Why Consumer Behavior Is Considered by Some Marketers as a Key Constituent of Strategic Marketing - Case Study Example

Understanding why Consumer Behavior is considered by some marketers as a key constituent of Strategic Marketing Introduction …………………………………………………………………………. 3 Strategic Marketing ………………………………………………...………………. 3 Consumer Behaviour …………………………………………………….………… 4 The Significance of the Study ……………………………………………….…….. 4 The Understanding of Theoretical Constructs ……………………………..……. 5 Case Studies ……………………………………………………………..…………. 6 Conclusion ………………………………………………………………….……… 8 References …………………………………………………………….…………… 9 Introduction In broaching the subject matter of this study, it is important to understand the two key terms utilised herein, strategic marketing and consumer behaviour. The relationship between these two components represents the focus of this examination that shall be explained as well as utilised in case studies involving Starbucks and Apple. As shall be revealed herein, there are varied components, considerations and theories that are a part of these two areas. The size and complexities of these associations means that just a few of these will be covered herein as a means to illustrate the topic matter. The highly competitive nature of business in today’s market that through information technology as well as various other methods provides consumers with more information on products and services means companies need to be more in touch with consumer behaviour patterns and rationales than ever before. Strategic Marketing Defining strategic marketing entails the fact that there are two distinct terms involved, strategic as well as marketing. Marketing in this context is most often thought of as being represented by the Four Ps, 1. Product, 2. Place, 3. Promotion, and 4. Price (Rogers, 2001). From the standpoint of the focus of this examination strategic objectives of a company represents using the aforementioned information and inputs as gleaned from research, records, surveys and studies to craft the composition and types of marketing plans and combinations thereof that will effectively catch consumer interest and induce purchase (Bradley, 2003). The purpose of strategic marketing is to enhance the performance of a company through improved and more effective marketing that not only reaches its best target audiences, but also converts these prospects into sales (Bradley, 2003). As such, strategic marketing is a highly cooperative and collaborative method that utilises and brings together the various elements collected from all input points that go into the crafting of marketing efforts as a means to identify the most effective and efficient methods that should be implemented for results (Bradley, 2003). Consumer Behaviour The second phrase that is central to this examination, and thus needs definition as well as clarification is consumer behaviour. Simply put, consumer behaviour represents the “Consumer decision making processes in purchasing and using goods and services” (YourDictionary.com, 2010). The preceding includes facets such as sociology, economics, psychology as well as what is termed as social anthropology (Bagozzi et al. 2002). The process of evaluating and understanding consumer behaviour takes in a broad range of disciplines that are evaluated based on the end product or service as well as competing brands as a means to draw on all possible and or potential input and information sources (Antonides and Van Raaij, 1999). It also seeks to understand the why of the wants of individuals and the varied external influences that act upon them as represented by family members, friends, associates, trends, society and the media (Antonides and Van Raaij, 1999). The Significance of the Study In order to fit the foregoing into the context of business one needs to understand that enterprises exists to fill a need and generate a profit. The preceding was aptly stated by Peter Drucker (1993, P. 42) in that “Business exists to supply goods and services to customers, rather than to supply jobs to workers and managers, or even dividends to stockholders”. The age old adage “Nothing happens until something is sold” (Johnson, 2009) describes the business process that begins with customers accepting and purchasing a product that is the culmination of all the planning with regard to product design, manufacturing, distribution and marketing to result in a sale. Thus, the core of generating sales and revenues reverts back to the exactness and strategic planning processes employed and used, along with the knowledge of consumer behaviour and why they purchase. The preceding thus provides the rationale as to why the investigation of consumer behaviour and strategic marketing are important subjects. The practical implications represent the generation of revenues and gaining customers on a consistent and ongoing