage the customers to visit the hotel (Costa and Nóbrega, “The influence of customer oriented behavior on quality service”). TASK 2 Effect of selling a new service on buying process of customers. Jim and Fearne are the new owners of the Glendale Hotel and are struggling to save the business. The hotel has previously faced decline in the business due to a number of factors. The buying behavior of the customers is influence by a number of factors. The behavior of the individuals affects the process of decision making in terms of products and/or services to be offered. The buying behavior is dependent on the needs and wants of the customers. Therefore, selling of new service is also dependent on the demand for the hotel serving in a particular area. Some of the external factors also have the potential to affect the buying decision of both the potential as well as existing customers. For instance, the availability of substitute service providers is likely to influence the buying decision of the customers. On the other hand, providing unique services has the potential to attract new customers (Fu, Jones and Bolander 351–364). The past experience of the customers affects the buying decision of the customers. The business of the Glendale Hotel has shown a decline due to customers’ dissatisfaction. However, selling of new products and/or services has the tendency to attract new customers as well as has the potential to develop interest among the existing customers. The psychological factor such as motivation has the potential to influence the buying behavior of the customers. The motivating factor of an individual is dependent on the need for services. Therefore, it is essential for the new business to raise awareness about the services and/or products offered by the Glendale Hotel. To increase sales and improve profitability, it is essential to provide necessary information to the potential as well as existing customers. For this purpose, it is vital to implement promotional strategy to raise awareness (Fu, Jones and Bolander 351–364). Theories of new products/services buying. The major aim of Jim and Fearne is to develop a positive implication among the potential as well as existing customers to purchase the services and/or products and improve overall sales. With an increase in competition, availability of new services has improved the purchase intension of the buyers. In order to achieve competitive advantage in the business, it is essential to provide the products and/or services according to the needs of the customers. The product purchase intension of the customers depends on a number of factors including improvement in technology, the feature of services provided, environment and many others (Hanzaee and Adibifard 484-489). Factors Affecting New Product Purchase Source: (Hanzaee and Adibifard 486) In addition to this, service provision has the potential to affect the purchase decision of the customers. To improve the sales of service of the hotel, it is necessary to design it in such a manner that differentiates it from other service providers. The differentiating features of the service have the potential to attract new customers. The quality of communication determines the availability of information that in turn has the potential to shift the buying behavior of the customers towards the Glendale Hotel (Hanzaee and Adibifard 484-489). In order to raise the sale of services, it is essential to develop marketing strategy with the aim of improving profitability. The launch of new products and/or services in market requires implementation of effective promotional strategies. Moreover, conducting market survey is helpful in order to analyze the demand for the hotel services and needs of potential customers. Furthermore, research and development activities can be carried out by innovating products and services to retain the customers in the long run (Hanzaee and Adibifard 484-489). TASK 3 Factors affecting organizational buying decisions. Organizational buying behavior is different from individual behavior. In an organization, the purchase decision involves a number of individual and therefore, the process is of complex nature. The previous owner of the Glendale Hotel had maintained a regular corporate business. However, the business has faced loss over a long period of time. Therefore, it becomes essential for the new business owners to increase focus on organizational buying process to retain as well as improve corporate business. The organizational buyers are more concerned with respect to the quality as well as price of the hotel service. Therefore, it is crucial to maintain the quality of services provided and to set the price in such a manner to gain competitive advantage. Moreover, to retain the existing organizational buyers, some additional service benefits can be provided to increase loyalty (Padhy and Dsouza, “Organisational Buying Behaviour”). The organizational buying decisions are also influenced by a number of factors that in turn affect the corporate business relation. The external environment factors for instance demand for hotel service is likely to affect the buying decision. On the other hand, the shortage of services would have a negative impact on the buying behavior of the organization. Improvement in technology requires changes in products and/or services. In order to maintain long term business relation, it is necessary to offer innovative services. The interpersonal relation between the buyers and sellers of hotel service is essential to retain as well as improve corporate business. Therefore, the Glendale Hotel should maintain proper communication with the business partners to enhance corporate relation and avoid shift to other competitive suppliers (Padhy and Dsouza “Organisational Buying Behaviour”). The organizational buying decisions involve different situations that include ‘new task’, ‘modified rebuy’ and ‘straight rebuy’ (Padhy and Dsouza 3-4). In case of new task situation, the organizational buyers are identified to be purchasing the products and services initially for the first time. The price and quality of hotel service is the most essential factor in order to retain the new buyers. The modified buying situation involves change in the services that is likely to affect the buying decisions. In such a situation, the organizational buyers develop the tendency to search for new suppliers. Therefore, it becomes necessary for the concerned hotel to innovate the services and products offered. A straight rebuy is the situation