Significance of Consumer Psychology in Strategic Marketing - Term Paper Example

1. Introduction Analysis of consumer psychology is vital ingredient of market strategy as it helps to understand the changing preferences of the customers. In a highly competitive environment of global business, it is important that trend in the customers’ needs and requirements are studied in advance so that appropriate strategy could be developed to maintain a competitive advantage. As such, elements contributing to the decision making power of the customer become vital imperatives for the marketers. Thus, the concept of status consumption becomes intrinsically linked to purchase decision and the behaviour. The various factors influencing the customer’s purchase behaviour and consumption pattern of product would be discussed that are utilized to market a product. 2. Identification and analysis of target customer The consumers can be broadly divided into three types; 1. Users or the end-users are those consumers who are actually using the products and services. They constitute major segment of the market that has direct and indirect impact on the performance outcome of the marketers. 2. Payers are those persons who pay for the products and services which would be used by others. 3. Buyers are people who actually make payments for the products and services bought. All the above three types of consumers can be the same person or different persons, depending on the circumstances. But irrespective of the differences, there are certain values that the consumers expect to get from the products and services that he buys. These are called universal values and can be primarily stated as fairly priced, quality product which must be accompanied by pre and post purchase service. In other words, the customer expects to be treated with good behaviour and assistance when refund or exchange is sought by the customer, which considerably reduces the risk of buying sub standard product. The three types of consumers have certain personalized values which significantly influence consumer behaviour. 3. Elements of customer purchase behaviour process The understanding of how the consumers buy and behave is a vital marketing concept. The customer purchase behaviour is a subtle but complex process of perceiving a need for a product or services that is significantly impacted by personal choice and external factors. The major factors that contribute to the purchase of a product are elaborated as below: 3.1 Perceiving the need Consumer buys a product only it perceives a need for it. The awareness of the need could be voluntary or triggered by advertisement of the product that may lead to the decision to purchase. 3.1.1 Seeking and assessing value The awareness of the product and requirement is often followed by the need to seek information about the product from various internal and external sources. The internal sources comprise of internet search, past experience of the product or personal survey for the best product from different source. The alternatives to the product also become intrinsic part of seeking and assessing value for the product. For high end product, the information gathering process becomes important criteria in purchase decisions. Thus information from friends and acquaintances and from the consumer rating organizations are sought to reduce the risk of buying expensive products. 3.1.2 Price and buying value While price may not be very important part of the strategy with the old customers but competitive pricing helps to bring in new clients. Various factors are used as evaluative criteria for the product. The credibility of the manufacturer, reliability of the product, quality, performance, social status, post sales performance, price etc. 3.1.3 Consumption value and satisfaction User satisfaction in the consumption of the product is an important element of buying decision and promotes customer retention. Lee et al. (2002) say that the consumer experiences satisfaction in relation to the consumption, possession, maintenance, life cycle and the after sales service of the product purchased. If the consumption meets the perceived expectations of the product, it results in satisfaction and repeat purchase and general goodwill. But if the perceived value and benefits fall short of the expectation, there would be dissatisfaction. 3.1.4 After sales performance The post purchase commitment lends credibility to the product and promotes trust and customer relationship building. The satisfaction with the product and good post sales communication become strong factors for retaining customers and building new ones. 3.2 Consumers’ psychological influence The factors and issues that impact the purchase psychology of the consumers are vital ingredients of their buying decisions. Some of these factors are enumerated as follows. 3.2.1 Personality and motivation Motivation factors like personal wellbeing and health, environment, development issues etc. influence the buying behaviour for goods that facilitate these factors. Motivation for buying a product is considerably influenced by the personality and self concept of the consumer. Self concept is the way one perceives or likes to perceive himself. Personality, on the other hand, is the way other people see them or the way they interpret the person’s overall appearance that is exhibited. It is for this reason that people are influenced by the changing trends in the society and are prone to cultivate traits and adopt living styles that reflect their values, tastes and personal preferences. Arnould et al. (2004) emphasize that motivated behaviour is prompted by a desired goal that is need driven. Products bought as a lifestyle statement have a motivated goal. It portrays and determines how people like to spend their time and money and to what extent, they are ready to change their personality to suit their changing environment. Luxury brands, fashions and trends are indicators of changing lifestyle patterns of a person which one likes to adapt to keep abreast with the changing times. 3.2.2 Perceived value and brand image Brands are created in the concept of meeting the perceived value of the products by the people at large. ‘Brand building is needed because products are the same’ (Kotler, 2005). The brand name ensures that the product maintains a high standard of excellence at a price that a customer is willing to pay for. Therefore, the brand provides the customer with a quality product which satisfies his needs, making it as one of the key reasons that brands still enjoy the popularity amongst its customers and at the same time, attract fresh clientele. 3.2.3 Learning ‘In cognitive learning, the individual learns by listening, watching, touching, reading or experiencing and then processing and remembering the information’. (Think Quest, 2008). Theory of cognitive learning is important because it implies that that through various means of learning processes, people are able to retain the information in the memory and apply it as and when required. When applied to advertisements, this theory becomes highly relevant. The impact of those visuals and the textual contents are reflected in the behavioural pattern of the people who may or may not become their client. In some cases, the low impact advertisements are known to even divert the committed clients. Hence, effective communication through appealing visuals and informative textual contents are important not only for retaining the old customers but they must also be able to attract new one. The effective communication helps create need that acts as catalyst to the process of purchase which may or may not lead to buying decision. 