Consumer Buying Behaviour & New Product Development - Essay Example

 Consumer Buying Behaviour & New Product Development Abstract The purpose of this project is to offer an in-depth analysis of consumer purchasing behaviour whilst examining the specific factors that affect the process of product consumption. Individuals are affected by social and cultural characteristics, as well as personal motivations to buy products, which either impedes or supports marketing efforts. This project will examine these consumer attributes and further offer an analysis of new product development and why innovative goods and services aid in corporate growth. Consumer Buying Behaviour & New Product Development Experts in the field of marketing have deemed consumer decision-making styles as patterned, mental, cognitive orientation towards shopping and purchasing, which routinely dominates consumer choices (Bauer et al, 2006). Though it might be argued that the patterns and stages of consumer purchasing are somewhat universal, each individual consumer maintains different preferences in terms of pricing, quality, as well as the level of utility offered by specific products. Utility can best be defined as a measure of satisfaction that a consumer receives from possessing or consuming goods and services (Boyes & Melvin, 2005). As such, consumers tend to make choices that offer them maximum utility. However, in order for marketing entities to deliver the products demanded by consumers, in the pursuit of maximizing utility and satisfying corporate profitability expectations, marketers must consider the methods by which consumers adopt new products. Before a consumer makes the decision to purchase a new product, they must first recognise the opportunities or problems with a life situation which needs improvement or correction. This is the first stage in the buying decision process whereby the consumer desires to provide a change or a resolution to an issue. For example, the consumer may recognise a specific problem: There is currently not an adequate supply of food in their refrigerator or the supply of food is not sufficient to their current tastes. Once the consumer recognises that a problem or opportunity for change exists, they set out to correct the issue. During the second stage in the decision making process, the consumer gathers the information necessary to attain a desirable solution to their recognised problem. This can be provided in the form of internal assessments or searching external sources of information. For instance, the consumer may make a mental review of a previous, positive experience with a particular brand or type of food product. Moreover, they may search external sources of information such as from friends, associates, magazine advertisements, or sales representatives to determine how best to rectify the problem of having an empty refrigerator. During this stage of the decision making process, the consumer actively searches for the proper solution to their dilemma. Moving forward, the customer begins evaluating the many options available for them in solving the problem of, in this case, the empty refrigerator. The consumer may have found a tremendous amount of information that both supports or rejects their potential alternative solutions, thus they either accept or reject various alternatives. For instance, a close associate may have communicated their negative experience with a branded item, suggesting that the troubled consumer not consider this particular item. In similar respect, the customer uses a variety of evaluative criteria, such as brand name or product price, which is all formulated by the consumer in determining what option is truly the best for their immediate (or long-term) needs. The fourth step in the decision making process is to make a final decision and to actually purchase the alternative which they deem is most appropriate for their individual needs. During the evaluation process, the consumer has weighed the potential pros and cons of their product choices and has determined a final choice. From this point, the consumer decides on the location of the seller where they will buy their chosen alternative and subsequently makes the purchase. Finally, after having purchased the product, the customer performs a post-purchase evaluation of their newly consumed good. If, for some reason, the product does not live up to their expectations, the consumer is dissatisfied and comes to regret their purchase. In opposite accord, the customer may be sufficiently delighted by any number of attributes that their new purchase provides and find high levels of utility. Post-purchase anxiety, often called cognitive dissonance, is an imbalance between personal beliefs and attitudes which occurs after the product purchase (Boone & Kurtz, 2006). There are any number of individualistic reasons as to why the consumer either feels remorse or adulation for their new product purchase, however marketers must be aware of the impact of post-purchase re-appraisal as this may have long term detrimental effects on consumer loyalty. The impact of post-purchase evaluation will be discussed in more detail throughout this project. Social and personal factors, generally unique to each individual consumer, also serve to greatly impact the process of making product purchases. Social group involvement is prevalent for the average consumer in terms of friendships and acquaintance relationships, family membership or cultural aspects unique to each geographic region. Within any social group, there are generally a set of