in which the buyers seek quotations from different service providers with respect to the organizational needs (Padhy and Dsouza, “Organisational Buying Behaviour”). TASK 4 Customer retention and customer loyalty. Customer retention is very essential for the hotel to maintain relation with the existing customers and to attract new customers. In order to remain competitive in nature, it is necessary to ensure that the customers are satisfied with the service offered to them. The level of satisfaction is associated with the retention of the customers in the long run. The success of service sector is dependent on developing relation with the customers and therefore, it is crucial to maintain loyalty. In addition to this, retention of existing customer is necessary to reduce the cost involved in switching to other hotels. Therefore, for this purpose, the hotel offers number of different packages in order to retain the existing customers (Krasna 12-15). According to Khan (2013), customers repeated purchase of products and/or services defines the retention ratio of the customers. The hotel is involved in offering both accommodation and food facilities to the customers. Therefore, in order to retain the existing customers, it becomes essential to provide services according to the demand of the customers from the hotel industry. The service quality affects the buying decision of the customer that in turn has the potential to retain the customers for a longer period of time. Retention of the customers also increases the profitability of the firm, and the loyal individual are more willing to pay premium prices that is beneficial for the hotel industry (Khan 42-64). The image of a business is another factor that influences the number of customers. The positive image of the hotel is one of the crucial factors for attracting new customers. Therefore, for this reason, it is vital for the Glendale Hotel to develop its brand image by promoting its product and services. The business image should be designed in an attractive and knowledgeable manner that aware the customer about the products and/or services offered by the hotel. The Glendale Hotel has faced a decline in business and this indicates the fact that customer retention is essential to maintain profitability and to avoid closure (Khan 42-64). Retention of the customers is the core factor to remain competitive in the hotel business. Another factor that facilitates retention is recognition of the customers. For instance, calling existing customers is an effective measure to maintain loyalty in the long run. The quality of the services provided by the employees of the hotel also affects the loyalty of customers. Therefore, the Glendale Hotel should design some loyalty program such as offering discounts to the customers for subscribing membership cards has the potential to attract as well as retain the customers (Krasna 12-15). Reasons behind customer retention and customer defection. Customer retention and maintaining loyalty is essential to face the increased completion in the hotel industry. The existing loyal customers are more aware and familiar with the brand image and therefore, are willing to use different products and services. In addition to this, the feedback and recommendations suggested by the customers is the most important sources to identify the change requirements. Furthermore, the existing customers are more willing to have the services as compared to the new ones. In this respect, the expected sales are higher in case of loyal customers. The positive experience of the loyal customers shared with others has the potential to develop a strong brand image (Khan 42-64). The loyal customer acts as a marketing agent for the business and is likely to have a positive impact on profitability. Moreover, retaining the existing customers involves lower costs as compared to attracting the new customers. The loyal customers of the business act as an agent in raising awareness about the products and services offered and therefore, reduce the additional costs involved in the promotion of the hotel. The hotel is also subjected to customer defection due to the existence of large number of service providers. The price of products and services is the main factor that results to the shift of the customers from one hotel service provider to another. The customers are sensitive to price and therefore it becomes essential for the hotel to set affordable and competitive price for the services and products offered. Service failure is another factor that not only affects the availability of the product, but also results in decline of the existing customers. The lack of inconvenience is another cause for the defection of the customers. The geographic location of the hotel is one of the most essential factors that are considered by the customers while travelling. In case of more expense and larger distance, the hotel is not preferable by the customers (Khan 42-64; Wolnik and Svraka “A Case Study Investigating in Customer Defection”). The quality of products and services is a vital factor that assists the business in holding the customers. Therefore, poor quality of products as well as services is likely to reduce the number of customers. In addition to this, the services provided by the employees are another factor that has the potential to affect customers’ behavior towards the hotel. With the increase in competition and in the number of hotels, it has become essential to provide unique services to the customers in order to differentiate it from others. Moreover, any delay in providing the services has negative impact on the overall experience of the customers, which may results in decline in the number of customers (Khan 42-64; Wolnik and Svraka “A Case Study Investigating in Customer Defection). Benefits of relational interaction between customers and organizations. Customer relationship management focuses on developing and managing the relation between the customers and the hotel. Relational interaction is essential to retain the customers for a longer period of time. Moreover, interacting has the potential to attract new customers that in turn raise the sales and profitability of the hotel. The communication process also enables the hotel to gather feedback from the customers that acts as a base for implementing changes relating to demand in quality of products and services (Amofah and Ijah, “Objectives, Strategies, and Expected Benefits of Customer Relationship Management”). Therefore, interacting with the customers