Contemporary Marketing Strategy

Analyzing Consumer Behavior to Drive Managerial Decision Making

Rajagopal

• Publisher: Palgrave Macmillan
• Year: 2019
• Print ISBN: 9783030119102
• eBook ISBN: 9783030119119
• Topic: Business
• Subtopic: Business Strategy
• Index: Business

The broad foundation of this book is laid on the conceptual discussions on consumer theories and applied arguments on shifts in consumer behavior. This book develops knowledge and skills on building market-centric and competition-oriented models. Discussions in the book illustrate strategies for managing competitive market interventions through advanced marketing-mix elements across nine chapters. Various perspectives on innovation and technology for expanding and establishing business in competitive markets are critically reviewed in these chapters. This book examines advanced marketing-mix and several consumer-centric strategies to co-create new businesses in new markets by associating consumers.

Part IRole of Consumers

© The Author(s) 2019

RajagopalContemporary Marketing Strategyhttps://doi.org/10.1007/978-3-030-11911-9_1

Begin Abstract

1. Consumer Behavior: Internal Factors

Rajagopal¹

(1)

EGADE Business School, Tecnologico de Monterrey, Santa Fe, Mexico City, Mexico

Rajagopal

Email: [email protected]

End Abstract

Behavior is a set of socio-psychological indicators that cultivate a cognitive process in human beings. It refers to the range of personality attributes exhibited by people, which are influenced by societal values, culture, attitudes , emotions, values, ethics, power, relationships, and persuasion. Behaviors in humans are grown as learned, acquired, or shared process over the spatial and temporal factors. Similarly, consumerism is evolved in the society as a behavior influenced by the cultural, ethnic, economic, political, legal, and technological factors. However, consumer behavior is different for each consumer, and is generally motivated by the social psychology and self-reference. The attributes of perceived values in consumption develops the consumer behavior over long time in a geo-demographic segment and a marketplace. Consumers commonly exhibit asymmetric behavior in searching, purchasing, evaluating, consuming, and arraying preferences for products and services. Thus, consumer behavior is a complex phenomenon and understanding a consumer completely is critical for manager to implement marketing strategies efficiently and customize products and services for customers to offer maximum value. Every element of the marketing plan and strategy is benefited by understanding the customer properly to manage the customer touch points competitively in the marketplace. Mapping the consumer behavior has become inevitable for companies in order to design markets in the rapidly changing consumer preferences today.

Organizations can learn about consumers over time by tracking the dynamic behavior on the way consumers shop, venue attractions, and what differences matter across geo-demographic segments and destination markets. Consumers today, search for the secured solutions, which could satisfy their needs, than finding a product. Hence, growing commoditization in the global markets drives consumer behavior stronger for bargaining value for money and competitive leverage. Consequently, a growing number of consumers not only tend to constitute their behavior by evaluating the social psychodynamics on products, services, and brands , but also build their buying behavior through self-reference and sustained values. Most companies address the change in consumer behavior by understanding the applied concepts on consumption economics. Consumerism is now shifting from emotional phenomena to materialistic attributes in making consumption decisions. In this context, companies need a fact-based analysis of the consumer behavior to monitor their perceptions and consumption experience. Consumers develop attitude and behavior in due course of time. The theory of behavior can be analyzed in the context of global markets. Consumer behavior is a complex process , which is developed through a chain of cognitive stages including perception and attitude leading toward forming the behavior at the end. Disruptive forces in market like e-commerce, low-cost technology products, and tactical marketing strategies have captivated behavioral uncertainties and rapid shifts in the consumer experiences in the twenty-first century.

Geo-demographic explosion of middle-mass segment of consumers, aging consumers, gender imbalance of consumers in the marketplace, urbanization, income polarization in the society, millennial trends, and the shrinking corporate values have been the major factors influencing volatility in the consumer behavior. In addition to the socio-economic indicators , the attributes corresponding to changes in the consumption patterns have occurred due to increase in convenience shopping, focus on wellness and green consumption. The consumer behavior in the global-local marketplace is also affected by the discretionary spending, and buying local low-cost products. In addition to various internal and external variables influencing consumer behavior, companies with advanced technologies could also explore the dynamics of consumer preferences using digital data analytics, social media-driven consumption patterns , and consumer experience through virtual reality. Big Data and machine learning experiments are converging virtual reality and the personal value of consumers to determine the consumer behavior and preferences in the contemporary marketplaces. The visual appeal of the product and services no longer attracts the consumer to make a purchase decision. They buy experiences and emotions, which a brand can offer. Digitalization of markets has trained consumers to expect continuous excitement and value additions to their experiences. The rapid shifts in the consumer behavior has also become noticeable as the growth among aging populations in developed markets is outpacing growth in the number of younger consumers in the emerging markets. However, elderly consumers are inclined toward learning the new consumption patterns of the millennials in the emerging markets.

