Coles Industry Dynamics Influencing Consumer Behaviour And Decision Making Process - Case Study Example

Executive Summary Coles had been successful in its retail chains of supermarkets all through Australia. Started as a variety store the retail chain has now become a giant because of its ability to judge consumer behaviour pattern in a correct way. In order to attract the household ladies it offers huge promotions and discounts on daily basis thus ensuring that the customers are offered something extra apart from the money that they have to pay. It offers a range of house brands in the clothing sector along with traditional brands which has an effect on the consumer behavior and determines the product which the customer looks to purchase There are several factors that influence the decision making process of the consumer, this consists of both internal and external factors. Another factor that need to considered for making an organisation achieve success is identifying the strengths of the organisation and overcoming its weakness so that the process of anticipating consumer behaviour is smooth. Organisations should constantly try to persuade customers by delivering quality in their products at reasonable price. It can be said that delivering value to the customers should be of prime importance in the retail market segment. Consumer decision making process is something which varies from consumer to consumer and from product to product, organisations should always try to make such strategic marketing decision that it can leave a mark in the targeted consumer mind so that while evaluating the different alternatives available to customers during the decision making process, customers put your brand as the benchmark and then compare the alternatives. An organisation achieving the same has more chances of getting its products sold than the alternatives evaluated by the customers. Finally an important factor that helps in building consumer relationship and in better understanding of consumer behaviour is brand loyalty. Organisations in today’s environmental scenario spend huge funds in advertising their products to make their brand known to the targeted customer. However, organisations should concentrate more on providing quality products and making the product available on a consistent basis. Organisations sometimes are carried away by intense competition and spend huge funds and time on fighting with their rivals rather than delivering value products to its customers Table of Contents Introduction 4 Industry Overview 4 Consumer Decision Making Process 6 Internal & External Factors Influencing Consumer Decision Making Process 10 Strategic Marketing Decisions 15 Discussion 16 Recommendations 17 Conclusion 18 References 20 Introduction The increase in the level of competition has increased the relevance of consumer behaviour. Consumer behaviour is defined as the various phases or stages that a consumer goes through before finally purchasing a product or service being offered by the seller. The buyer decision is influenced by several factors like social factors, psychological factors, economical factors to name a few. Thus, it becomes necessary to understand these factors so that the consumer can be influence to purchase the product or services. Consumer behaviour can be studied both in terms of group and individuals. Evaluation of consumer behaviour is an on-going process since tastes, preferences, needs, requirements of a consumer keeps on changing and differs from group to group or individual to individual. It is to be noted that in this competitive world consumers cannot be ignored and requires proper understanding of their behavior for the long term success of the organization. It is rather important that the products or services are so designed that it meets the need of consumer (Hawkins, Best & Coney, 2006, p. 23). The assignment presents complete details on the different factors which influences consumer decision making process. To understand the manner different factors have a relevance on consumer decision making “Coles” which is a retail player operating in Australia has been considered. Industry Overview Coles is an Australian based supermarket and is owned by Wesfarmers. The supermarket is spread all over the country and has around 741 stores and employs more than one lakh people in the country. Along with international and national brand Coles manufactures product under its own brand name which is very successful among the masses. The company had started as variety store in Melbourne and expanded at a rapid pace. In 1960, the first supermarket in Melbourne was opened and by 1973 Coles had achieved success in opening its stores in all Australian capital cities. It was much later in the year 2007, that Coles was purchased by a Western Australian based company Wesfarmers. Coles today offer a variety of products ranging from food products to clothing, household products to utility products and much more. It has entered into the world of e-commerce also through its official website and making its products and services being offered online. The key success factor contributing towards the success of Coles is its ability to understand the consumer and their changing behaviour. It understands the value of customers and uses different schemes and promotions by which it is able to convert the potential customers into real ones. It delivers value to its customers as the customer receives more value that they expect which has helped to develop a pool of loyal customers. The strategy which Coles adopted is to ensure low pricing while maintaining the same quality. This helped them to develop their business based on a business model of low cost pricing which has increased the rate of penetration in the market It is to be further noted that it