Potential Benefits The Study Of Consumer Behaviour Provide in Marketing - Essay Example

Running Head: STUDY OF CONSUMER BEHAVIOUR AND MARKETING STRATEGIES Study of Consumer Behaviour in Designing Marketing Strategies [Writer’s Name] [Institution’s Name] Study of Consumer Behaviour in Designing Marketing Strategies There are many definitions of the term ‘marketing’, however a wide accepted definition is “the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organisational objectives” (Marie Marquis 2004) Marketing therefore is the combination of product development, price, packaging, promotion, public relations and distribution is included. For the purposes of this research however, marketing will be used only to define those processes that are visible to the consumer, namely advertising and other promotion incentives. Understanding the marketing mix price, product, place and promotion enables marketers to appropriately market their products that can meet the needs of its customers and develop a successful marketing strategy. Marketing Strategy is defined as the broad marketing thinking, which enables an organization to develop its products, and marketing mixes in the right direction, consistent with overall corporate objectives (‘glossary’ (n.d.), access on 05.10.06). Therefore, marketing strategy is an idea, plan or action that helps companies to attain its overall strategic objectives. It includes segmenting and defining the target market, selecting proper marketing mix to achieve marketing objectives and determine the product unique selling point to create a defensible competitive position. It seems the heart element to successful marketing strategy is an understanding of potential customers and their needs to satisfy them and gain substantial profit by serving them more effectively than other competitors. Though the study of consumer behaviour has gained attention to the marketing managers in recent years, much of the work in that area has centred on the development of conceptual models with an emphasis on managerial paradigms, which would be vital for effective marketing decisions by marketing managers. (e.g., Surprenant and Solomon 2001; Vredenburg and Wee 2000) are noteworthy and highlight the linkage between the study of consumer behaviour and the marketing strategies. An area of particular importance to managers is an understanding of the repurchase information acquisition process used by service customers. Knowledge of information acquisition strategies is vital to both marketing managers and scholars because information search is an early influential stage in the purchase decision process. According to the literature a consumer can be defined as a person whom acquires goods and/or services for consumption, however the consumer role can be divided three ways by the person who decides on the need for a product, the purchaser and then finally the by the person who actually consumes the good. Children from the early ages of 3-4 can already fulfil this requirement and have been identified as being a considerable market for food marketers. (Chandler and Heinzerling 1998) In general, the greater the degree of perceived usefulness to marketing managers in a repurchase context, the greater the consumer propensity to seek information about the product. The role of usefulness to marketing managers in the consumption of consumer behaviour has been addressed both conceptually (e.g., Eiglier and Langeard 2003; Zeithaml 2001) and empirically (e.g., Brown and Fern 2001; Davis, Guiltinan, and Jones 2000; George, Weinberger, and Kelly 2000; Guseman 2001; Murray and Schlacter 2001), with theory and evidence suggesting that consumer behaviour are perceived to be more relevant to marketing managers than consumer buying habits. Comparatively little attention, however, has been directed to understanding the impact of the riskier nature of consumer behaviour on the purchase process and the information "needs" of consumer behaviour consumers. Despite difficulties in precisely defining what consumer behaviour is, marketing literature reflects broad agreement in terms of both conceptual description and empirical substantiation as to what characterizes consumer behaviour (e.g., Zeithaml, Parasuraman, and Berry 2000). Generalizations that have widespread acceptance among scholars and practitioners in the field as being characteristic of consumer behaviour include consumer attitude towards intangibility, simultaneity of production and consumption, and no standardization of the products in question. In both theory and practice, marketers have recognized that the fundamental, qualitative differences between consumer buying habits and consumer behaviour, in addition to requiring special management paradigms, may elicit distinctive behaviour on the part of consumers. That consumer behaviour is not directly perceptible, is frequently experimental, and typically is unpredictable in their outcomes for the buyer implies that they would influence purchasing behaviour of consumers. Though varying degrees of perceived usefulness to marketing managers characterize all consumer purchases, evidence suggests that by their fundamental nature consumer behaviour may be perceived to be particularly risky (Guseman 