Consumer Behaviour and the Role It Plays in Marketing - Term Paper Example

Introduction to Marketing Introduction The changing world has then placed much emphasis on the importance of communication for effective marketing. All types of communication are involved in marketing communications, including literature, training, advertising, mail, telephone, product promotions and other contact relevant to marketing communication. Among the channel members, even follow-up on complaints as well as customer billing may be included within the communication loop. In order to effectively serve the marketing channel, correct timing and accuracy in communications is essential. Moreover, it is important for the company to recognize that all members of the channel have an obligation or important role in maintaining the efficacy of marketing communications. Channel communications works in a two-way system wherein information transfers to the user and bounces all the way back to the producer (Goldberg and McCalley, 1992). In other words, marketing communications works like a feedback system, which allows company producers to relay information to the customers. In response to the provided information, consumers give certain reactions or behaviours. Customer Loyalty Marketing theorist, Theodore Levitt (1986) once said, "The purpose of business is to get and keep customers." Indeed, businesses spend a lot of time and money in evaluating customer preferences to be able to retain customer loyalty. For if patronage is granted, profit increase follows. There are different aspects of the business that can be researched like customer preferences and customer loyalty that can be researched to get customer perception. Customer loyalty is about establishing and maintaining a relationship with your customers. (Chow & Holden, 1997) A key to this mutually beneficial relationship is the awareness of customer preference or the present and potential needs and wants of a customer about any aspect of the business, whether it is about products or services because of possible customer turnover which will lead to decreased profits. This is emphasized by Ric Ducques and Paul Gaske (1997) who expressed the need to focus on the reasons behind customers defection as on attracting a new customer. Loyal customers can be easier to convince to try new products or services, charge higher prices and use as a willing referral. According to Michael Lowenstein (1997), any business's most advantageous strategic purpose is to gain customer loyalty. It has a constructive effect on company culture, development and bottom line. Customers will be able to see that the company is geared towards retaining customers through all business processes from management to staff. Aside from being a strategic purpose, gaining customer loyalty is also a key corporate challenge today especially in this increasingly competitive and crowded marketplace because of the eventual profitability it will provide. (Chow & Holden, 1997) Every business wants to have a regular customer base because customers dictate profits and how the customer is treated will reflect on whether the customers will remain loyal with the company or not. This concept is illustrated by Mittelhauser (1997) in a study about the textile and apparel industry. Competition forces certain brand names to become stronger than others because of product loyalty and name recognition. Consumers tend to buy what is already familiar to them. Thus, it becomes imperative for retailing outfits, especially small or exclusive ones to build a steady base of customers to exist in the competitive marketplace. Don Peppers (1993) noted that customers have both current and potential value to companies. Thus, another advantage of having a loyal customer base is that it is more inexpensive to maintain one than acquiring new customers. The cost to get new customers amount to 5-10 times more than that of keeping a customer because there are a lot more tasks to be done to acquire new customers. Having a regular customer base will shift the focus of business strategies to improvement of product and service quality among others. In 1999, fashion retail giant, Marks and Spencer's (M&S) suffered a big loyalty test in Northern Ireland when customers expressed dissatisfaction about the stagnant fashion, inconsistency of sizes and high prices. Even those who considered weekly trips to M&S a must complained were greatly disappointed with the store. (Flynn, 1999) Customer loyalty is not a one-sided arrangement, with the company reaping all the benefits. The customers also expect to be rewarded for patronizing the company. Aside from assuring customer satisfaction, the company also has to devise certain strategies that will make the regular customers buy more or try new products. (Go, 2001) One of these methods that relates to the fashion retail industry is to give benefits to loyal customers. Some of the examples are the following: sampling, discount coupons, rebates, price-off, bonus packs, sample packs, special packs, premiums, free trial, warranty, prizes, patronage card/reward, contests and personality. Consumer behaviour and the role it plays in marketing Consumer behaviour is perhaps one of the most interesting aspects of marketing because it deals with the individual characteristics of consumers. It is basically the buying behaviour of the final consumers which are the individuals and households who buy the goods and services offered in the market for their personal consumption (Kotler & Armstrong, 2001). The main concern in marketing in relation to this aspect is whether consumers actually respond to the marketing strategies employed for the product (Best, 2004) which also gives rise to the model of consumer behaviour within which most market researches circle around. A good consumer behaviour model was introduced by Kotler & Armstrong (2001) which discusses the process with which the consumers respond to the different product features, prices and advertising. Figure 1 shows that the starting point consists of