The Buying Patterns of the Consumers - Essay Example

The Buying Patterns of the Consumers Introduction The origins of marketing can be traced back to the earliest days when our ancestors engaged in barter and trade. In the Ancient Rome and Greece, while setting up stalls, sellers would take into consideration, the buying power, bargaining power, needs and expectations of the customers. It took almost 25 centuries for us to build on these practices and create a formal field of study of marketing (Hoyer & Macinnis, 2009, p. 247). However, even then, the field of marketing has gone through many transformation and revolutions. In the earliest days of the industrial revolution, the pre dominant ideology or concept was to produce as much as possible of a product because the same would assist in extensive distribution with a push strategy and allow taking advantage of economies of scale (McDaniel & Gates, 2011, p. 107). When flaws in this approach became apparent, during the mid 1990s, the focus shifted towards product orientation, which urged the marketers to spend all their resources in perfecting the quality of their products. The next ideology shift during the late 1970s brought the selling orientation, which preached the idea that in order to ensure sales and profits, companies should follow highly aggressive sales strategies (Lancaster & Massingham, 2010, p. 20). Nevertheless, all these ideologies were stepping stones in allowing marketers to come up with the marketing innovation, which puts customers at the top of everything which the motto, “customer is always right”. Marketing approach urges marketers and companies not to engage in “hunting” but “gardening”. Marketers agree that “make and sell” strategy is extremely short sighted and today, in order to succeed, companies need to follow a “sense and respond” strategy. Organisations should not put in all their efforts to find the right customers for their products, but the focus should be on finding the right products for your customers (Solomon, 2006, p. 370). More importantly, in order to find right products for your customers, you first need to have a thorough understanding of the needs and wants of your customers. Only when businesses have the proper knowledge about the buying patterns of their consumers, they can sustain their revenues and ensure that they rank high in terms of customer satisfaction. This paper is an attempt to prove the above-mentioned statement while exploring both sides of the argument and then showing how the arguments in favour of this statement are stronger than the counter arguments. Discussion Arguments First, there are various examples present in the literature and business history where a better understanding of consumer behaviour has allowed business to create unique yet strong and profitable business models. Consider the example of Southwest Airlines, which in the early 1970s came up with a unique business model “no lesser fares and no frills”. The idea was to cut down the expensive and lavish facilities that were costly, provide better customer service with lower fares and fly as many planes as possible through shorter routes (McDaniel & Gates, 2011, p. 107). Even today, Southwest Airlines is one of the strongest players in the US airline industry. Even through the toughest times of recession and post 9/11 crisis, Southwest Airlines was one of the few airlines that remained profitable; primarily because they knew what their customers wanted them to do (Hoyer & Macinnis, 2009, p. 247). Second, understanding the behaviour of customers allows companies to charge a premium price for their products and strengthen themselves financially. Furthermore, they are better positioned to face competitive threats from their rivals. Consider the example of Starbucks in this regard, a firm that has kept it abreast with the changes in the expectations and demands of its customers and the same has allowed it to charge a much higher price for its coffee than any of its competitors. During the past three decades, a lot has changed, and many companies have come and gone challenging the territory of Starbucks, but Starbucks’s relentless focus on understanding the needs of its customers has allowed the company to impress investors with its performance (Kardes, et al., 2010, p. 108). Third, there are no doubts in the fact that, when companies are better aware of the buying patterns of their consumers, they enjoy a better position to satisfy them. More importantly, research reveals that the cost of acquiring new customers is, on an average, five times more than the cost of retaining the existing customers. This explains why companies have been stressing so much on customer delight and customer satisfaction because the same can increase the rate of customer retention (Thygesen & McGowan, 2006, p. 419). More importantly, satisfied customers are highly likely to engage in word of mouth advertising and bring in more customers as well and that also with minimal cost. Moreover, studies have revealed that although, it takes time, word of mouth advertising or referrals are the most effective manner since people are more likely to believe their friends, colleagues, family members and co-workers (Blackwell, et al., 2006, p. 41). Counter Arguments Companies that spent too much time and energy trying to mastering the art of understanding their consumers run the risk of getting caught up with the same. A glance at the business history would reveal that most of the great companies and their genius marketers did not focus their energies towards meeting existing unfulfilled needs. Instead, they thought ahead of their time, created products and