cultural norms which guide a consumer's behaviours, these norms consist of the values, attitudes and behaviours that a certain group deems appropriate for group members. For instance, assume for a moment that an individual belongs to a family structure that strongly emphasises frugal living. For much of this particular consumer's existence, they have been promoted the "dangers" of living on credit and making expensive purchases. For this individual, the social norm is that of modest living. This particular type of individual may well be a marketer's proverbial nightmare as this individual would regulate his or her spending behaviours based on the social norm established in their strong family structure. Thus, this consumer would not readily pursue purchases such as large screen television sets, luxury vehicles, expensive restaurants or any number of higher profit-generating goods and services. During the evaluation process of purchasing, likely the consumer would rely on the family-promoted values of frugality and dismiss high dollar goods as viable product alternatives. In a scenario with an opposing viewpoint, a consumer may be involved in a more self-proclaimed elite organisation of acquaintances which consists of over-achievers who promote the many laurels of product consumption. This individual may have been raised believing that the key to happiness is the ownership of new technology and vast amounts of retail shopping. In this situation, this particular consumer is obsessed with product quality and the prestige offered by various goods, thus they seek alternatives which will fulfil their need for perceived luxury and make high-dollar merchandise purchases. In a very similar respect, consumers often consult with reference groups – groups whose value structures and standards influence consumer behaviour – when determining the value of products (Boone & Kurtz). Reference groups may consist of testimonies from family and friends, as well as well-known celebrities, which provide a consumer with ideas by which they mould their purchasing habits. For instance, television advertising may dramatically over-emphasise beauty as the primary attribute to successful living by illustrating various cosmetics or luxurious clothing designed to enhance the physical form. This consumer who is prone to being influenced by reference groups will adopt similar values and subsequently consume a wide variety of beauty-enhancing product lines. This individual may purchase very expensive skin or facial creams not only for their proposed ability to enhance appearance, but to let other reference group individuals to herald this consumer for their use of these beauty products. Social class, as part of demographic segmentation, can also serve to influence consumer purchases. Oftentimes, class rankings are determined by occupation, education, income or geographic residence. Generally, as an individual earns more money, their demand for more top-quality, higher priced products increases in similar respect. However, it is not only income that determines social class as it can be a systematic set of personal values and beliefs that guide an individual toward social behaviour. For instance, a unionised labour worker might make a significant salary, but exist in a social environment of more "down to earth" expectations. This labourer, though they earn a sizeable financial living, may value a more modest lifestyle and choose to make purchasing decisions based on this value system. Contemporary consumers, especially apparent in the United Kingdom and other Westernised cultures, are often competitive in terms of being perceived by others as affluent. Thus, middle-class consumers often make larger, more expensive purchases in the pursuit of treating themselves to quality merchandise or to advance social perceptions of their higher status. It is vital to illustrate the various influences that social and personal belief systems offer to consumer purchasing behaviours as these individual habits form the foundation of the information necessary for marketers to select the appropriate target through which to promote and distribute its products and how to provide growth to its industry through consumer revenues. In many respects, marketers must become well-versed in the principles of psychology as human behaviour is a primary indicator of how consumers view particular products and base their evaluations on various goods and services. A vast portion of marketing, in terms of relating to the consumer, involves being astutely aware of the influences of social class and personal belief systems in order to distribute a product which will be accepted by the market audience and generate a sales volume which can help a business to sustain growth in its industry. Having mentioned business growth and consumer purchasing behaviours, it would be relevant to discuss the steps necessary for marketers to ensure that once their product is purchased, that the consumer maintains high levels of satisfaction with their choices. As previously discussed, during the decision making process, consumers tend to evaluate their purchases to determine whether the product has sufficiently met their expectations. Part of the marketing strategy is to deliver the goods and services that customers most desire and to subsequently build a loyalty to their particular brand of merchandise. When a consumer comes to regret their specific purchases, marketers must recognise their role in minimising the effects of dissatisfaction or work towards building a better reputation in