is because of the success of organisations like Coles, Woolworth, Wal-Mart that the retail chain industry is growing at a rapid rate of around 15-18% globally and the traditional grocery and variety stores are losing their. The ability of the retail players to understand human behaviour better as compared to the traditional players has helped them develop their business Consumer Decision Making Process Decision making follows a series of steps that an individual customer goes through before making its purchase decision. Consumer decision making process can be defined as one in which a consumer gathers and access reliable information for various alternatives available and then finally makes a decision to purchase a product or service. It is to be noted that products or services for which a consumer has an addiction or habit and products for which substitutes are not readily or easily available consumers have no choice but to choose the product. However in case of complex products or services for which variants and substitutes are available the consumer usually goes through a complete process or stages of decision making process (Awni, 2008, p. 70). The various factors or rather stages involved in the decision making process of a buyer is explained as under: Problem Recognition Problem recognition or need is indeed the factor that triggers the buying decision. This stage can be as simple as buying finished eatables from Coles as it will help to satisfy hunger for the consumer or it can be equally activated by marketing efforts with complete information search and evaluation of alternatives available in the market especially in case of buying an expensive product or service like a computer, cell phones, house, car etc. Thus, problem recognition or need for a product or service can be regarded as first step in the consumer decision making process (Firoziyan, Hasangoli & Stiri, 2009, p. 127). Information Gathering / Search When an individual recognises his need for a product or service he tries to collect maximum information of the same from the market to make a right choice. An individual may collect information in the following ways (Chrisan, 2001) Through his own personal experiences of using the product or service before and then deciding to buy the product from the similar source or not. This is much driven by the previous satisfaction derived by consumer from the product or service. For example a person visiting the store of Coles will be influenced to purchase the product from the same store because price being the lower in comparison to other stores He may gather information through public sources like newspapers, radios, magazines etc. Coles has ensured to advertise heavily and provide complete description about the products, prices, promotions and others facilities which a customer can avail from their store. This will have an influence on the purchasing decision of a consumer Gathering information from personal sources through word of mouth from his colleagues, friends, family members or other acquaintances. Since, Coles has a presence over Australia so that chances of people visiting their store is high which will thereby act as a factor to influence the new customers towards the store Information can also be collected by commercial sources like advertisements, sales people or though the attractive packing of the product etc. Coles has ensured to advertise heavily and provide complete description about the products, prices, promotions and others facilities which a customer can avail from their store. This will have an influence on the purchasing decision of a consumer Alternative Evaluation Once the potential customer gathers information from all possible sources from which he can purchase the products then he evaluates the other alternatives available to him in the market place. An individual usually chooses the best alternative available to him keeping in mind his need for the product, his taste for the product and brand and his analysis of the price of the product (Awni, 2008, p. 70). It is to be noted that price and quality of the product or service here actually plays a major role in most of the cases. Coles has used this factor strongly to influence consumer as a strong brand name due to the association with the industry for such a long period of time provides an opportunity to sell the products. In addition to it Coles has most of the renowned brands and looks to provide special incentives to the consumer will have a relevance on their decision making and guide consumers towards Coles retail stores Post Purchase Dissonance Post purchase evaluation implies judging his decision about the product or service which has been purchased. An evaluation is made by the customer himself to find out whether the product or service met his expectations or not. This will have a relevance on future decisions and guide the customers in the future to purchase the same product or services (Chrisan, 2001, p. 93). Coles on this front has ensured maximum customer satisfaction as the retail stores looks to satisfy the customer before leaving the store. Coles uses ads or follow-ups to ensure that the customers had made the right decision by selecting their brands among the various alternatives available to him while making his decision bys showing a comparison with others and the manner in which the product helped to satisfy the needs of the customers. Building Loyalty Brand loyalty influences consumer decision making process as it determines the future loyal customers. Brand loyalty is usually created by delivering quality products and is an effective tool in attracting customers towards its products and retaining them. A well reputed brand helps a buyer to make his decision process less time consuming as he is assured of the quality of the