the stimulus-response model wherein marketing-focused factors which involve product, price, place and promotion and other stimuli which include outside factors in the market environment enter the "black box". This contains the individual buyer characteristics and decision processes. The third component of the model involves the actual responses to the marketing efforts which can translate into product choice, brand choice, dealer choice, purchase timing and purchase amount among others. It is congruent to the end goal of marketing which is to gain consumer loyalty (Chow & Holden, 1997; Ducques & Gaske, 1997; Levitt, 1986). There are many factors which shape the consumers' preferences which have been described in great detail and researched on by many scholars (Best, 2004; Kotler & Armstrong, 2001). Best (2004) offered a detailed diagram of the said factors outlined as customer needs as seen in Figure 2 which classifies the influences in three major categories: demographic, lifestyle and usage behaviours. On the other hand, Kotler and Armstrong (2001) have provided a different set of factors which affect consumer behaviour. Figure 3 shows that there are 4 major classifications namely: cultural, social, personal and psychological. These affect the buyer in the end of the process though in each case one factor may be more influential than the others (Levy, 1981). In the category of culture, the buyer is influenced by his/her subculture and social class within which opinion leaders are found who most often than not dictate the preferences of the group which can also be held true for the social category that includes reference groups, gamily and roles and statuses performed by the individuals. Although these two are alike, the main difference is that the former is more focused on the values and beliefs formed while the latter is more focused on the people around the individual. The third category is personal which indicates that age and life-cycle stages, occupation, economic situation, lifestyle, personality and self-concept are factors which influence the buyers. The last category focuses on psychological factors which has four subparts: motivation, perception, beliefs and attitudes and learning or cognitive factor. This has also been discussed at length by other scholars in their studies (Abelson, Kinder, Peters & Fiske, 1982; Folkes, 1984; van der Pligt, 1998). However, conspicuously absent is the latest development in the academe which is the role of emotions in consumer behaviour (Bagozzi, Baumgartner & Pieters., 1998). Psychological factors Motivation Motivation is the drive of the consumer to seek satisfaction and this ascribes to two major theories namely Freud's Theory of Motivation (1957) and Maslow's Hierarchy of Needs (1970). The first one assumes that a person does not really understand his/her motivation which when related to consumer behaviour, a person may buy something because of a hobby but a deeper level, it may be because of trying to impress others or yet at another level maybe because the purchase makes the individual feel independent. Maslow's theory, on the other hand, explains why people are driven by particular needs at specific times and when related to consumer behaviour, it will be applied to satisfy either levels of need through the purchase. Perception Perception is also a part of the psychological factors influencing consumer behaviour because it is the process, in which an individual chooses, organises and interprets information in order to have a meaningful big picture (Kotler & Armstrong, 2001). As individuals have different responses to the same set of stimuli, so does the perceptions of people. In addition, there are currently three kinds of perception which affect buyer goals: selective attention which screens out most information; selective distortion which interprets information to support pre-existing beliefs and selective retention which retains only the information which upholds their attitudes and beliefs (Woodside, 1974). Beliefs and Attitudes Through experience and education, individuals acquire beliefs and attitudes which affect buying behaviour. Beliefs shape the product and brand images which either attract or repel people to buy. If some of the beliefs are wrong, sales will decline such that marketers are quick to spot any kind of misconceptions to prevent this from happening. On the other hand, attitudes refer to the regular evaluation of an individual's feelings and tendencies such that people are put into either liking or disliking the product (Kotler & Armstrong, 2001). Even though attitudes encompass feelings or emotions, they are still different concepts because the former encompasses other concepts as well besides feelings. Moreover, attitudes are found to possess both cognitive and emotive elements (Rosenberg & Hovland, 1960). Attitudes are difficult to change such that products and services fit in the common, existing emotions rather than change attitudes. Learning or Cognitive Factor Learning emerges from an individual's experience such that it occurs through the interplay of drives, stimuli, cures, responses and reinforcement which compose the whole of human behaviour (Kotler & Armstrong, 2001). The decisions which consumers make to purchase are based on learning. Several studies have been made to support the idea of the cognitive influencing consumer behaviour (Buchholz & Smith, 1991; Park, 1993; Sproles & Sproles, 1990). From the cognitive arises individual learning style which refers to the way an individual absorbs the information and/or skills he/she is exposed to (Dunn, 1984). Other studies have focused on this particular area specifically its effect on consumer decision-making style (Jacoby & Chestnut, 1978; Kendall & Sproles, 1986). Emotions: Aspect still to be unravelled According to Johnson and Mullen (1990), emotion is defined as the "state of arousal involving conscious experience and visceral or psychological changes" and when applied to consumer behaviour becomes the product of how consumers feel toward