Toughest Competition in Decades - Essay Example

Consumer Behaviour Introduction Today's companies face their toughest competition in decades, and the things will even get tougher in the years to come. In recent times, the markets have transformed into seller's market to a buyer's market. Here customer can choose from a wide array of goods and services. In these markets if the sellers fail to deliver acceptable product and service quality, they will quickly lose customers to competitors. And what is considered acceptable today may not be acceptable to tomorrow's evermore demanding consumers. Consumers are becoming more educated and their quality expectations have been raised by the practices of superior manufacturers and retailers. To succeed, or simply to survive, companies need a new philosophy. To win in today's market place, companies must be customer centred - they must deliver superior value to their target customers. The study of Consumer Behaviour helps the marketers to understand their target customers and what influences their buying decisions. Role of ConsumerBehaviour Consumer Behaviour can thus be defined as, "The study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society." On the basis of the factors that influence consumers buying behaviour, the companies can tailor their marketing programmes to the needs, and wants of narrowly defined geographic, demographic, psychographic, or behaviour segments. The ultimate form of target marketing is the customized marketing in which the company adapts its products and marketing programmes to the needs of a specific customer or buying organization. There are three major steps in target marketing. The first is the market segmentation, where the marketer divides his market into distinct groups of buyers with different needs, characteristics or behaviour, who might require separate products or marketing mixes. The second step is the market targeting - evaluating each market segment's attractiveness and selecting one or more market segments to enter. The third step is market positioning- setting the competitive positioning for the product and creating a detailed marketing mix. To have effect target marketing it is important to consumer behaviour and the factors which affect it . Characteristics Affecting Buyer's Behaviour : The major factors which influence the consumer behaviour are : 1. Cultural Factors - Culture, Sub culture, Social class 2. Social Factors - Reference groups, Family, Roles and Status. 3. Personal Factors - Age and lifecycle stage, Occupation, Economic situation, Lifestyle, Personality and self concept. 4. Psychological Factors - Motivation, Perception, Learning, Beliefs and Attitudes. 1. Cultural Factors : These exert the broadest and deepest influence on consumer behaviour. The marketer needs to understand the role played by the buyer's culture, subculture and social class. Culture : The child growing up in a society learns a basic set of values, perceptions, preferences and behaviours from the family and other important institutions. This forms his culture. Subculture : Each culture contains smaller subcultures, or groups of people with shared value systems based on common life experiences and situations. Subcultures include nationalities, religions, racial groups and geographic regions. Social Class : Social classes are society's relatively permanent and ordered divisions whose members share similar values, interests, and behaviours. It is not not determined by a single factor, such as income, but is measured as a combination of occupation, income, education, wealth, and other variables. 2. Social Factors : A consumer's behaviour is also influenced by social factors, such as the consumer's reference group, family, and social roles and status. Reference groups : A person's behaviour is influenced by many small groups. Some are primary groups with whom there is regular but informal interaction- such as family, friends, neighbours, and co-workers. Some are secondary groups, which are more formal and have less regular interaction. These include organizations like religious groups, professional associations, and trade unions. Family : Members of the buyer's family can exercise a strong influence on the buyer's behaviour. The family of orientation consists of one's parents, husband, wife, and children. From parents a persons acquires an orientation towards religious, politics, and economics and a sense of personal ambitions, self -worth, and love. In case of expensive products and services, husband and wives engage in more joint decision making. The market needs to determine which member normally has the greater influence in the purchase of a particular products or services, either the husband or the wife, or they have equal influence. Roles and status : A person belongs to many groups- family, clubs, and organizations, his position in each group can be defined in terms of both role and status. Each role carries a status reflecting the general esteem given to it by the society. People often choose products that show their status in the society. 