Consumer Relationship - Essay Example

 CONSUMER RELATIONSHIP Contents Introduction 2 Consumer Decision Making Process 2 Theories 5 Application in the Beer industry 6 Application of Utility Theory in beer industry 6 Strategies in Customer Relationships 7 Conclusion 8 Bibliography 10 Appendix 11 Introduction With almost all the companies aware of whatever need to be done so as to gain bigger market shares, most organizations still have not noticed that the most important component of a business organization is how such an organization relates with its customers and the willingness to satisfy the needs of those customers. The Beer industry worldwide is one very competitive industry, however, to date, the top ten beer firms account for almost eighty percent of the world’s consumed beer. The difference between these giant firms and the smaller firms is merely how such big firms aim at satisfying their customers (Anton 2008, p. 372). Consumer relationship management is one area of organizations that calls for proper intelligence and understanding to achieve. Most organizations look into satisfying the needs of their customers without first understanding themselves. By giving so much focus to consumer satisfaction and ignoring the organization itself, in the long run even the customers themselves hardly get satisfied (Liveris 2011, p. 17). This paper critically analyzes the contribution of organizational/product- consumer relationship trends in the global beer industry by taking into consideration the demands of consumer relationships, theories around consumer relationships and the techniques that have been employed by organizations so as to achieve customer relationships. Consumer Decision Making Process In purchasing goods and services, consumers are always faced with dilemmas before arriving at the decision to buy some specific products or services. In the beer industry, one may ask such question as, why do I need to buy “Heineken” but not “castle lager” for instance. Well, depending with the individual, different factors such as price, quality and satisfaction will start ringing in their minds. To others, however, the producer of the product matters a lot. It is common that people tend to choose products from well established organizations as opposed to the upcoming organizations. Described below is the process that most consumers undergo before arriving at the decision to purchase certain products: a. Identification of the Problem What triggers the mind of any individual to buy a certain product is the need to solve a certain need or problem that such a consumer may be facing. Here, the consumer tends to believe that by purchasing specific products, their problems will be solved. Most organizations start influencing the customer decision making from this point. Companies try to put to customers that those customers actually have problems and those problems can only be solved with products from such organizations. A good example is alcohol consumption. Do a research today and you will notice that most people start drinking beer following an advert that was aired on a television that portrayed alcohol as a solution to most problems. Organizational activities such as advertisements highly influence customer needs. b. Information Search After identification of their problems, consumers do search about those products that can fully solve those problems. At this stage of the consumer decision making process, the consumer looks at the problem critically followed of informative analysis of different products. Different organizations have different ways of passing their respective product information to their different customer units. More information can be gotten from the company websites, although the vast majorities get such information from the numerous advertisements (Liveris 2011, p. 18). One organization that has extensively used advertisements to entice their potential customers is Heineken International. To Heineken, the more information customers have, the bigger the market share. c. Evaluation of alternatives With a massive pack of information at the finger tip of the customer, such a customer may be capable of critical analysis of a wide range of products. Depending with the need of the customer, they can evaluate and rank product in accordance to their respective preferences. Primarily, products that satisfy most the customer rank the highest. In an evaluation of alternatives, organizations in the beer industry play in the minds of their consumers by providing differentiated products. With differentiation, the customer then has a wide range to choose from. d. Making Purchases Consumers always do evaluate the products so as to come up with those products that will fully satisfy and solve their problems. Different factors play in the minds of consumers in making purchases. Here, factors such as price, convenience and reliability of the product play a huge role. Sometimes, a customer will ditch a product just because it was hard to find such products at the first glimps3e at a store. Firms in the beer industry highly influence the purchase of their products at this stage by bringing those products as close as possible to the customers as well as making those products as conspicuous as possible to the respective customers and the potential customers (Liveris 2011, p. 18). e. Post Purchase Behaviour The aim of any purchase is to realize satisfaction. Consumers always have expectations from the products purchased. The failure of a product to satisfy the expectations of a customer may lead to failure in the next and subsequent purchases. In the beer industry, it has been difficult to deal with the post purchase dissonance. In other industries such as electronics, product