2001; Murray and Schlacter 2001). Furthermore, because of the transitory and varied nature of consumer behaviour, product evaluation may occur primarily after purchase and consumption (Young 2001), heightening repurchase uncertainty. The concept of consumer behaviour and it’s usefulness to marketing managers implies that most consumers make purchase decisions under some degree of uncertainty about a particular product and/or brand. Conceptualized as the likelihood of negative consequences (i.e., danger, loss, etc.), perceived usefulness to marketing manager’s represents consumer uncertainty about loss or gain in a particular transaction and has six components (e.g., Brooker 2003; Jacoby and Kaplan 2003; Roselius 2000): financial, performance, social, psychological, safety, and time/convenience loss. Overall perceived usefulness to marketing managers represents the aggregate impact of these various factors. Given the level of aggregation for consumer buying habits and consumer behaviour, this study focuses on inherent usefulness to marketing managers (Bettman 2003, 2000), the latent usefulness to marketing managers a generic product category holds for a consumer. Marketing theorists long have argued that consumers seek information from a variety of sources when faced with usefulness to marketing managers or uncertainty (e.g., Cox 2001). Because consumer behaviour appear to create particularly uncertain and risky purchase situations, it is logical to expect that consumers acquire information as a strategy of usefulness to marketing manager’s reduction in the face of this specific uncertainty. Zeithaml (2001) argues that consumer behaviour are more difficult to evaluate than consumer buying habits and that, as a consequence, consumers may be forced to rely on different cues and processes when evaluating consumer behaviour. Indeed, service marketing scholars suggest that consumers evaluate information about consumer behaviour in a more complex and distinctive way (e.g., Bateson 2003; Booms and Nyquist 2001; Davis, Guiltinan, and Jones 2000) and often demand increased information for predominantly service-type products (Deshpande and Krishnan 2003). The following discussion briefly identifies a simple typology of information sources and reviews the relevant literature on usefulness to marketing managers and information sources. Consumer information sources can be classified into two broad types, internal and external; consumers to gather information and cope with perceived usefulness to marketing managers use both types. Internal search is fundamentally linked to memory scan (Bettman 2000,b; Leigh and Rethans 2003; Lynch and Srull 2000), though understanding of internal search dynamics is largely speculative (Hansen 2003). When faced with a purchase decision, the consumer first examines information in memory about past purchase experience, including experiences in a product class and previous learning about the environment. Experience creates knowledge, which in turn leads to internal search in subsequent decision situations (Jacoby, Chestnut, and Silberman 2003; van Raaij 2003). Hence, internal search can be viewed as an important source of information available to the consumer. The marketing literature is replete with evidence suggesting that external information search represents a motivated and conscious decision by the consumer to seek new information from the environment (e.g., Berning and Jacoby 2001; Furse, Punj, and Stewart 2003; Moore and Lehmann 2000; Winter 2000). Though sources of external information can be classified in terms of whether the source is marketer-dominated or whether information comes from personal or impersonal communication (e.g., Engel, Blackwell, and Miniard 2000), other typologies encompass a wider range of information sources that are amenable to empirical operationalization and classification (Andreasen 2000; Lutz and Reilly 2000), including forms of personal, impersonal, and direct experience information sources. Marketing and information acquisition literature by specifically addressing the information needs of the consumer behaviour. Service scholars have proposed that prior evaluation is more difficult for consumer behaviour than for consumer buying habits (Zeithaml 2001) and those consumers may evaluate them differently than they do consumer buying habits (Young 2001). Several findings of the study converge to support this prediction. First, the data provide evidence of consumers' inclination to deter making an outright purchase of consumer behaviour. This finding is consistent with the prediction of usefulness to marketing manager’s theory that in the face of greater uncertainty and loss, consumers engage in an extended decision process. Second, the role of personal sources of information is noteworthy. The data show that for consumer behaviour, personal sources are preferred over impersonal sources of information, more so than for consumer buying habits. Similarly, consumers indicate greater confidence in personal sources when contemplating consumer behaviour purchase. Further, personal independent sources are more effective for consumer behaviour than for consumer buying habits. These findings provide indirect support for the notion that products