3. Personal Factors : The buyer's decision is also influenced by personal characteristics such as the buyer's age and lifecycle stage, occupation, economic situation, lifestyle and personality and self concept. Age and Life-cycle stage : People change the goods and services they buy over their lifetimes. Buying is also shaped by the stage of the family lifecycle - the stages through which families might pass as they mature over time. A man is a child, then becomes a youth, then gets married and have children and then becomes old. Over these stages his needs keep changing and thus his buying behaviour also changes. Occupation : A person's occupation affects the goods and services bought. Blue-collar workers tend to buy more work clothes, whereas white- collar workers buy more suits and ties. Economic Situation : This relates to a person's income. His economic situation will affect his product choice. Marketers of income-sensitive goods watch trends in personal income, savings, and interest rates. If economic indicators point to a recession, marketers can take steps to redesign, reposition, and reprice their products closely. Lifestyle : is a person's pattern of living as expressed in his activities (work, hobbies, shopping, sports, social events), interests (food, fashion, family, recreation), and opinions (about themselves, social issues, business, products). People coming from the same subculture, social class, and occupation may have quite different lifestyles. Personality and Self-Concept : Personality refers to the unique psychological characteristics that lead to relatively consistent and lasting responses to one's own environment. Personality is usually defined in terms of traits such as self-confidence, dominance, sociability, autonomy, defensiveness, adaptability and aggressiveness. Many marketers use a concept related to personality - a person's self-concept. The basic self-concept premise is that people's possessions contribute to and reflect their identities. 4. Psychological Factors : A person's buying choices are further influenced by four major psychological factors: motivation, perception, learning, and beliefs and attitudes, situational influences. Motivation : A person has many needs at any given time. Some are biological, arising from states of tension such as hunger, thirst, or discomfort. Others are psychological, arising from the need of recognition, esteem, or belonging.A motive (or drive) is a need that is sufficiently pressing to direct the person to seek satisfaction. For example, when a person is thirsty, he will like to have a cold drink. This urge will force him to buy a Coke or Pepsi or any other drink of his choice. Perception : A motivated person is ready to act. How a person acts is influenced by his or her perception of situation. The process by which people select, organize, and interpret information to form a meaningful picture of the world is called Perception. For example, when the person is thirsty and he buys a cold drink for himself, his choice will depend on his perception of the different brands that are available. Learning : When the people act, they learn. Learning describes changes in an individual's behaviour arising from experience. For example, if the person has tasted one brand when he had felt thirsty last time and had not liked it, he is likely to avoid it this time. Beliefs and Attitudes : Through doing and learning, people acquire beliefs and attitudes. These, in turn, influence their buying behaviour. While beliefs area descriptive thought a person holds about something, attitudes are a person's consistently favourable or unfavourable evaluations, feelings, and tendencies toward an object or idea. Attitudes put people into a frame of mind of liking or disliking things, of moving toward or away from them. Situational influences : Specific circumstances often influence consumer behaviour. For example, consumers in a rush are likely to take the most convenient product available. Consumers whose attention is demanded elsewhere are likely to disregard commercial messages. Consumers shopping for a special occasion (e.g., a wedding) may buy different products. The Buyer Decision Process : A consumer passes through the following five stages before making a final buying decision : 1. Need Recognition : Here the consumer recognizes a problem or a need. For example, Mr. A has some spare time after the office and he wants to involve himself in some leisure activity. 2. Information Search : In this stage the consumer is aroused to search for more information; the consumer may simply have heightened attention or may go into active information search. For example, Mr. A will list all the activities he can do to spend his spare time, like playing cricket, watching a movie, go for shopping, go for a walk etc. 3. Evaluating the Alternatives : Here the consumer uses information to evaluate alternative brands in choice set. For example, Mr. A will evaluate all the above options on the basis of his beliefs and attitudes, his role and status, his prior experiences etc, and then will select the appropriate activity. 4. Purchase Decision : Here consumer actually buys the product. For example, Mr. A after evaluating all the activities, he will finally select one activity that suits his current situation. 