Consumer Behaviour in the Consumer Electronic Market - Term Paper Example

Consumer Behaviour in the Consumer Electronic Market Successful marketers focus on understanding the wants and needs of their consumers as clearly as possible. Various aspects of consumer behaviour, including internal influences and external influences are fundamental aspects that every marketing manager should be cognizant of. This report seeks to provide recommendations on actions that MNO Electronics needs to consider so as to influence UK consumer perceptions around the company and products, in order to make the product a success in the UK. Valid and effective recommendations on a variety of internal factors, mainly perceptions, attitudes, motivations, and decision-making have been provided. Introduction MNO Electronics is a leading global company specialising in marketing domestic consumer electronics products ranging from digital set top boxes, external power supply units (ePSU), simple set top boxes as well as complex set top boxes, game consoles and video players. The company is considering the future addition of home theatre systems, video projectors and internet routers to its products. Founded in 2002 as a privately owned marketing company, MNO has curved a niche in consumer electronics products, becoming one of the biggest and the fastest growing marketing companies in the world. The company has a marketing team that has more than 50 man-years of experience in the marketing of consumer electronics products. The management team at MNO also has a very strong background in marketing products and is well versed in the marketing processes of various product designs across diverse cultures. Among the wide variety of products marketed by MNO, the company has its biggest operations focused on the digital television sector. According to a recent analysis carried out by Futuresource Consulting based on the outlook of the UK market for consumer electronics, flat panel sales have been going up since the 2010 football World Cup that was recently hosted in South Africa and have not shown signs of slowing down, as people look forward to the London Olympics that will be held in just over an year to come. These two events have played a fundamental role in driving sales up as people are now replacing their CRT television sets in preference of flat panel TVs. Additionally; the demand for smaller screen is on the high as people purchase second and third displays for use in the bedroom or in the kitchen. (FutureSource, 2010) The UK market is the leading market for flat panel television in Europe as shipments reached 8.8 million units in 2008 and passed the 9 million unit mark in 2009, in spite of the negative impact of price drops that were experienced between the latter months of 2008 and into the first half of 2009 adversely affecting TV vendors. According to the report by Futuresource, LCD technology is the leading seller of flat panel TVs, having captured a massive 90 percent of total sales. The firm also estimates that future growth of the UK market will be maintained by value-added features such as 3D, ultra-thin screen features, higher screen refresh rates as well as LED technologies. Worth noting is that plasma technology has continued to lose the UK market share to LCD, however, it will remain significant in large screen sizes of 50 inches and more. (FutureSource, 2010) The future of the UK market is indeed bright, considering that televisions make up the biggest share of the energy consumed by the consumer electronics group of products, with an overall CE consumption of 40% recorded in 2009. (www.defra.gov.uk, 2010) Experts foresee that the number of televisions in households will go up from 59.5 million to 72.2 million, a significant increase of 21%, between the years 2009 and 2020. This is indeed good news for MNO because it shows there are more opportunities underway beyond the 2012 Olympic games. Notably, the experts have also determined that the usual on-time for the main television in the home is also expected to swell from 4.9 hr/day to 5.1 hr/day. Both of these trends lead to an overall TV energy use increase of up to 17% by 2020. The trends have been reported to develop from an increasing consumer fondness for watching television as well as the use of TVs to access the Internet and play computer games. Additionally, large screens are on high demand. This has been promoted by improvements in the quality of pictures, for example high definition, and that they are steadily becoming more reasonably priced. (www.defra.gov.uk 2010) 2) Perceptions In 2009, the UK experienced what economists described as the worst recession since the Second World War. Unemployment was going up and the resultant insecurity about the future made consumers in the UK hesitant to spend on supplementary or one essential items, as well as many consumer electronics products. Volume and value sales went down in 2009, as manufacturers and marketers tried to persuade consumers to acquire products by strategies such as bringing down unit prices in virtually all categories of products. New technologies came in handy but it was not enough. (Debrett 2010) In spite of the positive reports and the recovery trend that the economy has shown for the month of 2010, the majority of UK consumers believe that they are still living in a recession; up to 90 percent of consumers believe that the recession is not over yet, a recent research study revealed. This indicates a significant recessionary mindset that has influenced consumer perceptions on consumer electronics products. This highlights a fundamental issue that Deluxe should take into consideration when marketing its products to the UK market; the organization should develop strategies to change this mindset and influence consumer perceptions about current and future buying prospects. (Researchandmarkets 2010) Another very important consideration to influence UK consumer perceptions is to increase consumer awareness on digital televisions. This will be a smooth process, considering the fundamental role played by the digital switchover process, a long process that has been one of