has the potential to improve the quality of the service. Moreover, interaction helps in differentiating the customers that in turn is effective in terms of cost for marketing promotion of the products and services. Interaction with the customers has the potential to improve loyalty and increase the level of satisfaction. Information gathered from the customers is the most important source to identify demand and deliver according to the needs of the customers (Amofah and Ijah “Objectives, Strategies, and Expected Benefits of Customer Relationship Management”). TASK 5 Market research in order to assess and evaluate consumer behavior. For the success of the hotel, it is essential to analyze consumer behavior. Therefore, market research is essential to analyze the behavior of consumption pattern of the customers. The need of the individuals varies and therefore, consumer market research is an effective way to fulfill the demands of the customers. Moreover, market research helps to identify the target market for the determining the products and services. For ascertaining consumer behavior, an appropriate research method is needed to be adopted, which enables the hotel to obtain feedback about the products and services (Sahney, “Consumer Behavior”). For the purpose of consumer research, surveys and questionnaires method can be used. The survey method is a traditional method of collecting data. The method is suitable for collecting information regarding consumer attitude and behavior. The survey method for the purpose of consumer research is easier to conduct as compared to other method. Consumer market survey is cost effective and has the potential to gather necessary information from the respondents. The survey method represents a large population and therefore, the method is likely to provide more relevant information as compared to other method. The questionnaire and interview method used for collection of data involves low cost (Sahney “Consumer Behavior”). The interview method enables face-to-face interaction between the researcher and the consumers. Therefore, the method is likely to provide more relevant information about the customers. The interview method allows free flow of communication between the parties involved and therefore is a rich source of data and information. The interview method is more time consuming, but respondents have an equal opportunity to share their viewpoints. Through the interview method, information can be gathered from the customers about their wants with respect to the hotel. The feedback gathered from the customers is an essential source for implementation of changes with respect to the demand of the customers. The questionnaire method used for the collection of data is also effective, as the consumers are able to share their opinion. Some of the disadvantage linked with the interview method is that it is limited to particular geographic region and thus, the quantity of information is limited (Sahney “Consumer Behavior”). Moreover, biasness of the interviewers is likely to affect the result to be obtained from the survey. The introduction of digital technology has improved the survey method by allowing the customers to share their opinion through social media and other websites. The online survey method has reduced the cost involved in the manual form of collecting data and information. The data collection process is easier in case of online survey method as compared to other methods (Sahney “Consumer Behavior”). Another method used for evaluating consumer behavior is ethnography that is based on the attitude and social factor that affects the selection and purchase of the products. The method enables the market researchers to analyze the human behavior that affect the buying decision of the customers. The ethnography method of collecting information is preferable by the marketers, as it can be conducted at any time with the aim to reach existing and potential customers. The method is applicable in case when the consumer experiences the hotel’s services. The experience of the customers determines the level of satisfaction or dissatisfaction that in turn is linked with the repeated purchase behavior (Sahney, “Consumer Behavior”). Information gathered through the observation method can also be used for ethnography market research. The ethnography method of the research enables the marketers to gather relevant information about the factors that has the potential to positively influence the buying behavior of the customers. The detail evaluation of consumers’ behavior allows determining the demand for the products and services. The recognition of the demand pattern enables the hotel to design the products and services according to the customers. The method is preferable by the marketers, because it is effective in collecting information regarding product usage as well as consumption pattern. However, research method is expensive and time consuming as compared to other methods of data collection (Sahney “Consumer Behavior”). Works Cited Amofah, Patrick and Amer Ijah. Objectives, Strategies, and Expected Benefits of Customer Relationship Management. 2005. Web. 29 April 2015. Costa, José Alfredo Ferreira and Kleber Cavalcanti Nóbrega. The influence of customer oriented behavior on quality service. N.d. Web. 29 April 2015. Fu, Frank Q, Eli Jones and Willy Bolander. “Product Innovativeness, Customer Newness, and New Product Performance: A Time-Lagged Examination of the Impact of Salesperson Selling Intentions on New Product Performance.” Journal of Personal Selling & Sales Management 28.4 (2008): 351-364. Hanzaee, Kambiz Heidarzadeh and Shadi Adibifard. “New Product Specification and Purchase Intention: Validating and Developing a Native Scale (NPPI-I).” Middle-East Journal of Scientific Research 12.4 (2012): 484-489. Padhy, Jagannath and Pravin Dsouza. Organisational Buying Behaviour. N.d. Web. 29 April 2015. Krasna, Tadeja. “The Influence of Perceived Value on Customer Loyalty in Slovenian Hotel Industry.” Turizam 12, (2008): 12-15. Khan, Shahzad. “Determinants of Customer Retention in Hotel Industry”. Journal of Applied Economics and Business 1.3, (2013): 42-64. Rani, Pinki. “Factors Influencing Consumer Behaviour.” Int.J. Curr. Res. Aca. Rev 20. 9 (2014): 52-61. Sahney, Sangeeta. Consumer Behavior. N.d. Web. 29 April 2015. Wolnik, Karolina and Svraka, Amela. A Case Study Investigating In Customer Defection. 2012. Web. 29 April 2015. Yahaya, Azizi Hj. Abraham Maslow: The Needs Hierachy. N.d. Web. 29 April 2015. Read More