the product or service. It is not an unusual element in consumer behaviour because emotions are continually experienced by an individual in his/her decision making process. Johnson and Mullen (1980) explains that emotions has a long history in the field of psychology with the patterns of visceral changes reported by James; coordination of such changes in physiological functioning and cerebral activities explained by Cannon and also cognitive understanding of situational and arousal environments studied by Schachter & Singer (all cited in Johnson & Mullen, 1980). Some opinions in the marketing field suggest that emotions can stimulate the buying interests as well as the buying purposes and motives of consumers (O'Shaugnessy & O'Shaugnessy, 2003). These have been supported by researches on the particular aspect (Bagozzi, Baumgartner, Pieters & Zeelenberg, 1999; Bagozzi, Gopinath & Nyer, 1999; Cohen & Areni, 1991; Gardner, 1985). However, this is only a later development in the field of consumer research because the attention of studies has been focused on the cognitive such that it drew criticisms from others. There was significant improvement in correcting this situation as more and more researches have devoted to studying the influence of emotions and the role it plays in consumer behaviour (Olney, Holbrook & Batra, 1991; Shiv & Fedorikhin, 1999). These studies assert that the act of buying is not just a mental act but can involve a range of emotions which either intensifies the wants and desires or the motivation to buy. Another criticism in this area is that although research in consumer behaviour has shed light on the role of emotions, they have not gone beyond measuring the responses, selection or preferences to tackle consumption as criticised by Holbrook and Gardner (1993) because consumption is also an important part of consumer behaviour as well. Functions O'Shaugnessy and O'Shaugnessy (2003) have delineated the functions of emotions which are relevant to consumer behaviour. First, it is a key to survival because emotions direct individuals to the important things people need in order to survive. The second function is that it provides information which can affect their behaviour. This was also explained by Bagozzi, Baumgarter, Pieters and Zeelenberg (2000) as they explain that emotions provide feedback in consumer behaviour which serves as the information used on whether the product should be bought or not. Emotions can also add to social control which can influence behaviour in a larger unit. Its last function is to complement reason which can account for impulse buying which some have indulged in. Emotions, as they are related to values indicate what should be considered important including options to be considered such that as reasoning tells the consumer the features of a certain product, then emotions fill the part which cannot be answered by features and other technical aspects alone. Determinants of emotional responses toward products Johnson and Mullen (1990) have discussed the different determinants of emotional response which are helpful in conceptualising strategies that will best elicit emotional responses that will lead to convincing individuals to purchase the products and services. Repetition The repeated exposure of the individual to the product may lead to more favourable emotional responses from the consumers. This is echoed by a study conducted by Wilson (1979) which involves a dichotic listening task wherein different sets of sounds were presented for each ear. This study concluded that a person's positive feelings of previously encountered things are not dependent on memory and beliefs. Classical conditioning Yet another indicator is classical conditioning which is a model of associative learning. This process involves a previously neutral conditioned stimulus eliciting a conditioned response because of repeated pairing with an unconditioned stimulus which evokes a similar unconditioned response. This is commonly found in television advertisements as Goldsen (1978) has researched on the effect of commercials eliciting classically conditioned emotional responses. Humour Humour is another determinant because it enhances the effectiveness of the message by diverting the attention of the consumer in counter-arguing (Osterhouse & Brock, 1970). It can also affect emotional response toward the product best discussed in terms of classical conditioning. According to Johnson and Mullen (1990), the repetitive representation of the product or the considered the conditioned stimulus which precedes the joke or any unconditioned stimulus obtains a positive emotional response from the consumer. However, there are also negative effects in using humour through classical condition because humour is very subjective and it also suffers from the strain of being repeated (Sternthal & Craig, 1973). Fear appeals A fear appeal is an action which seeks to draw out a negative emotional response because the consumer did not use the product or service. There is an implied unfortunate consequence for the person in the message but it can only be achieved should the appeal be clear enough which means that there should be an offer of a means to avoid the consequence or even reduce its effect. Simple warnings are not enough because there seems to eliciting a boomerang effect (Hyland & Birrell, 1979). Conclusion Marketing is indeed a complex combination of several factors. 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Journal of Marketing. 37, 12-18. van der Pligt, J., Zeelenberg, M., van Dijk, W.W., de Vries, N.K., & Richard, R. 1998, Affect, attitudes and decisions: let's be more specific. European Review of Social Psychology. 8, 34-66. Wilson, W.R. 1979, Feeling more than we can know: exposure effects without learning. Journal of Personality and Social Psychology. 37, 811-821. Woodside, A.G., 1974, Relation of price to perception of quality of new products. Journal of Applied Psychology, 59, 116-118. APPENDIX Figure 1 Model of Consumer Behaviour Figure 2 Figure 3 Read More