the post-purchase re-appraisal process. In similar accord, a customer who is delighted by their choice of purchase allows marketers an opportunity to build on the product attributes which sustain consumer satisfaction and attempt to draw on these successes in further product offerings. In order to prevent a negative post-purchase experience with consumers, marketers are equipped with various options to ensure that the purchaser maintains a positive perception of their new product. Marketers recognise that in the post-purchase evaluation stage, the consumer tends to be highly sensitive to the opinions of family and friends in relation to the consumer's purchase. As such, in cases of extreme negative scrutiny over the recent purchase, many consumers attempt to alter the facts of the purchase scenario, most typically by reducing the proposed price actually paid for the particular good (Mitchell & Boustani, 1994). To illustrate, when consumer acquaintances begin offering negative feedback regarding the new product, such as indicating that the consumer spent more than the product was perceived to be worth, the consumer will offer that the price paid was considerably less than the actual price. This creates a situation where the consumer now perceives this particular brand to be over-priced and not worthy of subsequent purchases. Recognising the psychological factors driving diminished consumer loyalty, marketers have the option of using heavy promotional campaigns which highlight the many distinguishable benefits of the product to justify its retail price tag. This establishes a strong brand recognition which may remove emphasis from post-purchase re-appraisal of quality and focus more on the product's unique attributes to make the product a desired potential purchase. If the firm can establish brand loyalty, and engage the consumer audience to view the branded product in a positive light prior to purchase, it will diminish negative post-purchase remorse. Moreover, because of the importance of post-purchase re-appraisal, marketers often use perceived risk as a method to stimulate a positive post-purchase consumer response. As an example, time risk is employed by marketers, in this case the food industry, to alert the consumer to the fact that existing competitor products may be time-wasting in their pursuit to market microwave foods or ready-prepared meals (Mitchell & Boustani). Marketers can rely on heavy promotional campaigns which illustrate the many detriments of traditional foods on the market which require extensive preparation in order to gear the customer toward the acceptance of packaged meals. This is a preliminary step in the marketing process which can serve to reduce a negative post-purchase opinion of the product. Customer service tactics, in addition, are often used to aid in generating a positive consumer experience in the post-purchase evaluation stage. For instance, the automotive industry (in which most purchases cannot be returned for refund or exchange) often provides letters or telephone calls from dealer personnel and related auto industry groups which offer personalised attention to consumer issues (Boone & Kurtz). These customer service activities promote that the company stands by its product as the chosen consumer alternative and will strive to support any issues or concerns that arise regarding the new purchase. All of these tactics designed to generate a positive post-purchase assessment are designed to secure consumer loyalty to a company's branded goods and prevent damage to consumer perceptions of the product. Negative word-of-mouth appraisals of branded goods can be as detrimental to growth within various markets, thus marketers must take tremendous steps to ensure that the purchase of their products is a positive experience. Much of the previous discussion has been focused around the consumer decision making process and buying behaviour, however it is relevant to discuss the nature of new products in terms of the importance of these products to marketing entities. Contemporary marketers have learned through experience that the secret to success in today's rapidly changing environment is to bring out high quality new products and to perform this task quickly (Nickels et al, 2005). As competition grows within various consumer markets, generating innovative product ideas and delivering them to a market that will embrace them becomes a proverbial race to capture market share. Using the technology industry as a primary example, this particular industry is facing a consumer environment which is routinely demanding new products that are innovative, modernised and adaptable to consumer needs. The product life cycle of technological goods is generally short, as new breakthroughs quickly make these products obsolete. For this reason, it is crucial for an industry to be internally equipped to continuously develop new products for the sake of maintaining a competitive edge. More so than ever, consumers are guiding the commercial industry as their demand for new products makes it necessary for companies to adapt in order to fulfil their needs. When a specific product type is inundated with various competition, a firm that is not able to provide subsequent new product offerings will quickly lose consumer loyalty as they shift their spending to those companies who are successful in rolling out new and innovative goods and services. Thus, routine new product rollouts are crucial to creating sustainable competitive advantage which is defined as a value-creating position that is likely to