Consumer Psychology - Research Paper Example

? Consumer Behaviour Introduction There are various types of products and services available in the market, and consequently there are several types or categories of consumers. In a typical consumer industry, the issues faced by the companies are more or less related to common factors which include sales, service, new products introduction, debt collection and competition. The consumer behavior and the companies’ response with strategies for growth in this paper are discussed in relation to the consumer industry. The relationship between business undertakings and the targeted markets is dependent upon the extent of consumers’ power in the market place. In discrete market segments the consumers have relatively little power and in a less discrete environment, the relationship leads to less consumer loyalty and greater consumer choice on account of greater mobility enjoyed by the consumers. Background The technological developments in telecommunications and media in the recent past have opened up new avenues for marketing of the products. The developments have also enhanced the awareness among the consumers about their rights, quality of the products, pricing pattern of the similar products, track record, servicing in respect of the products and host of other factors related to marketing. Therefore the changing business environment has necessitated revisiting of the strategies hitherto adopted by the companies in marketing of the products and services and streamlining their strategies in line with the developments in the industry for their survival. Upgrading of the products and processes is a continuous process keeping in tune with the changes in technology and tastes and fashions of the consumers. Objectives This paper discusses consumer behavior with reference to an ongoing concern. An ongoing concern has to approach the issue from two angles, one in connection with the existing consumers and the other with the prospective consumers. Though there may be an element of overlapping, strategies vary for collection of information. The paper seeks to analyze the issues with regard to the existing and potential consumers. In the case of existing consumers, the information about them is already available with the company. The techniques such as Customer Relationship Management (CRM) would be useful for the management of these customers as well as the potential consumers. In the case of prospective customers, the information from the industry, community and other external sources will be required and the techniques such as market research would be useful for collecting information. In this connection a clear perspective formed by the management with regard to Consumer psychology and Consumer behavior is essential. Consumer psychology Consumer psychology deals with the study of issues most relevant to the decisions taken by the people in purchasing a particular item, determining the value of a service and the influence of advertisements in the media in their decisions, especially when they are confronted with the new products or services, consequently interrelated to the consumer behavior. The entire gamut of consumer psychology encompasses marketing, advertising and social psychology apart from economics and cultural diversity or differences and extends to several other related areas such as product packaging as well. For example, Choi, Kwon & Lee (2007, p. 10) state that “mortality salience has an impact on materialistic consumption. People with a greater fear of becoming a terrorism victim showed a greater tendency for brand name consumption and compulsive consumption”. This is an extension of the application of Terror Management Theory to consumer behavior. Likewise, the opportunities afforded are endless and includes new uses for the existing products which may give rise to new ideas in marketing a product. The economic and social background of the consumers and the psychological interplay in this backdrop is very crucial in the product placement and positioning, considering the target consumers, say, wealthy, middle class, urban and rural and so on. Consumer behavior According to Burns (2010, p. 3) many theories of consumer behavior suggest that consumers evaluate products based on their subjective perceptions of the products (perceptions based on signs and symbols) rather than on objective physical reality. Improving the shopping experience is very important as the customer satisfaction is the key driver to the business and customer retention is a problem if the competitors are well placed to satisfy the customers. Target marketing aims to create purchase intent with the consumers who have remarkable attitude towards the products. However consumers are oriented towards quality, which in many cases act as a common denominator for a positive behavior and leads to customer satisfaction. Dakik (2010, p. 18) states “The modern concept of quality was, for the first time, implemented in Japan after the Second World War. It is believed that the quality is a key of the Japanese business success”. The advertisements are targeted towards the consumers based on their behavioral patterns. If the company is able to strike a chord with the consumers through its communication, the target marketing efforts become successful. Meyers (2010, P. 7) states that “If the product is not in-line with the cultural needs of the consumer, then attitude towards the product and resulting purchase intent will be adversely affected by the marketing efforts. Marketers should therefore keep these findings in mind during the development of their marketing communication strategy”. Collection of information Collection of information with reference to the consumers could be from internal or external sources. The retrieval and analysis of the details in respect of the existing consumers with a strategy of retention of customers would definitely be the starting point in reorganization of the strategies adopted by any business. CRM technique is suitable for adopting collection of information in this respect. Integrating the potential consumers’ tastes and fashions with the existing business operations in order to improve the demand for the products manufactured or services rendered by the company points to the need for market research. Both these strategies are not mutually exclusive for a running concern, rather interrelated and essential for the growth and development of the business. Customer Relationship Management Lin (2010, p. 1306) states that for the rapid advances of Internet technologies in recent years, Electronic Commerce (EC) has gained many attentions from enterprises to