the major actions of the UK government since the turn of the century. In 1999, the Secretary of State for Culture, Media and Sport at the time announced that the UK government was to achieve digital switchover between 2006 and 2010. (parliament.uk 2010) This led to the implementation of the Digital Action Plan and the strategies that, however, did not meet the target date. The digital switchover process has greatly improved consumer perceptions of digital televisions and more and more consumers now understand the benefits of digital technology above those of analogue. However, as revealed by a recent UK Government press release, although the switchover process has been successfully completed in various parts of the UK, this is yet to be achieved in many regions, where the switchover is in progress and in other regions where the process is yet to begin, such as the Isle of Man. (digitaluk.co.uk 2010) We recommend that in addition to implementing the digital switchover process in the remaining regions, more effort should be focused upon increasing consumer awareness of digital televisions and products. This can be achieved by ensuring that local television broadcasters such as the BBC and ITV carry out campaigns to aggressively persuade viewers to upgrade to the digital technology. This should be particularly conducted with a focus and reference of the 2012 Olympic Games, which means that all UK broadcasters should have completed migration by 2012. (digitaluk.co.uk 2010) Attitude Different people have different attitudes towards the digital television technology. While the technology has been embraced by the majority of consumers, this is not the case to every consumer in the UK. Some find the technology confusing. Others have no desire to obtain more than the four channels they have at present. Moreover, others are reluctant to purchase a digital box so as to view the free channels. Worth noting is that according to the view of many consumers, digital televisions are not considered as television set technology. Digital televisions are seen as what can be described as set top box subscription propositions that one can plug in to an existing television. Although many companies in the UK, for example Sky, have offered free to view set top boxes to those willing to install a Digibox and have also signed commitments to keep them connected to telephone lines, consumers still think that they must pay for the service. (www.digitaltelevision.gov.uk/ 2010) The issues above are some of the most significant issues that need to be addressed so as to be successful in marketing the digital televisions in the UK. Negative attitudes are an industry issue as well as a consumer communication issue. Many consumers have little or no understanding of free to view multi channel services offered by digital televisions and those have, there s still a proportion of them who have low incentive to buy the digital reception equipment. One of the widely expressed attitudes in the manufacturing and retail sectors is that switchover will, if left to only market forces, not be achieved by 2012. The growth of analogue television sales that was seen after the launch of digital television services has been a tremendous force towards encouraging others to invest in the analogue TV sector. (www.digitaltelevision.gov.uk/ 2010) This is a significant negative attitude that needs to be changed; unless this attitude is changed, the scale of investment into the future production and marketing of digital television equipment will be negatively affected. We therefore recommend addressing negative attitudes; however, this will be achieved by ensuring that positive stimulation of market demand is developed. We also recommend that a glamorous information campaign is carried out. (Communications 2010) A consumer information campaign is a great platform with which to communicate clear and concise consumer messages regarding the benefits and features of digital television. (parliament.uk 2010) A typical information campaign may not be effective in passing across the intended message on the digital television industry; we recommend commissioning a ‘catalyst approach’ public information campaign that will be able to depict a unified digital television authority to consumers and which would ensure that any message, irrespective of its format or digital feature, is included. It is also recommended that a positive PR campaign is facilitated Such a campaign will also be high profile. If this proposal is accepted, we will come up with creative ways to achieve the catalyst aim aforementioned. The brief, however, should be to take the generic and unique features of digital television that include all of the respective formats and bring to light them in various advertising messages within a specific digital television campaign. Motivation The success of our digital television products in the UK market cannot be achieved without motivated consumers. (Kunert 2010) Motivating consumers to want to purchase our digital television products will require more than information campaigns or advertisements, it will also require strategy changes in favour of high quality digital televisions that meets the needs and interests of UK consumers. The following are a number of recommendations to motivate them. Firstly, we recognize that consumers will be motivated to purchase our products if they are convinced that they offer better value for money returns compared to other television technologies. This is why we recommend our highest quality formats, formats that offer breathtaking sharp images. So as to offer better pictures, we therefore recommend marketing only formats that broadcast in formats of 720p or 1080i and above. Secondly, in acknowledgment of the power of sport programming to motivate consumers, we recommend that the rule of preserving certain sport programming content for certain formats, for example free to air broadcast should be scrapped off, and that all sport programming should be encouraged in a majority of television channels. This is particularly important considering that the 2012 Olympics are just around the corner, and