with service attributes are largely subjective and experiential. For example, the data suggest that internal sources, in contrast to external ones, are particularly relevant to the consumer behaviour. These data point to a distinctive information acquisition pattern for the consumer behaviour. Specifically, the findings suggest a greater need for usefulness to marketing managers-reducing information and an extended consumer decision process for consumer behaviour. However, in view of the intangible, ephemeral, and experimental nature of consumer behaviour, there may be less opportunity to diminish uncertainty by direct observation and/or trial for consumer behaviour, suggesting a prolonged consumer adoption process and, ultimately, a more lengthy diffusion process for consumer behaviour. The conclusions from this research have important implications for a better understanding of consumer behaviour and marketing management. In order to improve the customer satisfaction level, the marketers need to assess what the customers need. The knowledge of consumer psychology is helpful in assessing the customer needs and then giving them what they need: The psychology of how consumers think, feel, reason, and select between different alternatives (e.g., brands, products); The psychology of how the consumer is influenced by his or her environment (e.g., culture, family, signs, media); The behaviour of consumers while shopping or making other marketing decisions; How consumer motivation and decision strategies differ between products that differ in their level of importance or interest that they entail for the consumer. To satisfy customers' needs, better than its competitors is important because it is able to help the company build customer loyalty and increase sales. Xerox’s senior management found out that its ‘completely satisfied’ customers are six times more likely to repurchase Xerox products over the following 18 months than its ‘very satisfied’ customers are. (Jones & Sasser, 1995) Moreover, the cost of recruiting a new customer is usually considerably higher than the cost of retention, even in supermarket context (Sirohi et al., 1998). One estimate (Patricia Sellers, 1989) is that it is cost five times more to attract a new customer than pleasing an existing one. Customer retention is thus more important than customer attraction. Moreover, one study showed that dissatisfied customers might bad-mouth product to 10 or more acquaintances (Albrecht and Zemke, 1985). The influence of bad news is greater in Chinese society, as Chinese consumers tend to rely more on word-of-mouth communication (Yau, 1994). Over half of marketers already use behavioural targeting, while another 31% intend to start this year, per a recent survey by Forrester Research, Cambridge, Mass. While search uses queries as a direct signal of intent, behavioural targeting relies on Web use to indicate consumer interests. "Search has proven itself to be so successful, and marketers are interested in translating that same type of activity into other media," said Shar VanBoskirk, a Forrester analyst. While advertisers have been pouring money into search for years, they are now running into a saturation problem: Search ads account for about 40% of online ad spending, per the Interactive Advertising Bureau, yet search pages are less than 10% of the Web, said Bill Gossman, CEO of Revenue Science, a Bellevue, Wash., behavioural targeting company. "There's only so much of the Internet consumers can monetize with search," he said. Providers like Revenue Science and New York-based Tacoda are using anonymous audience data to help advertisers run campaigns aimed at users exhibiting certain behaviours. This approach allows the marrying of audience data from one group of sites with ad placements to another. For example, Weather.com could show a car ad to surfers who come from Cars.com. That could theoretically solve advertising challenges presented by the existence of sites with small but attractive audiences, like gadget blogs, and others with broad, undefined reach, such as e-mail sites. Both companies have struck deals with a diverse number of sites to share anonymous audience data to allow ads to be targeted elsewhere. When its data is used for targeting, those sites get a cut. "What we're seeing here is person-centric marketing, and that's been the holy grail of brand advertisers for a long, long time," said Dave Morgan, CEO of Tacoda. These days, pert buttocks, bulging bikini tops and glistening lips do little to enhance sales. Mercifully (or sadly), young consumers find sexually explicit advertising "boring and repellent", according to a recent survey. In addition, this is just one of an array of unwelcome realities confronting an industry, which is only beginning to climb out of the worst recession that most of its practitioners can remember. Nowadays, advertisements that are not ignored, resisted or disdained by an ever more perceptive public are increasingly being banned or discouraged. Already, tobacco ads are history. Will alcohol ads follow them, along with all advertising aimed at children? Perhaps the McDonald's bulls will be denied their fun not just by doubts about their effectiveness, but also by an anti-obesity-driven