products. A buyer usually prefers a reputed brand and set the brand as his benchmark while making a comparison with other brands during the decision making process (Chrisan, 2001, p. 123). Coles on this front has continuously strived to achieve a good brand name. The company by working on their business model of low pricing and keeping the quality of the product the same has developed a pool of loyal customers. This has been backed by the fact that most brands are offered by Coles and facilitates comparison with other products has acted as a mechanism through which customers have been attracted towards the product and has developed the required brand loyalty towards the retail chain. Thus, we see how different factors or stages influences decision making for the consumers. However, it is to be noted that it is not always that a buyer go through all stages of the decision making process. Sometimes the process may eventually end at the very first stage of problem recognition or recognition of a need by the consumer, this is usually in the case of less expensive products or when the consumer is in a hurry and makes a prompt decision. Sometimes even after a complete evaluation of all alternatives available to the buyer, the potential consumer may not convert himself into a real consumer on account of non-satisfaction about the available products available in the market and may delay his buying decision (Daniel, Charls, & Joseph, 2003, p. 27). Thus, we see that how consumer behaviour plays an important role in the buying habit of a buyer and the importance of consumer behaviour in today world in terms of seller perspective. Internal & External Factors Influencing Consumer Decision Making Process We have already studied the various phases or stages of a consumer decision making process. It is to be noted that there are various internal and external factors which play an important role in the decision making process. Internal factors are those which an organisation has control over and can be tuned and sharpened accordingly whereas external factors are those which are uncontrollable from an organisations perspective. However, the effect of these external factors can be minimised to a certain extent by proper market scanning which includes environmental scanning and taking proactive measures to deal with those. For the same internal and external factors influencing the consumer decision making process has been explained as under. Consumer Perception Perception plays an important role in the decision making process of the buyer. A strong perception of the organisation can eliminate the stage of evaluation of various alternatives and make the consumer purchase the products or services that is offered by the organisation. Customer perception is mostly affected by factors like advertisements, public relations, brand image, social media, personal experiences of the buyer etc. Coles in this regard has developed a positive perception in the mind of the consumers. The retail chain continuously looks to advertise about its offerings, stores and different products which are available in the market. The retail chain has also hired the best in house employees who provide complete description about the products and has developed public relation which has added to create positivity in the minds of the consumer. This will thereby enable the store to guide people and influence them towards purchasing their products. Demographical Analysis Demographic pattern plans an important role in the decision making process of the buyer. Demographical study includes age, income, occupation, family life cycle etc. It is to be noted that consumer involvement level and decision making power varies with age distribution. A decision making process of a child is much slower and it is easy to persuade a child towards a product or service compared to a grown up. Education level also plays an important role as an educated consumer will always look for different alternatives available to him and try to negotiate on the price of the product without compromising on the quality of the product or the service offered. Coles has identified the demographical factors properly and has ensured that the employees hired by them have complete knowledge about the product. This helps them to explain the consumers about the product and thereby influences their decision making. Further, training has been provided to their employees so that they deal with customers courteously and influence them by showing all the offering that is available. Group Influence Group affects decision making process of the buyer as a consumer may be influenced by his peers or friends or relatives while looking to purchase a product or services. It is to be noted that at the age of 14-25 years, peers influence on consumer behaviour is more significant than at an older age. Similarly, women are more influenced by groups and peers than men. The higher is the knowledge of a product or service among the group, the stronger is the influence of group on the individual. Group influence may shorten the decision making process of the buyer in the stage of evaluation of different alternative of the product or may even broaden the time span of decision making depending upon the favourable or unfavourable discussion in the group. Coles through their brand image and long term establishment in the industry has been able to generate the required image which helps to influence peers. Since, most people are aware about Coles so group influence is high as the people who have visited the store and are satisfied look to influence others to purchase from the same store. Thus, we see that both internal and external factors have a significant influence on the consumer decision making process. It is to be noted that these factors becomes more