that this is the time when many consumers will start considering to purchase digital television products for their homes. Thirdly, we are aware of the resentment raised by analogue householders that some digital set-top boxes as well as adapters do not have facilities that allow them to record a digital channel at the same time while one is watching another digital channel. According to a survey carried out by MORI during the formative days of the digital switchover process, this was one of the most important factors that was noted to derail the digital switchover process, as analogue householders were even surprised that this facility was lacking in some digital set top boxes. (MORI, 2010) Few companies offered set top boxes with this facility. As awareness of digital television increases, experts have noted that the lack of facilities to record a separate channel is a significant disadvantage and delays the take up of digital technology as consumers rather opt to wait for new equipment to be availed. Cognizant of this fact, we recommend marketing only set top boxes that have additional facilities that allow recording while one is watching. (MORI 2001) 5) Decision-making One of the most important strategies that is bound to influence each stage of the UK consumer decision making process, to encourage consumers to search for, purchase, use and give a positive post purchase evaluation of our products will be investing on interactivity. We recommend marketing interactive facilities. Interactivity services, whereby consumers spend a significant proportion of time interacting with their televisions, has been identified as a significant consumer motivator to choose digital products. Researchers have determined that interactive users are majorly young consumers and more male than the typical digital viewer. Researchers have also identified that services enjoyed include banking, shopping as well as text services. While the interactive market is still in its early stages, we chose not to be complacent and exploit this opportunity t the best we can by marketing our products with campaign strategies that highlight on interactive digital services. Another investment that we believe will be critical in influencing each stage of consumer making process will be taking into consideration of our sales and marketing strategy. When formulating this strategy, great care will be held towards quality, sales exposition, price, channel and technical characteristics. Besides quality of products that is vested on our manufacturers, sales exposition is a fundamental factor in achieving success in obtaining a successful sales and marketing strategy. We therefore recommend a number of factors to be considered so as to bring up the high performance of sales and marketing strategy, factors such as sales training mechanism, recruiting, professional knowledge about selling skills and cordial service attitude. Multimedia Strategy The following is a discussion of major external influences that will impact on consumer behavior around our products as well as recommended images and messages should be used to advertise and market our new consumer electronics product to consumers in the UK. One of the main external influences that we believe will impact on consumer behavior is family influences. We recognize the fact that the population of many families in the UK is made up of a significant proportion of the ageing population. We also acknowledge that digital television is a novel technology that, just like computer software and websites, has been designed by the young generation of the computer era; hence one may argue that it is also largely focused on the young market. This, however, does not account for the growing ageing population as well as the disabled users, for whom digital television could offer numerous products and services. (www.ofcom.org.uk 2010) Although the demographic data concerning the older and disabled people can vary because of the various definitions used, between 15 and 20 percent of the UK population have disabilities, and this figure has been determined to be increasing. This number is increasing because of the impact of medical science as it lengthens the life span of people with disabilities as well as the fact that the ageing population is on the increase; it has been estimated that by the year 2020, there will be 12 million people over the age of 65 in the UK, and of these, a large percentage will have severe disabilities. (Dunnell 2010) It must also be considered that even people who are considered to be fit in their old age do not have the same levels of functionality as they had in their young age years. The functionality abilities such as hearing, sight, mental agility, stamina and memory, although they are not considered as disabilities, the functionality abilities of a person to the age of 20 will not be the same when that person reaches the age of 60. Nonetheless, many people have huge disposable income and significant wealth, and also have more time for leisure activities compared to people who are in their working age. This means, hence, that old people are a significant customer base for digital televisions. Digital offers must therefore meet the needs of the old people; otherwise they will not be interested in the digital technology. On the same note, people with disabilities, especially those who are limited to the house environment, have a much greater demand for home based television services. Digital television can obviously meet these needs, but only when the services are able to meet their specific needs. Much recently, the television industry has become more inclusive, with the provision of subtitles, audio description for those that are blind and sign language for the hearing impaired. While these services have been embraced by the market, the digital television technology, considering its immense capacity to include a wide range of extra information, could make these services to be expanded without any interference with the normal channel. Developing and marketing digital televisions that meet the needs of impaired users has in the past come up with innovative