Applications of Consumer Behavior and Consumer Loyalty - Term Paper Example

Consumer Behaviour - Abe Introduction Consumer behavior refers to the study of how, when, why, and where individuals do or do not purchase a product. It is about understanding the decision making process of the buyer, both personally and within groups. It involves study of consumer’s aspect, for instance demographics as well as behavioral variables in order to understand individuals’ wants. Relationship marketing is significant in understanding consumer behavior because it re-discovers the typical meaning of marketing by re-affirming the significance of the customers. Marketing offers services that satisfy customers (Andrei & Bruno 1). Consumer behavior assists business firms and organizations to enhance their marketing strategies by understanding matters like: The psychology of how customers think, feel, make decisions, and choose between diverse options, for example, retailers, brands and also products. The psychology of how the environment influences the consumers, for example, friends, culture, media or signs. The consumers’ behavior when shopping or when making similar marketing resolutions. Restraints in consumer knowledge or how information processing abilities of the consumer affects their decisions and marketing effect. How consumer incentive as well as decision strategies vary between products that vary within their level of magnitude or interest that they require for the consumers. How marketers can get accustomed to and improve their marketing strategies in order to reach the consumers more efficiently (Lars 1-3). Applications of Consumer Behavior Basically, consumer behavior can be applied in four different ways. The first application is for marketing strategy and here it is used in improving marketing campaigns. For instance, when the marketers get to know that consumers are keener and more interested to food advertisements when they are hungry, the marketers learn to schedule food adverts in late afternoons. By knowing that normally new products within market are at first adopted by small number of customers and spread later and then steadily to several customers, marketers learn that: organizations introducing new products in the market should have sufficient finances for them to stay afloat up to when their products become commercially successful and that it is essential to satisfy and please the first customers because if the initial customers are satisfied with their new product they will influence numerous succeeding consumers’ brand choices (Stuart 1). The other application is public policy. To explain this application, I will use some acne medication that was introduced in 1980s. An accutane that was so effective in curing acne resulted in grave birth defects when taken by expectant women. Even if medical practitioners were told to caution their female patients, several women got pregnant while taking this medication. In order to gain consumers’ awareness, the Federal Drug Administration (FDA) instructed that the accutane containers to carry graphic pictures of the deformed babies (Stuart 2). Another application of consumer behavior is social marketing. Social marketing entails informing of the consumers regarding a certain product or something and not selling. For instance, a marketing professor named Marty went on vacation in order to work with CDC to try to lower diseases transmission though usage of illegal drugs. The most effective solution was to make the illegal drug users to stop using the drugs but this move was deemed infeasible. Moreover, it was established that sharing of needles by the drug users was a very ingrained culture among drug users and hence difficult to stop. Consequently, Dr. Marty applied his knowledge in consumer attitudes and developed a marketing campaign that encouraged the drug users to clean and bleach the needles before sharing them and this campaign became successful (Stuart 1-2). The final application is that study of consumer behavior makes everyone a better consumer. For instance, if one buys a 500ml bottle of a drink, he/she pays less per liter than if he/she buys two 250ml bottles. Practically, nevertheless, one often pays a size premium by purchasing the larger quantity. This means that if the consumer knows this, they have the likelihood of checking the unit cost labels to establish if they are actually getting a bargain. Consumer Loyalty Organizations providing top-draw customer service may land in competition problems when new competitors establish a new business within their region. Their most loyal and best clients may be the first ones to defect. According to Julia 2011, the key concepts in customer loyalty include: Organizations offering most proficient customer service cannot expect too much loyalty in case a new competitor provides even better customer service. High-end businesses are supposed to avoid self-satisfaction and keep on proactively increasing comparative service levels when they encounter even the latent threat of increased service competition. Even if high-end clients cannot be consistent, an organization that maintains a superior service position within its local market has a high probability of attracting and retaining consumers who are more valuable in the long run. Companies rated lower in service quality are not as much threatened by the high-end challenger (Tanzina 2). Research shows that businesses offering their clients the best service may