endure over a long period of time (Longenecker et al, 2006). New products create this value for firms which is most noticeably visible in terms of profitability through sales revenues and overall corporate growth. But, what is a new product? Generally speaking, a new product is one that neither the company nor the consumer has previously handled. For instance, a contemporary firm which manufactures a camera phone with a built in hunting knife could be considered a new product. In this sense, neither the concept of camera phone or the hunting knife are new ideas, however the integration of these two concepts into a new style of phone is an example of the basis of new products. When a firm delivers a product that is unique to the consumer lifestyle, a new product is born. Focusing for a moment on consumer lifestyle, trends in the demands of consumers is generally the catalyst for the manufacture of new products. In Westernised cultures, life is routinely becoming fast-paced and in need of products which can assist or enhance these lifestyle expectations. With this in mind, new products are needed in order to make consumers' lives easier or generate high satisfaction in luxury or convenience. In this sense, new product development is designed to sustain an evolving home, workplace or culture in need of innovative products to assist in modernised living. In comparing innovation to that of invention, it is important to distinguish the two very different concepts. Invention can best be defined as a radically new concept that is previously unheard of. Today, much attention has been focused on invention, however, far more modern companies innovate by adopting and enhancing the invention of another firm rather than inventing a new good or service (Gilbert, 1995). To illustrate a relevant example, the creation of the television set in the mid 20th century was considered an invention. Today, companies which have designed variations on the traditional television set in the form of plasma televisions, high-definition televisions or flat screen televisions have practised innovation by modifying an existing product. In similar accord, new adaptations to cellular technology, such as implementing mobile telephones with MP3 capabilities are innovative products built around enhancing existing technology. Having illustrated the difference between invention and innovation, and discussion of the importance of innovation for modern marketers, it would be relevant to explore the process of developing new and innovative products. There are five recognised steps which firms engage in during the process of creating and marketing new products. The first stage, ideas generation, consists of exploring various conceptual ideas utilising various sources such as customers, internal sales teams, research and development professionals, competing products, retailers or even suppliers. All of these various sources offer insight into possible new product concepts. During the second stage of development, firms weigh new methods to innovate and determine whether ideas for new products would be marketable, profitable or whether the firm maintains the ability to produce this new concept. Raw materials capabilities and competitor product profiles are often considered during this stage of development. This process is known as screening which separates unfeasible ideas from those that can be sustained by the industry in the pursuit of rolling out a new product. The next phase of creating a new product consists of the physical development and testing of the concept. In this stage, the firm converts the idea into a visible product and develops a prototype through a series of mock-ups. Development involves various professionals within an industry whereby the prototype is manufactured and tested to determine whether it is a viable product. Moving forward, testing the product to determine whether it will perform positively in a real-life environment determines whether the product is ready to be introduced to the market or whether the good requires continuous fine-tuning. In the final stage of new product development, the item has been tested and deemed appropriate to be delivered to its intended market and is ready for full-scale marketing and commercialisation. During this process, the company determines various appropriate marketing strategies, trains its sales and support staff about the new product and introduces the new good or service to the consumer. Due to the need to rapidly deliver a new product to its appropriate target market, many companies race to shorten the development cycle in the pursuit of generating successive new products for delivery to the consumer. The time-to-market is crucial for firms as competitors can dominate various markets with similar products before another firm can deliver its product offering. Marketers have various methods at their disposal to ensure a shorter development cycle and faster new product rollouts. One method is to develop project teams who take responsibility for streamlining development. Project teams drive the development performance by focusing on the highest-value activities in every development stage, and recognise which activities can be deemed unnecessary (Sandmeier & Gassmann, 2006). In many instances, a project manager is implemented within these development teams and assumes responsibility for introducing consumer feedback to the project in order to shorten the need to routinely test prototypes. Further, the project manager acts as a regulator to ensure timelines are met and engage