basis as explained above. The theoretical implications of strategic marketing are represented by the varied components that are a part of the process. The Four Ps are one example, with others as represented by positioning. Market dominance represents one of these strategic marketing theories (Rosenbaum, 1998). It represents the strategic approaches that are taken by a company based on its position in a market or industrial sector as represented by is being the market 1. leader, 2. challenger, 3. follower, or 4. niche (Rosenbaum, 1998). Michael Porter’s (Allen et al, 2007) generic strategies represents theories of strategic scope as well as strength, where the first represents the depth of market penetration, whereas the latter represents the sustainable competitive advantage of an enterprise. The Understanding of Theoretical Constructs As the process of strategic planning seeks to anticipate future events, meaning market conditions as well as consumer behaviour patterns and tastes that can and might change (Johnston and Bate, 2003). Other factors that are a component of theories involved with the development of marketing strategies represent the institutional theory that sets forth that the development of strategic marketing is influenced by the manner in which other firms act and their outcomes in the shaping of rules, beliefs, and knowledge systems that characterize the industry sector (Schneider, 2007). The Game theory represent models that assume companies are extremely rational, thus seeking to achieve outcomes that are most preferred (Chaudhri, 2005). Competitive ‘signaling’ represents the theory that in many instances companies provide previews and or glimpses of possible of potential actions on their part that can be useful in understanding competitor changes and or shifts in the market or consumer landscape (Gag et al, 2008). A key theory in strategic planning is the quality of the product, which in economic terms is the most important non-price aspect that influences sales (Kamp and Thomas, 1997). Being a pioneer in a market as represented by being the first to introduce a new product and or service represents a competitive advantage that when properly utilised relegates others in the field to followers or me-too operators (Kuratko and Audretsch, 2009). In terms of consumer behaviour theoretical implications, the field is highly complex as it represents an abstract representation and simplification of reality (Wang et al, 2007). Within this dynamic are the theories of purchase uncertainty, product reputation, perceived benefits, impulse buying, recommendations of friends, associates and other acquaintances that is termed as social learning that also includes the various forms of media exposure in television and movies as to popularity and use (Liang et al 2008). Characteristics of varied consumer behaviour theories include heuristics as a means of posing new questions that aid in knowledge creation and addition, and what is termed as consistency, that means the varied theories fit into and or add to the understanding base that minimises and or eliminates incongruence facets (Liang et al 2008). Other theories that are considered in devising strategic marketing using consumer behaviour represent characteristics that uncover the utility function of the product ands or service that appeals to or has a bearing on consumer decisions (Lorch, 2005). Case Studies In exploring the aforementioned theories and applications for strategic marketing and consumer behaviour, case studies involving Starbucks and Apple shall be utilised as these represent two well-known companies. In looking at Starbucks from the standpoint of the combination of the 4P’s (Rogers, 2001), whilst the product was and is not unique, the company’s highly specialised coffee blends of gourmet varieties based on European offerings that included lattes and other forms represented a new phenomenon in the United States (Sharp, 2005). The nuance of creating a gourmet offering of coffee blends under a corporate banner that was new as well as undertaken on a grand scale took the market by storm is that Starbuck used aggressive marketing and store placements to eliminate much of their competition (Sharp, 2005). In the case of Apple, the company always opted for a product and products that had unique characteristics in comparison with their industry rivals (Iyer, 2008). The company’s high innovation level, unique user friendly designs and software, along with plug and play solutions established its identity in contrast to competitors in the same manner that Starbuck’s caught the public imagination for its higher priced premium brands. The preceding had and have implications with regard to consumer behaviour in that the uniqueness of being first in the market approach of these two companies has and does influence consumer behaviour whereby they tend