Consumer Behaviour Business Degree with Marketing - Assignment Example

Introduction According to Mintel (2009), there has been a significant increase in business in the UK coffee shops as the operators adopted an aggressive strategy to gain market leadership. However, the economic recession that started around 2008 impacted on the industry as the customers decided to cut back on their spending in fast food outlets including coffee shops of which Starbuck’s has not been spared from this predicament. Against this backdrop, it can be noted that the behaviour of the customers plays and will continue to play a decisive role in the operations of business organisations all over the world. All businesses that want to be successful in the long run should study customer behaviour in order to fully understand it (Cant, 2002). Marketers need to know what their customers need and want and they also need to know how their customers make decisions about buying and using products. As such, this report for Starbuck’s senior executives seeks to explore different factors that influence the behaviour of different customers towards a particular product or service. The report is divided into two parts and the first part is mainly concerned with establishing the extent to which motivation and the benefits sought by the customers go hand in hand towards the satisfaction of the needs of the targeted consumers. The second part seeks to establish the significance of understanding the family life-cycle and family decision making in order to make the organisation to be in a position to market their products and services more successfully. The report will also focus on how the marketers can focus on different factors which influence customer behaviour in order to positively change it through the effective use of different elements of the marketing mix. Recommendations will be given in both cases. 1. Motivation of the customers is mainly influenced by their behaviour hence it is imperative for the marketers at Starbuck’s to first establish the behaviour of their consumers in order to be better positioned to satisfy their needs. Hawkins et al (1998, p.7) define customer behaviour as “the study of individuals, groups, or organisations and processes they use to select, secure, use and dispose of products, services, experiences or ideas to satisfy needs and the impacts these processes have on consumer and society.” This definition implies that there are indirect influences on consumer decisions. As such, any profit oriented organisation must satisfy the needs and wants of the customers. The realisation that long term survival of companies is only possible if customer satisfaction has been achieved has led the companies and their employees to motivate the customers towards their products. In their quest to satisfy their needs, customers also seek to derive benefits from consumption of particular products hence the attempt to satisfy these benefits by the marketers goes hand in hand with the concept of motivation. To understand motivation is to understand why customers do what they do. The philosophy of marketing rests on the premise that customers’ needs are the starting point from which all other activities can be planned (Cant, 2002). However, there is need to take a motivational approach to establish the needs of the customers which influences their buying behaviour. Basically, motivation occurs when a need is aroused that the customer wants to satisfy. A need refers to something physical or psychological that the body must have to function and develop (Cant, 2002). As such, motivation is the driving force within the individuals that drives them to act in a particular way. According to Kotler & Armstrong (2004), a motivated person is ready to act and he is influenced by his or her own perceptions of the situation. People have different perceptions of the same stimulus and when they act, they learn something new. In the process, they acquire beliefs and attitudes that will shape their behaviour if they are satisfied that they will derive benefits from using a particular product. Therefore, motivating the customers towards buying a particular product will change their behaviour since they will be assured of deriving some benefits. It is therefore recommended that Starbuck’s should carefully segment its market in order to satisfy the needs of the targeted consumers. A market segment is essentially a part of the larger market and is made up of individuals or groups whose needs and wants are similar (Cant, 2002). Market segmentation offers different benefits to the customers. It forces the marketers to focus more on customer needs which is the essence of doing business. In a segmented market, the marketer can fully appreciate the differences in customer needs and respond accordingly to any situation obtaining on the ground. Market segmentation in relation to motivating the customers through offering certain benefits can be reinforced through the use of different marketing tools. As such, Starbucks should leverage on the effective use of the marketing mix in order to be in a better position to satisfy the needs of the customers. Basically, the marketing mix is comprised of product, price, place and promotion (commonly referred to as the 4Ps). The product offered in this case should always strive to maintain the reputation of Starbuck’s premium value which should also reflected by the price of the coffee offered. The customers buy a product to derive the utility needed and the value of the product should be reflected by the price (Cant, 2002). Promotion is another important element of the marketing strategy hence the company in question should always strive to inform, persuade and remind the customers about a product in order to influence their feelings, beliefs and behaviour. For instance, it will be recommended that Starbuck’s should offer premium coffee which is often associated with status and prestige. Product positioning also plays a pivotal role in motivating the customers to buy a product. As shown in appendix 1, customer decision making process takes place between the market strategy and the outcomes. In other words, the outcomes of Starbuck’s marketing strategy will depend on its interaction with customers to motivate them in their decision making process whereby they must believe that they will derive benefits from using a particular product. Thus customer value is very important for the company and it has a close relationship with the benefits that are likely to be derived by the customers from consuming a certain product. According to Wang et al (2004), there are different values that can be derived from consuming a particular product and these