provisions such as guarantees effectively help capture the trust of customers in the next and subsequent purchases. Always, it is at this stage of the consumer decision making process that most organizations tend to tie relationships with the customers. Organizations will look into what will make the consumer to come back to the product. From the consumer decision making process discussed herein, it is easy to notice that organizations play a huge role in the purchase of their products. Basically, the consumer decision making process informs that the success of a product purely relies with the organizations. Many theories have currently been put into study aimed at analysis of the consumer behaviours. These theories have as well aimed at highlighting the organizations in understanding their customer trends, the dynamism in the customer needs and how to eventually relate to the customers in satisfying their (customer’s) needs. Also, the theories discussed below analyse the effectiveness of the consumer decision making process. Theories Basically, consumers are influenced as well as take into consideration a lot of factors before and after purchase of any product. So as to sell effectively, most organizations have tried to analyse their customers in terms of what triggers the buying behaviours of such customers. Just by answering the question “how and why do people come to purchase our products and not the competitor’s?” may take an organization from a point to another in customer satisfaction. Various theories have been put to test and apply in helping understand how different consumers and consumer groups come to buy some kind of goods, but not others, even if those goods tend to satisfy similar needs, in the beer industry thus: Reasoned Action Theory Reasoned Action Theory has been used specifically to analyse the behaviours, attitudes as well as subjective norms of different sets of people. Reasoned Action Theory puts emphasis on the fact that the reasoning of an individual, their attitudes and their overall behaviour has a massive impact on the decisions made by such individuals. Developed by Fishbein and  Ajzen (1975, 1980), reasoned Action Theory aims at analysing the impact of psychological set up of an individual in their buying behaviour (Baran, Galka, & Strunk 2008, p. 97). From the theory of reasoned action, it is believed that people will always do things that they consider right or positive to them with little consideration to the results of their actions or the way other people look into their actions. While behaviours are highly influenced by factors such as culture and beliefs, subjective action entails the consequences of actions. Looking at the theory of the concept of behaviour, subjective action and attitude, one can easily come into conclusion that the attitude of an individual [plays the biggest role for an individual when it comes to decision making in such individuals. Morally, for instance, drinking alcohol is not advisable. However, a large percentage of the population still spend a huge amount of their time consuming beer, why? The answer is simple according to the theory of reasoned action, most people do not have a negative attitude towards consumption of alcohol. With a positive attitude, people will always keep up the consumption no matter the argument. Application in the Beer industry Firms that brew beer are well aware of the theory of reasoned action. With the knowledge of the theory of reasoned action, the beer industry has tried to capture the positive attitude of the customers by portraying beers as essential to human needs as possible. In most occasions, people have woken up to the adverts that portray beer consumption as the solution to stress and one that exhibits eternal relaxation. From this discussion, one can conclude that the theory of reasoned action is the platform organizations use to form the consumption agenda to the customers. Shortcomings of theory of reasoned action The biggest disadvantage of the theory of reasoned action is the difficulty to understand and predict different human behaviours and attitudes. The theory of reasoned action is basically the study of attitudes to predict human behaviour. It is however natural that human behaviour is constantly changing. Making products with a consideration of customers in terms of their changing attitudes can be hectic and erratic. Product Utility Theory The theory of product utility is another theory that has extensively been used in the beer industry. Everybody, both the sellers and the buyers, understand that satisfaction forms the core a product. The customer expectation is always to get solutions to their problems by acquiring the products. The seller, however looks at the product in terms of “Will this product bring us the results that we desire?” product utility entails the ability of a particular product to reach the targets of the seller as well as to satisfy the need of the customer. According to the theory of utility, one thing that puts together both the customers and the organizations is the need for continuity. Application of Utility Theory in beer industry As opposed to a long time ago when people started consuming beer, today, beer consumers are more concerned about their health. Health is a factor that has contributed most to the way organizations produce their products. However varied different market segmentations can consider health factors as they develop new products. It is generally basic for organizations to produce consumables that do not harm the health of their customers. In the beer industry specifically, the starch has been a component of focus in beer products. While some customer segmentations may like some quantity of starch in their