3.2.4 Values, beliefs and attitude The personal values driven by socio-cultural compulsions are strong motivators for purchase decisions. The perceived value for the brand that may add value to the lifestyle helps create an attitude amongst the consumers for the products that meets the performance. Thus, these factors influence purchase behaviour and may result in the purchase of the product. Indeed, scholars have found that when the products are evaluated against the values upholding quality of life that significantly improve consumers’ well-being, there is distinct merging of economic and psychological behaviour towards purchasing decisions (Handgraaf and van Raaij 2005). Thus, wellness industry and organic food etc. are major areas that contribute to improved quality of life. 3.3 Consumers’ socio cultural influence The socio-psychological paradigms are increasingly becoming major factors in the sales and market strategy. Shultz say that it is the end-users who now control the markets rather than the marketers (Shultz, 2001). The rapid globalization has created a pluralistic society which has diverse needs and requirement. Thus, the marketers focus on the issues that impact the purchase behaviour of the pluralistic society of the contemporary times. Few of these factors are: 3.3.1 Personal Personal choice and requirement for the product significantly impacts the buying behavior and results in purchase decision. Indeed, the financially well off person uses the informed choices to make decisions about fulfilling his need for the desired products which may complement his social status. 3.3.2 Family Assael (1998) asserts that family is considered to be the most important consumption and decision making unit. While the collective decision is a favourable outcome for purchasing products, the type of product also plays important part in the purchase behaviour. The food products may be bought as per the requirements of the mother, whereas toys are exclusively bought on the choice of the children. Parents also strongly influence the behaviour of the children in diverse area that could subsequently impact their decision power in sale and purchase of products and services in the later life. An orthodox family would like to maintain a status quo vis-à-vis fashion, new technology whereas a modern family would prefer to be updated with the times and thereby promote goods and services that would help them to maintain their modern lifestyle with latest gismos and fashion accessories. 3.3.3 Reference groups These groups are broadly influenced by the peer population and celebrities that endorse products and services. The reference group helps the common man to emulate their role models when they adopt the products used by them. The consumers often purchase products because they are also pleased to identify with the celebrities who are endorsing those products. 3.3.4 Social consciousness and social mindedness Scholars assert that consumers’ ‘social-mindedness is related to a predisposition to engage in socially, economically, and environmentally responsible purchasing behaviour’ (Nijssen and Douglas, 2008). In the present times, the consumers have also developed social consciousness and like to buy goods and services that are environment friendly and promote social cause. Indeed, the ethical issues and social responsibility are increasingly influencing the purchase decisions of the consumers (Auger, Devinney, and Louviere 2007). The success of Body Shop is primarily due to their image of endorsing social mindedness. It makes a huge range of body care products from natural ingredients from across the world and caters to people of all strata (BodyShop). The company prides in using natural products from all corners of the world and contributes to sustainable business practices by ensuring that the ingredients used in the products are from sustainable source where deforestation is not involved or cruelty to animals has not been part of business process. It subscribes to humane cosmetic standard and works towards the welfare of animals and community. 3.3.5 Social class Class is broadly defined as the group of people with similar values, interests, socio-economic status, education etc. Thus, the social class exhibits purchasing behaviour that is strongly attractive for segmented marketing. The luxury brands cater to the rich and competitively priced products focus on the middle class. 3.3.5 Culture Culture can broadly be defined by the values and norms that people follow in their life and lifestyle. While the traditional family values are still in vogue in Asian region, the concept nuclear family system and increasing trend of partnership rather than marriage between partners significantly influences the buying decisions of the people. Ennis (2009) insists that ‘culture strongly affects the way in which a person’s lifestyle develops and consequently influences the pattern of product consumption’. Thus, the key factor in the market strategy, vis-à-vis cultural background centres on the person who controls the finances. This helps the companies to develop and design their products for the target consumers. The consumption pattern and lifestyle are intrinsically linked the changing cultural paradigms in the contemporary environment of rapid globalization. 4. Conclusion In the highly competitive business environment dissemination of information about the products and generating awareness about it greatly facilitates in creating a niche market position. Advertisements and various tools of mass communication like social networking sites, blogs etc have increasingly become essential part of effective market strategy and help them to maintain competitive advantage. Indeed, use of technology in market strategy helps to meet the challenges of the changing dynamics of contemporary business. The organizations need to improvise techniques and skills to encompass traits and behavioural pattern that facilitate better perception and understanding of people. Thus, it can be concluded that the various factors that influence the buying decisions indicate consumption and must become intrinsic part of market strategy to gain leverage in the competitive business environment. (2133) Reference Arnould, Eric & Price, Linda & Zinkhan, George. (2004). Consumers. 2nd Edition. McGraw-Hill. United States. Assael, H (1998). Household Decision Making, in Consumer Behavior and Marketing Action. South-Western College Publishing, Cincinatti, OH, pp.565-601. Auger, Pat, Timothy M. Devinney, and Jordan J. Louviere. (2007). Using Best-Worse Scaling Methodology to Investigate Consumer Ethical Beliefs Across Countries. Journal of Business Ethics, 70 (3), 299–326. Edwin, J Nijssen and Douglas, Susan P. (2008). Consumer World-mindedness, social mindedness and tore image. 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