various company professionals to perform their portion of the development process according to their given deadlines. Thus, teamwork is often deemed as one of the most beneficial and efficient systems to shortening the time-to-market. Having previously established that consumer demands drive the innovation process, many firms tend to concentrate more heavily on the technical performance of their products during the development stages and lose focus on addressing whether consumers will readily accept their product once it has been introduced on the market (Strategic Direction, 2002). For this reason, some companies utilise a different method of test marketing whereby the prototype is introduced to a limited group of potential consumers in order to receive real-time feedback about their perceptions of the quality, usefulness or even proposed price of the new product. This information can be relayed back to those who are responsible for the development stages in order to shorten the production of various prototypes in order to build the product based on what consumers really desire to experience in their future purchases of the new good. It would appear that shortening the time-to-market is quite different for each individual company and is dependent on the nature of the product and the costs and labour involved in manufacturing a developed prototype. However, methods to radically decrease the time investment in the development process can be attributed to internal innovation, leading to increased product offerings in shorter periods of time and internal activities worthy of benchmarking. Once the new product has been introduced into the market, there is a series of steps by which most consumers adopt the new good or service. The first challenge for marketers is to develop consumer awareness of the product's existence. Generally, as part of the commercialisation stage of development, the marketing strategy is designed to bolster consumer awareness of the new product. Initially, consumers lack a full range of information about the product, however marketing efforts begin to generate consumer interest, where consumers in this next stage of adoption begin actively seeking information about the new product. This occurs during the introductory stage of the new product rollout and marketers must use creative strategies to peak curiosity about the new product. During the third phase, consumers begin an evaluation of the product; considering the likely benefits that the new product provides. It is during this stage that consumers might compare similar product offerings from various competitors and determine whether this new product would be a viable purchase. From this point, the consumer enters stage four of the adoption process where they make an initial trial purchase of the product in order to evaluate its overall usefulness. In many instances, marketers recognise that consumers tend to follow this evaluation stage and will offer sample-sized promotions of snack foods, shampoos, cosmetics in order to entice the trial purchases. Finally, the consumer either opts to reject the new product or decide that they find the product enjoyable and useful to their needs. If a marketer is able to provide consumers with what they want, they will generally decide to use the product on a regular basis. If consumers do not deem the product worthwhile, companies must consider the nature of the product offering and determine whether it should be scrapped from production or modified to make it a more positive consumer product. One major theme in terms of consumer purchasing behaviour and that of the marketing efforts of modern firms is in the consumer's overall ability to drive change within an organisation's product offerings. The ultimate goal of companies is to generate products that consumers will perceive as positive and regularly adopt, thereby securing forward growth or profitability within their particular industries. Marketing, in terms of recognising the behaviours of consumers, is a complex system of development, trial and error and ability to generate enough information to create sufficient innovation in new products. Thus, it would appear that marketing is, and might always be, in a state of constant evolution. Bibliography Bauer, Hans H., Sauer, Nicola E. & Becker, Christina. 2006. 'Investigating the relationship between product involvement and consumer decision-making styles'. Journal of Consumer Behaviour. Vol. 5, Iss. 4, pp.343-345. Boone, Louis E. & Kurtz, David L. 2006. Contemporary Marketing. 12th ed. Thomson South-Western. United Kingdom: pp.164-179. Boyes, William & Melvin, Michael. 2005. Economics. 6th ed. Houghton Mifflin. p.499. Gilbert, Joseph T. 1995. 'Profiting from innovation: Inventors and adopters'. Industrial Management. Vol. 37, Iss. 4, p.29. Longenecker, Justin G., Moore, Carlos W., Petty, J. William & Palich, Leslie E. 2006. Small Business Management: An Entrepreneurial Emphasis. 13th ed. Thomson South-Western. United Kingdom: p.310. Mitchell, V.W. & Boustani, Pari. 1994. 'A preliminary investigation into pre- and post-purchase risk perception and reduction'. European Journal of Marketing. Bradford. Vol. 28, Iss. 1, pp.59-62. Nickels, William G., McHugh, James M. & McHugh, Susan M. 2005. Understanding Business. 7th ed. McGraw-Hill Irwin. London: p.442. Sandmeier, Patricia & Gassmann, Oliver. 2006. 'Extreme innovation'. European Business Forum. London. Iss. 26, p.46. Strategic Direction. 2002. 'Can companies break from poor product development habits?' Bradford. Vol. 18, Iss. 2, p.24. Read More