keep their competitiveness. Among all possible endeavors for EC, research has shown that effective management of customer relationships is a major source for keeping competitive differentiation. CRM is a companywide strategy used for the management of clients and sales involving methodologies and software for the purpose of synchronization of business processes covering marketing, marketing service and support for market development. Tracking of the details of the consumers such as the history of purchasing, budget limits, interested area of purchase and their tastes and fashions will be useful in building up the repository of information for ready use which would form the basis for analyzing the trends and the purchasing patterns, and result into better communication, meaningful evaluation, agility in operations, reduction in cost and customer loyalty. Sophisticated processes and technology of the established vendors such as Oracle and SAP focus on internet and web technology to facilitate the implementation of CRM. Wahab et al. (2010, p. 88-89) state “Customer Relationship Management CRM has become the main strategy for companies' regardless of its size…Due to the changes in market strategies that move towards customer focus and value creation rather than product or services focus, a new paradigm of marketing are stress on buyer-seller relationship as another method in value creation for both parties”. Market Research Market research aims at gathering information about markets and evaluation of data in respect of the preferences in relation to the existing and/or new products and services of the company, channels of distribution and its competitors in the industry in terms of pricing patterns and demands with reference to the targeted customers. In addition to primary data collection, general survey with regard to the status of the industry, general economy, the government policies and the nature of competition should be conducted for the purpose of analysis, in view of the impact of these factors in demand for the products and services of the companies. Methodology of collecting information The data could be collected from primary sources and secondary sources. Primary sources include data in respect of brand awareness, brand preference, brand loyalty and other aspects related to consumer behavior collected through interviews, observation, questionnaire survey, mail & internet surveys and experimentation using computer models based on correlation between the variables. Similarly, there are various methods adopted for interviews such as direct interviews with predesigned questions, in-depth interviews and telephone interviews. Using sociometric data to study social behaviors of group shoppers is becoming popular. For instance, Kim et al. (2009, p. 1) state that the interaction patterns among shoppers will convey their interest level, predicting probability of purchase. Secondary sources could be cheaper and a wider area could be covered at lesser cost. Verification or confirmation of the data from the primary sources on a broader perspective is possible from the results inferred on the analysis of the data from secondary sources. However, complete reliance of data from the secondary sources or use of these data for specific needs of the business under compromise could vitiate the results on account of factors such as accuracy, out of date particulars and traceability to sources. Sampling & Survey In collection of information for the purpose of qualitative analysis, identifying targeted population is the first step, and in this process we have to take into consideration several factors such as age, gender, income level, country of origin and religion related to the population. It is important to note that the consumer preferences vary with reference to these factors and the product positioning without taking into account these diversified factors in the society would lead to meaningless results and therefore, sampling frame needs to be done carefully. Simple random sampling method could be employed with probability sampling scheme to ensure proper representation for the various groups in the targeted customers. It is preferable to make the survey with questionnaires distributed to the participants, and the data collector extending assistance to the participants wherever necessary for properly filling up the questionnaire. If the area required to be covered is wide and the participants scattered in different regions, survey through internet could be undertaken. In this case, the response rate may be poor as it depends upon the frequency of usage of the internet by the participants or difficulties in filling up the questionnaire and mail back the same before the deadline fixed by the company. However, the job could be entrusted to a specialized agency for carrying out the research in accordance with the parameters specified by the company. Saris & Gallhofer (2007, p.4) state “Survey research is often used for descriptive research. … studies can also be done to determine the reasons … such research is called explanatory research”. The experience and the communication skills of the data collector is an important aspects involved in the survey. Similarly the sample size depends upon the size of the population and the method of collection proposed. Strategy to manage consumers Apart from the competitive prices, quality of the products or services and excellent after sales service there are scores of other factors in the management of consumers, such as brand equity, consumer education, training to the employees, online sales, strengthening the information system (pending implementation of CRM), technological innovations, environmental activities and corporate social responsibility (CSR). The findings with regard to the consumer behavior would be useful in formulating or modifying the strategies adopted in the case of online sales also. Proper training programs to the employees for overall efficiency should form part of any strategy. The strengthening of the brand values and CSR under the fast changing environment is closely related to consumer behavior from different perspectives, but has great impact in shaping up the customer behavior for the growth and development of an enterprise. Branding Mishra & Datta (2011, p. 34) state that customers and brands are the two most important intangible assets of any organization. Brand equity in relation to the products/services or company is very important in consumer industry, as brand is the identity of the product or business. Brand should be able to differentiate the company’s product from the crowd in terms of its quality and other attributes and