beer, other segmentations such as the United States of America prove more resistant to starch (Burstein & Holsapple 2008, p. 79). In most cases, organizations in the beer industry have pursued a selected strategy to overcome the vice of difference in preferences. Heineken for instance pursued diversification, which has aimed at providing customers with a variety of products to choose from. Strategies in Customer Relationships Varied strategies have been put in place by organizations in the beer industry to help increase the product / brand- consumer relationships. One can easily note that with the continuously intensifying competition, customers always have a variety of substitution. However, most organizations in the beer industry have not seen the need for uniqueness in their operations. Looking at the strategies pursued by the different organizations, one can easily notice the similarities. The discussion herein can clarify the reason for the similarity of trends in market leadership of the beer industry. In the beer industry, big firms continue dominating as smaller organizations continue being suppressed. The following are some of the strategies that have been used by organizations in the beer industry to enhance effective customer- product relationships. Market segmentation Nothing enhances product- customer relations more than bringing closer customers to the products. Market segmentation involves identification of a particular set of customers than giving such a set products that satisfy their needs. In most African countries, for instance, the beers have been viewed as a drink for the old. Heineken, which is a leading member in the beer industry understood this karma and subverted it. In their adverts, Heineken portrays their beer as one that relaxes more at times when people are having intense fun such as watching football matches (Jennings 2004, p. 64). The vast majority of people who watch football in Africa are the youth. By targeting the African youth and claiming to satisfy their entertainment needs, Heineken has scooped a huge market share in the African market. This statistically shows the effective relationship between the African youth and the product Heineken. Product Diversification According to NATIONAL ASSOCIATION OF BETTER BUSINESS BUREAUS (U.S.) 2007, p. 45, diversification strategy has been employed today by most organizations that aim at either increasing their market share or profit margins. Basically diversification entails entry of new products into new markets or even the introduction of existing products but to new markets. The markets here can be represented in terms of geographic locations, social stratification or by merely choosing people who share some particular aspects of life in common to be the target customer. With diversification, all the customers feel represented in the organizational spectrum. Most organizations in the beer industry today have diversified by critically analysing the preferences of their target customers. For instance, Heineken, by introducing the Heineken malt to the American market, Heineken were able to capture the segment of customers who preferred little or no starch in their beer. Pricing Product customer relations are always enhanced when the customers feel the value for their money from the products. High pricing is always justified by high quality products. Customers will always feel satisfied when charged high for the products that justify the prices. Pricing has been a marketing strategy in most industries, mostly because people are easily attracted to cheap stuff (Jennings 2004, p. 66). The perception of low pricing is, however gradually changing. In today’s market, Heineken makes the most of their customers by just giving them beer that satisfies their need. Heineken has employed a combination of effective pricing strategy as well as a diversification to reach out to their customers. The strategy has worked on gaining competitive advantage. Conclusion Consumer relationship, according to this paper is not a new concept in the field of business. Ever imagined what would happen only if a failing organization had understood better their consumers? Very few organizations today experience significant growth. The reason behind the retarded growth in industries is space organizations have created for customers to easily switch preferences. By enhancing proper customer relations, organizations easily gain customer loyalty that is essential for the organizational growth. This paper is specifically important to organizations in the beer industry that aim at effectively competing their rivals by identifying the needs of the consumers, satisfying those needs without forgetting the needs of the organization itself. Bibliography Anton, J 2008, Customer relationship management: making hard decisions with soft numbers, Upper Saddle River, N.J., Prentice Hall. Baran, R. J., Galka, R. J., & Strunk, DP 2008, Principles of customer relationship management, Mason, Ohio, Thomson/South-Western Burstein, F., & Holsapple, CW 2008, Handbook on decision support systems, Berlin: Springer. Jennings, P 2004, 'The performance and competitive advantage of small firms: a management perspective', International Small Business Journal, vol. 28, no. 2, pp. 63-75. Available from: The University of Western Australia Library Course Materials Online. [1 September 2004]. Liveris, A 2011, 'Ethics as a strategy', Leadership Excellence, vol. 28, no. 2, pp.17-18. Available from: ProQuest. [23 June 2011]. National Association of Better Business Bureaus (U.S.) 2007, Business-consumer relations conference on advertising and selling practices in the financial, merchandise, and service fields of business, Boston, The Association. Appendix Read More