believe that their efforts to satisfy and please the customers will eventually pay off with an enormously loyal following. On the contrary, customers seen as the most loyal and expected to be most reliable ones are the ones who are excessively susceptible to service competition. This implies that the supposedly most loyal and best customers are likely to be the first to leave when challenger to such companies’ service superiority gets into the market. This can be attributed to increasing expectations for service within these markets: the longer a company has had a service advantage within a local market, the more sensitive are its clients to the service levels comparative to competitors’ services (Andrei & Bruno 1-3). Consumer’s Information Search and Decision Making Normally, consumers search for information both internally and externally. In internal search, the consumers establish alternatives from their memory. For some low involvement products, it is extremely crucial for marketing programs to attain “top of mind” awareness. For instance, not many consumers are likely to search the yellow pages for fast food hotels: therefore the consumer should be able get his/her hotel from memory before considering it. For high involvement products, consumers mostly use external search. For example, before buying a vehicle, the consumer will consult workmates, friends, get reviews in Consumer Reports and even visit numerous vehicle dealers. Therefore, companies selling products that are chosen predominantly using external searches should invest in availing information to the consumer in need, for example providing all required information web sites, brochures and even in news coverage (Stephanie & Liz 1-2). A compensatory decision entails the consumer comparing both the positive and negative attributes of a product. For instance, a car might be less costly and good gas mileage but dawdling acceleration. In case the price is amply cheap and gas efficient, the consumer may chose such a car instead of a more costly one with better acceleration but utilizes more gas. Rarely, consumer’s decision might engage a non-compensatory strategy. For instance, an adult might refuse to buy any soft drink containing artificial sweeteners. In this case, other drinks’ positive aspects like taste and nutrition cannot prevail over this one “non-negotiable” aspect (Tanzina 2) The level of consumer’s efforts in information searching is dependant on several factors like: Market; market is about the number of competitors and the expected magnitude of variations between brands. Characteristics of product; this involves the importance of the product, the intricacy of the product and most importantly the evident quality indications of the product. Consumer characteristics; this involves how interested the consumer, in general, in analysis of the product’s characteristics and making the best decision possible (Tanzina 3-4). Two remarkable issues within consumer’s decisions are: Variety seeking; this includes where consumers seek to try other brands and not because they expect these brands to be better and more superior but rather because they want a change. Impulse purchases; this is about unplanned purchases. For instance, a consumer can plan to purchase vegetables but when he/she in store buys broccoli and corn. On the other hand, a consumer can purchase a product on sale, or the one that he/she remembers she/he needs only when in the shop (Tanzina 3-6). Conclusion Numerous factors are involved in consumer choices. In some instances, the consumer gets more motivated. For instance, one is more careful when buying a gift for a spouse than when purchasing the same item for themselves. Some consumers compare similar products to get the best prices, whereas other consumers are more convenience oriented. Consumer’s personality also affects the decisions. Some people value variety than others while some people are more receptive to stimulation and like trying new products and shopping stores (George 2). Perception also impacts decision. For instance, some people can differentiate between a generic and a brand food while some can’t. Selective perception takes place when the consumer is only attentive to information of interest. For example, if one intends to buy a car, he/she will be more attentive to car advertisements. Some consumers hold back their buying intentions when they perceive risk. Therefore, several marketers proffer a money back guarantee. Furthermore, consumers change their behavior through learning. For example, such consumers avoid crowded hotels and buy brands that best fulfill their tastes. Lastly, different consumers have different values. For example, some people prefer recycling when compared to others who would prefer not to go through the hassle (George 2-3). Works Cited George Jefferson. Understanding Consumer behavior. Sales Promotion. Vol.1/3, 2011. Julia Hanna. What Loyalty? High-End Customers are First to Flee. Journal of Business. Vol.1/2, 2011. Lars Perner. Consumer Behavior: The Psychology of Marketing. Department of Marketing, Marshall School of Business, 2011.   Andrei Hagiu & Bruno Jullien. Search diversion, rent extraction and competition. April 25th 2011. Stephanie Clifford & Liz Alderman. A New American Invasion. News Times. June 16, 2011. Stuart Elliott. Account Executive Is Antiquated. Consider Yourself a Catalyst. June, 2011. Tanzina Vega. Focus Groups That Look Like Play Groups. News Times, May, 2011. Read More