creations. We argue that implementing this more inclusive approach to the digital television technology can bring in long-term commercial benefits and deliver tremendous social benefits. Another major influence on the behaviour of consumers in the UK market is reference groups. It is worth noting that the UK is a region of notable celebrities, especially sports figures and entertainers that play a significant role as comparative referents by influencing the behaviors of consumers and providing standards. A major example of this is the significant popularity of various restaurants in major cities such as London. Just like the popularity of these restaurants, the popularity of digital television has tremendously grown in the recent past and the digital television technology is now the talk of the television industry. Because of the digital switchover, the popularity of digital televisions in the UK is so high that according to a recent survey by Ofcom, the UK is the leading in the world with its households having the highest number of digital televisions in the world, followed by the US and other countries. Because of these referents, every household wants to own digital televisions. Peers have also played a very important role as normative reference groups by providing each other with values and attitudes by personal interactions. The digital television is embraced greatly by the young generation, peers in this generation, therefore, purchase similar digital televisions as their peers. (www.ofcom.org.uk 2010) Additionally, opinion leaders are another very important external influence of consumer decisions on purchasing digital televisions. Parliamentarians are important opinion leaders who can greatly improve the perceptions and attitudes of consumers towards the digital television technology. This is because by having a positive attitude towards the digital television, parliamentarians will not only influence the masses towards the uptake of the technology, they will also be a positive force towards adopting policies that can encourage the success of the digital television technology in the UK. Individual Critical Reflection on Learning Outcomes I have had a terrific experience during this module. At the start of the module, I expected to learn about consumer purchase processes as well as the use, maintenance and disposal of products and services, in addition to the internal and external influences that make a consumer purchase a specific product or service and not another. Never did I expect to learn of the numerous concepts that I am now aware of; understanding consumer behaviour is the heart of achieving success in penetrating a product or service market. Before undertaking the module, I was well versed with internal influences of consumers, particularly consumer perceptions and attitudes. This has greatly assisted me understand other influencers and appreciate consumer behavior concepts. The module process has assisted me to not only grasp the consumer behaviour concepts, theories and models, the constant interaction with my lecturers, for example, has immensely assisted me to decisively learn consumer insights that I can now apply to practical situation across various organizations. At the start of the module, the learning outcome assumed that I was conversant with who consumers and marketers are, and how these relate in ensuring that the needs of consumers are met and that goods and services successfully reach the intended market. The modules also assumed that I understood the role of marketing among other processes in meeting the success of a product or service. This learning has radically changed my perspective of what consumer behaviour is. I now understand the in-depth significance of understanding internal influences such as perceptions, attitudes and motivation as well as external influences, for example family, culture, signs and media when developing marketing strategies for a product or service. Although some models and ideologies proved to be challenging, I had a terrific experience when learning every detail of consumer behaviour described in this module. I recommend the module to every marketer who seeks to be a leader in the marketing industry. I have a number of questions with regard to the learning outcome, predominantly based on the current developments in consumer behaviour, market environment and culture. Considering the rapidly changing cultural views across the world now that the world is increasingly becoming a global village, I am amazed at the future trends of consumer behaviour, and how this will affect management theory across different external environment. I am optimistic that the role of consumer behaviour in marketing will be highlighted the more as the world turns global. To address these concerns, I will be actively involved in the current developments in consumer behaviour as this is the only way to keep on in step with the increasingly competitive global market. References Communications. Digital switchover of television and radio in the United Kingdom: 2nd report of session 2009-10, report with evidenceVolume 100 of HL (Series) (Great Britain. Parliament. London: The Stationery Office, , 2010. Debrett, Mary. "Reinventing Public Service Television for the Digital Future." 2010. digitaluk.co.uk. "ISLE OF MAN SWITCHOVER UNDERWAY." 2010. Dunnell, K. "Population Trends www.statistics.gov.uk/." 2010. Kunert, Tibor. User-Centered Interaction Design Patterns for Interactive Digital Television Applications. New Jersey: Springer, 2010. MORI. Research conducted for Department forDepartment for Culture, Media and Sport. 2001. parliament.uk. "Digital television switchover." www.parliament.uk, 2010. Portal, Futuresource Consulting Press. "Consumer Electronics Market in Europe." 2010. Researchandmarkets. "Market Research Reports www.researchandmarkets.com/reports/." Research and Markets, 2010. www.defra.gov.uk. "Consumer Electronics Products." 2010. www.digitaltelevision.gov.uk/. "Attitudes to digital television - UK Government Digital Television." 2010. www.ofcom.org.uk. Ofcom | Digital Lifestyles: Young adults aged 16-24. 2010. Read More