include the following: “emotional value” refers to the utility derived from a product or service; “social value” refers to the social utility derived from the product or service such as status and “functional value” which refers to the utility derived from the perceived quality of the product. Starbuck’s should strive to fulfil these different types of values and it must forge a strong relationship with the customers in order to create loyalty among them. 2. Customers interact with other people every day especially with the members of their own families. The family is therefore possibly the most important reference group for customer decision making process (Kotler & Armstrong, 2004). Traditionally, a family is described as two persons related by blood or marriage but the term house hold is becoming more popular as a result of the rapid growth of non traditional family households (Cant, 2000). Basically, there are two types of households namely a multiple household and a single household. According to Cant (2002), a multiple household consists of one or more families or a group of two or more persons dependent on common or pooled income and usually living in the same house. On the other hand, a single household consists of one person who is financially independent of any person or group though she or he may have other responsibilities somewhere. Of notable concern is that the family evolves through different stages known as the family life cycle (FLC). Usually, people change the goods and services they buy over their lifetimes given that tastes in food and beverages are often age related (Kotler & Armstrong, 2004). In most cases, the buying behaviour of the customers is shaped by the stage of the family life cycle which is mainly comprised of five basic stages. The first FLC stage consists of young single men or women who have established their own households apart from their parents (Cant, 2002). This age group is still experiencing with life and there are high chances of spending on luxury things as well as going to fast food takeaways as they do not have enough time to settle at home but just enjoy outdoor life. It is therefore recommended that Starbuck’s should target this group since their buying power is still strong at this age given that they do not have direct responsibilities like fending for the other siblings or children. The second stage is comprised of honeymooners, the early weds who still have little responsibilities hence it is also imperative for Starbuck’s to target this segment since it will be still interested in outdoor life. The third stage is more concerned with parenthood and there are more commitments to the family as there will be more responsibilities to fend for the children. This stage is followed by the post parenthood where the parents after making sure that their children have matured they will tend to indulge in new hobbies. However, this target group may not be that very active to be of particular concern especially to Starbuck’s though there is need to get to understand the patterns of their lifestyles. Couples in the post parenthood stage often have little responsibilities such that they can have extra financial resources to spend on other commodities that can be considered as luxury especially coffee which can still be brewed and consumed in the comfort of their homes. The fifth and final stage of the family life cycle is the dissolution which occurs when one partner dies. This cannot be a reliable target market. From this discussion, it is therefore recommended that Starbuck’s should particularly target the people in the bachelorhood, honeymooners as well as the post parenthood stages of the life cycle as they still have the buying power to afford luxury commodities such as coffee. Also of concern is the fact that the family as a customer unit facilitates the socialisation of the family members, contributes to the economic well being of family members, provide emotional support and shapes the lifestyles of the family members (Cant, 2002). Through the socialisation process, the members of the family learn different aspects about their culture and behaviour which plays a pivotal role in shaping their decision making processes. The institution of the family plays a pivotal role in the decision making process particularly with regards to the purchase of certain products. Factors such as the economic well being of the family, emotional support as well as family lifestyles play a pivotal role in shaping the family decision making process especially with regards to purchasing particular products. It is therefore important for Starbuck’s to understand and predict how family members interact and influence one another in terms of individual, family or household buying. Coffee consumption is mainly dependant on the nature of the lifestyle and it is imperative that the organisation ought to establish the extent to which family members have power in influencing the decision making process. Conclusion Over and above, it can be noted that understanding of the behaviour of the customers plays and will continue to play a decisive role in the operations of business organisations all over the world. All businesses that are concerned with their success in the long run should study customer behaviour in order to fully understand it (Cant, 2002). Marketers need to know what their customers need and want and they must put measures in place that are meant to motivate them to purchase particular products if they are assured that they will derive benefits from consuming certain products like coffee offered by Starbuck’s. Basically, motivation goes hand in hand with the benefits the customers will seek to derive from the consumption of coffee. The understanding of the family life cycle as well as the decision making process also play a pivotal role in helping them market their products and services more successfully. References Cant, MC 2002, Customer Behaviour, JUTA: CT. Hawkins, DI et al 1998, Consumer Behaviour: Building Marketing Strategy, 7th Edition, McGraw-Hill: Boston. Kotler, P & Armstrong, G 2004, Principles of Marketing, Pearson Education, Upper Saddle River: NJ. McCarthy, JE & Perreault WD (1996), Basic Marketing: A Global Managerial Approach, 12th Edition, Irwin McGraw-Hill: NY. Mintel 2009 Coffee Shops, UK; Broader Market Environment, February 2009 [Online]. Available at: [Accessed 29 June 2008]. Solomon, M 2009, Consumer Behavior; Buying, Having and Being, Pearson Prentice Hall: New Jersey. Wang, Y, Hing, PL, Chi R & Yang, Y ‘An integrated framework Managing Service Quality,’ Volume 14 · Number 2/3 · 2004 · 169-182 Appendix 1 Marketing strategy and customer behaviour Source: Cant 2002 Read More