Continuous innovation and technology in the consumer products companies have set new trends in the market, and created dynamic value perceptions among consumers that have raised their preferences and expectations. Digital marketing has opened massive opportunities to deliver new consumer experiences, and strengthened the relationships with consumers across the destinations in the global marketplace. Digital disruption has created new dimensions in consumer marketing through the benefits of large-scale promotions and convenience to drive compulsive buying behavior among consumers. The platform economy has shown a huge shift in creation of consumer value . However, technology and born-digital businesses have led the innovations, which is being experienced by consumers in every sector now. The platform economy distinctly comprises a new set of business and economic relations that depend on the Internet, computation, and data. The ecosystem created by each platform is a source of value, and it sets the terms by which users can participate. Such business and economic platform has empowered consumers, and developed their bargaining potential for quality and value for money. Though digitalization in marketing has induced rapid shift in the consumer behavior through open access to brand communication , consumer experiences, and socio-psychological cognition toward building their preferences and values, many multinationals are encouraging ‘value chain localization’ strategies which still focus on only the premier segment of consumers. This strategy does not adequately prepare them to meet the greater challenge and opportunity of reaching out the remote consumers, and achieving the universe of market by serving the consumers of all segments including premier, mass (upper, regular, and lower stratum), and bottom-of-the-pyramid. Hindustan Unilever Limited (HLL), a consumer products company has extensively reached the consumers at the bottom-of-the-pyramid, to market its consumer brands by empowering rural women as sales representatives. HLL has created consumer behavior for its brands upholding gender and societal values.

Most companies are inculcating radical buying behavior among consumers by generating brand literacy through the interactions of consumer communities on social media. Facebook, Twitter, and Instagram have been the principal platforms of consumer networking for most of the consumer-centric companies. Companies explore the consumer needs and preferences on the digital platforms and tend to meet consumers’ rising expectations on the products and services they intend to buy. Simultaneously, to reaffirm their purchase intentions, consumers also stay critical to the multichannel experience of peers on their preferred brands. The consumer experience is diffused by the user-generated contents on social media, which help them to review their perceptions , attitude , and behavior toward a brand in the marketplace. For example, Nordstrom customers can buy products not only in the physical and on the virtual stores, but also through a mobile app, on Instagram, or via text message. Consumers can pick, return, or exchange their online purchases at Nordstrom stores. Such convenience of digital marketing to access reviews and referrals, develop purchase intentions, and the possibility of decision reversals in case of change in the value perceptions has strengthened the consumer attitude and the behavior toward the brand. Several factors affect the consumer perceptions and consumption patterns as addressed in Fig. 1.1.

Fig. 1.1

Market ecosystem and effects on consumer behavior

As innovation and technology are continuously increasing, the social and cultural shifts are influencing the consumer preferences and consumption patterns as exhibited in Fig. 1.1. The acquired and shared culture among consumers drives awareness about the new trends, which in turn arouses new consumer preferences. For example, consumer preferences for 3-D games, virtual reality products, and trendy consumer electronics influence consumers in the emerging markets as ‘millennial effect’. The experience sharing over the digital platforms further influences the consumer behavior over a long time. Patterns of consumerism are changing in the society, as there are shifts in the consumer demography in the markets. The explosion of mass consumer segment, urbanization, and increase in the size of the population of aging consumers have contributed significantly to the shifts in consumer preferences and overall consumption behavior. Direct-to-customer marketing strategies, convenience shopping, and social media-driven marketing approaches of companies have increased social and cultural influence on developing the consumer behavior. However, disruption in technology, and attraction toward local consumption also contribute in driving the consumer behavior dynamic across the geo-demographic segments . Extended technology lifecycle builds positive consumer perceptions on higher value for money. Co-creation and co-designing approaches of customer-centric companies like IKEA has established business philosophy of connecting consumers and developing an emotion-based relationship with consumers as the key to leveraging loyalty and advocacy behavior.

Consumer Perceptions

Perceptions among consumers is a cognitive process, which registers the instant feeling of any product, services, or a situation. It is a process of recognizing sensory stimuli , which builds awareness and knowledge base. Consumers develop perceptions by self-generated stimuli, and by drawing inferences from other people in the society. The social perceptions make consumers learn about the feelings and emotions from anchor personalities in the society by analyzing information on physical appearance, and verbal and nonverbal communication. Self-perception by customers relates to values and motivations that drive buying behavior. Visual attraction of products, emotions, self-congruence and perceived experience, knowledge and beliefs, and psychosocial insights about the products, drives the perceptions of consumers, which later helps in developing attitude and behavior in future. The consumer philosophy today is woven around the practice of touch, feel, and pick of products and services, wherein the perceptual process among consumers is observed in four stages beginning with sensitive feeling, attention, review, and cognitive affirmation. The consumer perception is backed also by ACCA factors comprising awareness, comprehension, conviction, and action. Advertisements, in-store and online promotions, marketing events, referrals, and social media help in generating awareness among consumers to develop self-perceptions on the products and services. Consumers explore further information on the seeded perceptions to comprehend their knowledge and rationale in developing conviction toward the purchase decisions. Conviction is a state of cognition, which builds inclination toward the products or services to buy. Consumer p...

Table of contents

• Cover
• Front Matter
• Part I. Role of Consumers
• Part II. Market and Organization
• Part III. Functional Strategies
• Back Matter