prominent in retail segment as here the consumer is usually the ultimate user and makes the purchase decision for himself. To attract consumers retail sector thereby uses different promotional schemes, offers, discounts, advertisements etc to build their brand image and influence consumer to consider their products and services so that the consumer can be influenced towards a product or services. Strategic Marketing Decisions Consumer behaviour is of prime importance for every organisation in this competitive world, all strategic marketing decision is either explicitly or implicitly based on the beliefs of consumer behaviour. Strategic marketing decisions are made according to consumer behaviour. For example, advertisements by Coles are more prominent in the late afternoon period to attract the house wife and working women as the decision to purchase is largely dependent on them. Strategic marketing decision with regards to new products is also provided to the customers so that they can be attracted towards the product. Marketing decision has an importance in the development of an organization and the inability to tahe correct strategic marketing decision hurts both in terms of finance and reputation. We often see that discounts schemes and promotion of products are purely based on consumer behaviour as seen in Coles. For example, a shampoo bottle of 500 ml avaliable in Coles store usually cost lower than buying two 250 ml of shampoo. Ths has been done because consumer purchases the bigger bottle as it is cheap despite his requirement being a 250 mil bottle which marketers have recognized and worked on it to attract customers. Consumer behaviour helps an organisation to understand the purchasing habits of the consumers and organisations try to inculcate those factors and develops the new product accordingly. When marketing strategy and consumer behaviour are synchronised together, marketers can expect growth and success through increased sales and higher profits for the organisation. Once the marketers understand the real requirement of the consumer and anticipate correct consumer behaviour it is most likely that the message of the strategic marketing decision taken by the organisation will reach the correct targeted customer and will eventually lead to better growth in business (McLaney, 2003, p. 23). On a final note strategic marketing decision is not possible without the organisation understanding and making a complete analysis of the consumer behaviour in the market where the business operates (Corsini, 2009, p. 19). The study of consumer behaviour helps organisations in improving their strategic marketing decisions by understanding the following issues: Incomplete information on the part of the consumer to understand the product or services due to lack of proper chain to gather the required information The logic behind how consumers think, feel, decide and then select among various alternatives available to him in the competitive market. The ways in which a consumer is affected by the society in making a purchase decision. How consumer behaviour and preferences vary differently from consumer to consumer for the same product or different product offered by the organisations. How marketers can plan their strategic marketing decisions and improve their old marketing campaigns or introduce new marketing campaigns as per the requirement of the current market scenario. Thus, we see that strategic marketing decision cannot be considered in isolation as it is to be synchronised with the consumer behaviour pattern in order to know the correct buying habits of a consumer in the targeted market. Discussion Coles had been successful in its retail chains of supermarkets all through Australia. Started as a variety store the retail chain has now become a giant because of its ability to judge consumer behaviour pattern in a correct way. In order to attract the household ladies it offers huge promotions and discounts on daily basis thus ensuring that the customers are offered something extra apart from the money that they have to pay. It offers a range of house brands in the clothing sector along with traditional brands which has an effect on the consumer behavior and determines the product which the customer looks to purchase (Berkman & Gilson, 2001, p. 49). Thus we find that how Coles has been effectively understanding the behaviour of consumers and finding ways to persuade consumers to buy products from the supermarket thereby shortening the time span of consumer decision making process and increasing its own brand image and sales. One classic way in which Coles has been able to achieve success in consumer behaviour and boost up its sales is by making a correct strategic marketing decision through the introduction of scheme like fuel discount program, where a customer who has made a purchase of $30 or more in the supermarket and its liquor shops are offered discount in the purchase of fuels. Fly bus programs introduced by Coles has also helped Coles in increasing its sales as customers are lured by attractive rewards through its Fly Bus programs on making a purchase from Coles Supermarkets (Berkman & Gilson, 2001, p. 67). In this competitive environment Coles has priced it products in such a manner that it wins over customers, which has been strongly influenced by consumer behaviour through factors like quality of the products offered, range and variant available to the customer in the store, availability of products at the stores when there is need of the product by the customer, convenience shopping experience and lastly after sales service provided by the stores and facilities like exchange offer within 7 days in case of Coles clothing segment, home delivery of grocery purchased by household ladies etc. Thus, Coles has been constantly working to