it is associated with the sentiments of the consumers towards the products/services or the company. Shama & Hassan (2011, p. 12) states: “Product branding includes all the tangible and intangible associations that customers have about a product brand. This could include brand quality, brand price, brand features, brand personality and brand image. Product brands target customers, and are likely to create associations about specific products. Thus, marketers’ efforts focus on developing marketing activities that will deliver value to a brand which will enhance its image from the customers’ perspective. Due to its importance, marketing academicians and practitioners are becoming more involved with branding as a means for differentiation”. Therefore, consumer behavior is also closely linked to the perception about the brand. This psychological experience of the customer forms the basis for brand loyalty. Every marketing company aspires for brand recognition in market place for its products. Garretson, Fisher & Burton (2002, p. 97) state that shoppers who see a linkage between the price of a brand and its quality, or perceive of themselves as smart-shoppers, are more likely to seek price savings in promotions of national brands. Corporate Social Responsibility The concept of Corporate Social Responsibility is gaining importance in the recent years which signifies that the consumers are worried about the environmental concerns in consuming the products or services and willing to shift their allegiance to environment friendly products. The CSR related activities would enhance the standing of the companies in the society. Therefore, it is in the interest of the companies to phase out those products which are environment-unfriendly with a long term point of view, since environmental tag such as carbon label or green label for the products and services are also becoming mandatory in several countries. Findings The implementation of customer relationship management technique (CRM) has been favored in various studies for measurement and evaluation of consumer behavior in marketing. Also, market research in the case of new business or new product would be useful in gaining knowledge about the behavior with reference to the targeted customers, to enable the companies to evolve suitable strategies based on the observations. Brand development strategy for the business is very important from the angle of product promotion through advertising and for its long term growth and development. Similarly, in line with the shift in the consumers’ preference towards environment friendly companies, the implementation corporate social responsibility (CSR) strategies would enhance the positive attitude of the consumers towards the business. Limitations/implications of the consumer behavior theories and practices  However, the findings in the development of the strategies are subject to certain limitations ingrained in the consumer behavior theories with implications on implementation of the strategies, which need to be factored for better results. For example, consumer behavior is expected to change on a continuous basis in a society. Therefore, strategies devised with regard to a situation prevailed at a particular point of need to be reviewed under the changing circumstances. Conclusion The developments taking place in technology on various fields such as telecommunications, media, logistics and various other fields will have impact on the consumer behavior and the techniques adopted in managing the operations in the industries and the businesses. Likewise, buying habits of the people undergo changes keeping in tune with the changes in the tastes and fashions in a society and the economic situation of the country. Also, when a company is growing in strength, the composition of the employees and the mix of the consumer base undergo changes. Therefore, the success of the business operations lies in constant monitoring and evaluation of the consumer behavior and embracing the changes which were necessitated over the period of time by modifying the existing strategies and integrating the innovations and technological developments into the processes, because the only thing remains unchanged in the history of mankind is ‘Change’, because change is a constant process. . References Burns, D. (2010) Reconceptualizing Consumer Power: A View from Market Segment Theory in Retailing, Journal of research for consumers, Issue: 17, 2010. http://www.jrconsumers.com/Consumer_Articles/issue_17,_2010?f=42430 Choi, J., Kwon, K & Lee, M. (2007) Understanding Materialistic Consumption: A Terror Management Perspective, Journal of research for consumers, Issue: 13, 2007. http://www.jrconsumers.com/__data/page/4658/JRC_TMT_Revised2.pdf Dakik, S. (2010) THE IMPORTANCE OF TQM CONCEPT AS A FACTOR OF COMPETITIVE ADVANTAGE OF COMPANIES, Perspectives of Innovations, Economics & Business, Volume 6, Issue 3, 2010. http://pieb.cz/docs/PIEB/volume6/04_PIEB_V6_SERBIA_STojankaDakic_d_ac.pdf Garretson, J. A., Fisher, D. & Burton, S. (2002) Antecedents of private label attitude and national brand promotion attitude: similarities and differences, Journal of Retailing 78 (2002) 91–99 Kim et al. (2009) Predicting Shoppers? Interest from Social Interactions Using Sociometric Sensors, http://web.media.mit.edu/~taemie/papers/200904_CHI_TKim.pdf Lin, J. (2010) Information Systems for Enhancing Customer Relationships, Information Technology Journal 9 (7): 1306-1316, 2010. http://docsdrive.com/pdfs/ansinet/itj/2010/1306-1316.pdf Meyers, Y. J. (2010) Target marketing and the product: categorizing products to understand the resulting marketing communication outcome measures, Journal of Management and Marketing Research, Volume Five- June, 2010: http://www.aabri.com/manuscripts/10475.pdf Mishra, P. & Datta, B. (2011) Perpetual Asset Management of Customer-Based Brand Equity-The PAM Evaluator, Current Research Journal of Social Sciences 3(1): 34-43, 2011, 25 January 2011. http://maxwellsci.com/print/crjss/v3-34-43.pdf Saris, W. E. & Gallhofer, I. N. (2007) Design, Evaluation and Analysis of Questionnaires for Survey Research, John Wiley & Sons, Inc. Shama, H. M. & Hassan, S. S. (2011) Integrating Product and Corporate Brand Equity into Total Brand Equity Measurement. International Journal of Marketing Studies, Vol. 3, No.1; February 2011. Wahab et al. (2010) The Evolution of Relationship Marketing (RM) Towards Customer Relationship Management (CRM): A Step towards Company Sustainability. Information Management and Business Review, Vol. 1, No. 2, pp. 88-96, Dec 2010. http://www.ifrnd.org/IMBR/1(2)%20Dec%2010/The%20Evolution%20of_Relationship%20Marketing.pdf Read More