services which created new needs and wants. Consider the example of legendary Steve Jobs and Apple Inc. in this regard, which is one of the few firms that do not conduct any significant market research. Steve Jobs was of the view that consumers do not know what they want; it is your job to sense what they want and then create your products accordingly (Solomon, 2006, p. 370). Another criticism of placing too much importance on consumer behaviour comes from the proponents of relationship. If analysed closely, it appears that consumer behaviour and relationship marketing are at odds with each other. When consumer behaviour preaches companies to focus their energies towards understanding and predicting their behaviour of consumer, relationship marketing, as the name suggests, urges to form strong and close relationships with customers and then leverage the same to change the perceptions and behaviours of the customers (Lantos, 2010, p. 92). Refutation Important here to understand is the fact that the above-mentioned criticism of consumer behaviour does not necessarily negate the concept of consumer behaviour or discourage companies from engaging in market research in the first place. The criticism stems from the problems that are created when companies get too much caught up in analysing and understanding consumer behaviour. However, extensive focus on consumer behaviour does not necessarily is a problem (Blackwell, et al., 2006, p. 41). For example, even in order to inspire customers or think ahead of them, one needs to have the basic knowledge or understanding of their expectations so that one could have a sense of direction regarding the same. Furthermore, the criticism that relationship marketing is at odds with consumer behaviour is on the way to approach the situation. The other approach would be to see consumer behaviour analysis as the prerequisite to relationship marketing. After all, relationships are better formed once when you understand the person better. Consider the case of Levis Strauss to understand how Levis mastered relationship marketing and thinking ahead of customer by gaining a better knowledge of consumer behaviour (Lancaster & Massingham, 2010, p. 20). During the early and mid 1990s, Levis Strauss enjoyed incredible market growth and showed impressive financial performance. Clearly, their 501 Jeans were a massive success and the focus of all the employees was on creating new and innovative designs of 501 Jeans since 501 Jeans generated more than 60 percent of the total revenues for the company. Levis Strauss, due to their impeccable success, had reasons to believe that market research and consumer behaviour would not yield them any results for them since they already knew that people want 501 Jeans. Nevertheless, when sales dropped and profits shrank, Levis realised that the entire Jeans industry was on the decline and customers never perceived Jeans as long term apparel but as a fad and they were turning to combat pants, shorts, trousers, dress pants and others (Hoyer & Macinnis, 2009, p. 247). Soon, Levis Strauss realised that it was falling back not because it was going back but because of the fact that it was standing still, and the market was moving ahead. Market research found out competitors such as Zara, M&S, H&M, Mango, Gap and others were benefiting from their vertical integration model, something that was not present in the jeans industry. Nevertheless, based on the findings, Levis revamped its value chain, which allowed the company to decrease the lag time from 8 months to 3 weeks. They created a partnership with Custom Clothing Technology Corporation (CCTC) which allowed them to introduce their idea of “personal pair”, where customers could provide their measurements at Levis stores and get their jeans delivered to their places or for pick up from the store within less than two weeks. Levis realised that the only way to give a new life to the jeans industry was to reduce the lag time and allow the customer to take charge of the design and manufacturing process by creating custom jeans (Kardes, et al., 2010, p. 108). Conclusion In the globalised world of today, where customers have access to more choices, information and options that ever, it has become imperative for businesses and their marketers to understand the thought processes, perceptions, expectations, buying decision making strategies and overall consumer behaviour of their customers (Thygesen & McGowan, 2006, p. 419). Considering the escalating competitive pressures of the marketplace of today, without a comprehensive understanding of consumer behaviour, companies can easily find themselves in trouble with changing macro and macroenvironmental conditions. Only companies that keep track of the changing consumer trends, preferences and fashions, are able to post sustainable profits in the ruthless marketplace of today (Lantos, 2010, p. 92). References Blackwell, R. D., Miniard, P. W., & Engel, J. F. 2006. Consumer behavior. Thomson/South-Western. Hoyer, W. D., & Macinnis, D. J. 2009. Consumer Behavior. Cengage Learning. Kardes, F. R., Cronley, M. L., & Cline, T. W. 2010. Consumer Behavior. Cengage Learning. Lancaster, G., & Massingham, L. 2010. Essentials of Marketing Management. Taylor & Francis. Lantos, G. P. 2010. Consumer Behavior in Action: Real-Life Applications for Marketing Managers. M. E. Sharpe. McDaniel, C., & Gates, R. 2011. Marketing Research. John Wiley & Sons. Solomon, M. R. 2006. Consumer behavior. Financial Times/Prentice Hall. Thygesen, F. & McGowan, P. 2006. “Inspiring the organisation to act: a business in denial.” International Journal of Market Research, Vol. 44, Quarter 2. Read More