5. Post Purchase Behaviour : In this stage, consumers take further action after purchase based on their satisfaction and dissatisfaction. For example, this stage will relate to post activity experience of Mr. A, as to whether he enjoyed the activity he engaged himself in for spending his leisure time. The study of Consumer Behaviour is used in the following example, where two respondents are interviewed and asked about there choices for activities to spend their leisure time. Choice of Leisure Activity By two respondents: Two respondents one male (age-32 years, working as a Regional Manager with a reputed automobile company ) and one female ( age- 52 years, a housewife ) were interviewed as to what leisure activities they have involved themselves in the recent past. The choice of activities given to them were - Reading a book, Playing a sport of their choice, watching a movie, shopping, photography, going for a walk, cooking, dancing. 1. Research results for respondent1 :( Male)Mr. Robert Galvin Robert was asked about the activities he had chosen to spend his leisure time in the past. He rated the choices as follows : Playing Cricket, Going for a walk, Dancing, Watching a movie, going for shopping, Photography. His choices were influenced by the following situations : He played cricket on Sundays with friends, when he had all day is available to him for leisure. During weekdays, he usually selected going out for a walk, after coming from work. He has the evening time for him to involve himself in leisure. Also he wants an activity where he can spend some with the family. So he goes out to walk with his wife and then plays with his child in the park. He likes dancing and likes to spend weekend evenings in discos but only when he is not tired of playing cricket in the morning or he has any other engagement like a dinner invitation etc. He watched movie only when there has been a latest release and the movie reviews are good. He normally goes shopping normally during the first weeks of the month when his salary is credited in his account. He does not like to use credit cards for personal shopping. He reads magazines related to automobiles to gain knowledge about the industry in which he works He does photography only when he has some time left after being involved in the above activities. The main reason also for not selecting this leisure activity is because he does not own a good camera, he normally uses his mobile phone to catch family pictures. His choices were also affected by his demographics and personality : Being young and male, made him to choose activities like playing cricket, dancing, going for a walk and restricted him to choose cooking. Family life cycle- He is married and has a wife and a child. These conditions made him choose activities like going for a walk, watching movie, going shopping, as they helped him to be together with the family. Income - When his pocket permits, he goes for shopping as it is normally during the first weeks of the month when his salary is credited in his account. Occupation - His job involves a lot of travelling and is hectic,thus he wanted activities which would help him remain fit. Thus he chose playing cricket, going for a walk, and dancing. Also he reads magazines related to automobile industry of which he is a part. Personality : Cooking does not suit his personality, being a male he has never been exposed to this activity. 2. Research results for respondent 2 : female ( Mrs Jennifer Lores ) Jennifer rated the activities as per her choice as follows : Reading a book, Watching a movie,Cooking, Going shopping, Going for a walk The major factors that influenced hr decision are : She is aged 52 and is a hypertension patient, she wants an activity which would relax her after finishing her household chores, which make her tired. So, she can read a book while lying down. She likes watching old classics, so whenever there is one on the televion, she prfers to spend her leisure time watching it. She likes cooking for the family and try new dishes, so whenever the entire family is at home she prefers to cook new dishes for them She goes shopping normally during the weekends along with her husband. This makes them spend some time together buying things for home. She only goes for walks in the evenings, and if they are free and there are no prior engagements like a get together with friends or relatives. She did not choose activities like playing a sport or dancing, for her physical condition do not permit her to do so. She did not choose Photography because of her lack of knowledge about the subject. Her decisions are also affected by her demographics and personality : Age- Her age factor restricts her to choose only activities which are more relaxing and do not involve much of physical activity. Being a female, she likes cooking for the family and try new dishes. Being a housewife she spends most time doing the household chores, so she reads in her leisure time only fiction books or cookery books which relax her. Being educated helps her to select reading as an activity to spend her leisure time. Personality - She is very homely and religious. Thus doing photography, or dancing does not suit her personality. The above two respondents vary greatly in their choice because one is young, male, and a professional, whereas the other is old, female and a housewife. Works - Cited 1. Armstrong, Gary and Kotler, Philip, Principles of Marketing. New Delhi,India, Prentice Hall India, 1997 . 2. Factors Influencing Consumer Behaviour from www.britannica.com. 3. Factors Influencing Consumer Behaviour from www.consumerpsychologist.com. 4. Consumer Behaviour from www.wikipedia.com. Read More