understand consumer behaviour clearly so that they are able to supply products according to the customer requirements. Even though Coles work in a segment where new entrants and competitors are frequently added to the list, Coles is not much affected by the same because of its ability to understand consumer needs and behaviour and persuade customers towards the products offered by it. Coles constantly work on a daily basis to provide more values to its customers and thus have emerged as the leading brand in the retail market of Australia. It can be said that Coles correct strategic market decisions, ability to understand consumer behaviour of both groups and individuals and responding as per the situational demand is the key to success of Coles Supermarket chains all over Australia. Recommendations There are several factors that influence the decision making process of the consumer, this consists of both internal and external factors. An organisation has to consider both internal and external factor and then plan its strategic marketing decision accordingly. It is to be noted that macroeconomic factors cannot be ignored even though changes in the macroeconomic factors are beyond the ultimate control of an organisation or firm operating in the environment. For example, an organisation may had developed a product as per the requirement and needs of the consumer in its targeted market with correct anticipation of the consumer behaviour towards the product but still the product may not be hit or have a grand opening because of the economy being hit by Recession at the time of launching the product. This could however be prevented had the organisation had made a correct analysis of the environmental conditions and figured out the threat of recession before launching the product (Berkman & Gilson, 2001, p. 143). Thus, consumer behaviour does plays an important role in deciding the success of an organisation but other factors need to be equally analysed as well. Another factor that need to considered for making an organisation achieve success is identifying the strengths of the organisation and overcoming its weakness so that the process of anticipating consumer behaviour is smooth. Organisations should constantly try to persuade customers by delivering quality in their products at reasonable price. It can be said that delivering value to the customers should be of prime importance in the retail market segment. Consumer decision making process is something which varies from consumer to consumer and from product to product, organisations should always try to make such strategic marketing decision that it can leave a mark in the targeted consumer mind so that while evaluating the different alternatives available to customers during the decision making process, customers put your brand as the benchmark and then compare the alternatives (Berkman & Gilson, 2001, p. 55). An organisation achieving the same has more chances of getting its products sold than the alternatives evaluated by the customers. Finally an important factor that helps in building consumer relationship and in better understanding of consumer behaviour is brand loyalty. Organisations in today’s environmental scenario spend huge funds in advertising their products to make their brand known to the targeted customer. However, organisations should concentrate more on providing quality products and making the product available on a consistent basis. Organisations sometimes are carried away by intense competition and spend huge funds and time on fighting with their rivals rather than delivering value products to its customers. Conclusion Consumer behaviour is an important factor in determining the success rate of an organisation. Organisations do understand that consumer in today’s world cannot be left unattended or taken for granted as they are the key to ultimate success. Organisations do hire market experts these days to make a proper anticipation of consumer behaviour and determine the buying habit of consumer. Organisations need to constantly make changes in their products keeping in mind all internal, external and macro-economic factors. With the fast changing needs and demand of customers and rapid technological changes organisations have to constantly bring innovation in its products and services offered and understand the needs of the consumers and focus on what adds value to the products and services offered by it and try to eliminate the unwanted elements in its products and services (Ismailpour & Ghafarieashtiyani, 2002). Thus, an organisation needs to first identify its targeted customer and then understand the consumer behaviour about the targeted customer by the help of various factors that has an impact and which influence consumer behaviour. Thus to conclude, while profit generation, sales forecasting and proper management system is important in terms of organisation growth when it comes to customer, consumer behaviour tops the list. Any business that cannot understand the operating mind of its customers will always face a challenging time in recognising its targeted market and means to attract customers towards its brand of products and services offered. It is to be noted that understanding the consumer behaviour is half the battle won however the real success lies in the strategic marketing decision taken by the marketers to utilise the recognised customer behaviour in most optimised manner. References Awni, R. (2008). Strategic position indicating. Translated by SeyedAmir Poya seyfzadeh, Management Selected Monthly, no.78, p.70. Berkman, H. & Gilson, C. (2001). Consumer Behavior Concepts and Strategies, Kent, Boston Chrisan, P. (2001). Marketing: A Behavioral Analysis, McGraw – Hill. New York Corsini, R. (2009). 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