ban on all fast-food promotion. In addition, there is more. Increasingly, people are finding ways of avoiding advertisements completely, however politically correct and sex-free they may be. Perhaps consumers are one of the many who no longer see newspaper ads because consumers no longer buy newspapers. Do consumers use the web instead? If so, consumers doubtless deploy a pop-up blocker to keep the ads at bay, and delete potential spam unread. Audience fragmentation makes it no longer possible to assemble TV viewers in tens of millions before a single commercial, while those who record their viewing can simply fast-forward through the breaks. Eventually, we shall all create our own schedules by downloading programmes on to fancy Sky type recorders that can strip out ad breaks completely. Viewers who already have such equipment skip 70 per cent of the ads. A revolution seems to be under way. Once, we were prepared to attend to advertisers' messages in return for the subsidy they accord the material that surrounds them. Now, time-poorer, cash-richer and altogether more irritable, we seem to be reneging on this historic contract. As a result, hard-sell messages delivered through the traditional mass media are losing their power to affect our behaviour. Perrier's "H2Eau" and "Eau La La" campaigns helped transform us into mineral water drinkers, but such achievements will in future be hard to match. So are we at last to be freed from advertisers' blandishments? Of course not. New circumstances simply demand new methods, and marketing managers are energetically cooking them up. One thing they are trying is to target our minds' spare moments, instead of pestering us when we do not want to be disturbed. Nowadays, most such moments occur when we are out, and especially when we are stuck in queues or traffic jams. So in 2003, spending on old-fashioned outdoor advertising increased by 24 per cent. Drive-time radio, billboards, posters and dirigibles are all on the up (literally, in the last case) and new outlets of this kind are constantly being unveiled. The behavioural targeting field is attracting new entrants and investments. Revenue Science and Tacoda recently closed £25 million and £12 million funding rounds, respectively. Last week, Acknowledge received £48 million in funding to build its behavioural targeting network for small advertisers. Meanwhile, Claria recently said it would sell its adware business to focus on its own behavioural targeting platform. David Rittenhouse, group media director at Neo@Ogilvy, New York, said he prefers ads tied to Web use rather than demographics or context. "It's based on frequency and Recency of behaviours," he said. "That's something that makes them more qualified." Tying ads to Web behaviour was the goal of the 1990s boom-era Internet ad companies DoubleClick and Engage. Yet the newer entrants offer better technology, said VanBoskirk, and the ability to string together enough sites to give campaigns reach. Tacoda has built a network of 3,000 sites that it says covers 130 million Internet users. Revenue Science helps advertisers run campaigns across many sites using its software. Some see insights that are more valuable from advertisers' own customer and site data. "That's the proverbial low-hanging fruit," said Scott Howe, general manager of DrivePM, a unit of aQuantive, Seattle, which places Web ads based on several targeting criteria. "If someone has interacted with an advertiser or visited the site, they're much more likely to buy again." With the dynamic environment, undoubtedly, each firm attempts to study and understand the consumer behaviour due to businesses stay in business by attracting and retaining customers (Arnold, Price & Zinkhan, 2002). That means only gaining a comprehensive understanding of consumer behaviour can meet the firm’s marketing goals. According to Solomon (1999), most marketers now recognize that consumer behaviour is an ongoing process; decision-making unit plays an important role in this process. As the basic consumer decision-making unit, family are most frequently examined by many markets because decision making by family differs in many ways from decisions made by an individual and an organization. Today, the food industry is one of the major players in the field of advertising (Hastings et, al 2003). In the UK alone advertising spend on promotion per year is £743 million. With £522 million spent on television and £32 million in children’s airtime.(Sonia Livingston 2005) With the most consistent advertisements being dominated by the ‘big five’ groups of foods that consist of pre-sugared cereals, soft drinks, confectionary, savoury snacks and fast food. Breakfast cereals hold a significant part of the grocery sector with over 90% of the UK households buying them. In 2000, 414,000 tons of breakfast cereals were sold in the UK at a retail value of £1.1 billion making it an important area for study to identify its future promotional direction. (www.mhne.com/business/marketing/forums/pdf/chapt3.pdf 2003). In summary, the study findings suggest that the information about the consumer behaviour warrant special attention from both marketing scholars and practitioners. 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