to be drawn to the products as a result of the high quality and perceived value as brought forth by Antonides and Van Raaij (1999). These aspects are critical in the development of unique selling propositions represented by strategic marketing planning. Faced with the impact of the global economic slowdown, Starbucks has had to craft a new approach to its strategic marketing that touts the “… quality and value …” its product offers (WorldNews, 2009), in contrast to its former approaches that were based on trends with slogans such as “No. 1 Best Coffee” Wong, 2009). The high prices and the overload of stores caused the company to rethink its Place, Promotion and Price variables of the other 4Ps as the company’s years of over saturation of the market and higher prices saw reduced traffic in the company’s quest to become the face of the away from home coffee segment (Harris, 2007). The realities of economics, a tightening of consumer spending and high prices that were and are acting upon the company caused Starbucks to re-evaluate its marketing approaches in a company wide approach that changed its base dynamics in consort with marketing conditions brought about by consumer behaviour. In contrast to the reactionary approach of Starbucks, Apple has been proactive in its products and approaches to consumer behaviour, and tastes (Iyer, 2008). The company stays well in front of developing trends and innovations anticipating consumer needs, wants and desires through an extensive understanding of consumer behaviour and mashing all elements of strategic marketing inputs to serve as the basis for new product and software as well as service offerings (Iyer, 2008). Key examples of this are represented by the new trend in music downloads as represented by iTunes that has reached over 9.9 billion songs sold as of February 2010 (Tech24hours.com, 2010). The preceding is one example of many that include the fact that Apple has recorded in excess of 3 billion in app store downloads for its devises such as the iPhone, and iPods (Apple.com, 2010). These types of developments were borne out of having a pulse beat on consumer behaviour and then being able to translate the salient developments into corporate action through strategic marketing. Other examples are represented by Apple’s development of its iPod series, iPhone, iPad and new computer lines as well as software (Iyer, 2008). The products of Apple are available and have achieved renown in excess of 77 countries (Apple.com, 2010), meaning that its ability to understand and mesh consumer behaviour into marketing strategies that garner results is impressive. Conclusion The preceding case study example represents a look at two highly successful companies, one which did not anticipate emerging economic, market and consumer changes and trends, whilst another did. These examples serve to go to the core of the rationale of this examination through contrasting the current fortunes of these two companies. As brought forth herein strategic marketing represents the use of many approaches in the crafting of approaches and plans to address the direction that a company should take in the marketplace. At the heart of the foregoing is the thinking, desires, attitudes, forces and other variables acting upon and impacting consumer behaviour that is essential. Understanding these areas is the core of crafting strategies to reach and devise products, marketing approaches and plans to stay in front of change as opposed to reacting. The examples of Starbucks and Apple was utilised as a means to illustrate the foregoing. References Allen, R., Helms, M., Takeda, M., White, C. 2007. Porter's Generic Strategies: An Exploratory Study of Their Use in Japan. Journal of Business Strategies. 24 (1). Pp. 69-71 Andraski, J., Novack, R. 1996. Marketing Logistics Value: Managing the 5 P's. Journal of Business Logistics. 17 (1). Pp. 23-25 Antonides, G., Van Raaij, F. 1999. Cases in Consumer Behaviour. John H. Wiley & Sons. Chichester, United Kingdom. P. 23 apple.com. 2010. Apple’s App Store Downloads top Three Billion. 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Number of iTunes song downloads as of February 2010. Retrieved on 20 June 2010 from http://www.tech24hours.com/2010/02/number-of-itunes-song-downloads-as-of.html Wang, M., Chen, C., Chang, S., Yang, Y. 2007. Effects of Online Shopping Attitudes, Subjective Norms and Control Beliefs on Online Shopping Intentions: a Test of the Theory of Planned Behaviour. International Journal of Management. 24 (2). Pp. 296-298 Wong, E. 2009. Starbucks Brews a Fresh Pot of Publicity. Retrieved on 19 June 2010 from http://www.brandweek.com/bw/content_display/news-and-features/direct/e3id2aff40c7008d416794b3e444cd4e08e YourDictionary.com. 2010. Consumer behaviour. Retrieved on June 19 2010 from http://www.yourdictionary.com/business/consumer-behavior Read More