Understanding the Consumer

Isabelle Szmigin

• Publisher: SAGE Publications Ltd
• Year: 2003
• Print ISBN: 9780761947011, 9780761947004
• eBook ISBN: 9781446237380
• Edition: 1
• Topic: Business
• Subtopic: Marketing
• Index: Business

Understanding the Consumer brings together marketing theory and practice in a truly consumer-centric approach. It challenges the lip service usually paid to this concept and demonstrates that a fundamental understanding of the consumer is critical to the future of effective marketing.

Drawing on cutting-edge developments in the literature it reconceptualizes how consumers respond and act in the marketplace with particular attention to:

- relationships with suppliers, products and brands

- their innovative, creative and resistant behaviour

- the complexity and unpredictability of their consumption behaviour

- their increasing need to get closer to production.

The book challenges existing functionally driven marketing thinking and shows how a more holistic approach to the marketplace will drive better theory and practice. It combines a jargon-free approach to the subject with an illustration of the relevant theory using practical, topical examples from the marketplace as well as drawing on other business related disciplines including sociology and economics to support its arguments.

Chapter 1

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The Consumer-oriented Approach to Marketing

we are faced with a profusion of minor choices and a dearth of major choices. We can enter a superstore and choose between twenty different brands of margarine, but many of us have no choice but to enter the superstore. Were we to tell the corporations dominating some sectors that, dissatisfied with their services, we shall take our custom elsewhere, they would ask us which planet we had in mind. (Monbiot, 2000: 16)

Introduction

This chapter will review the increasing importance of consumer behaviour to marketing management. It will highlight how consumers became more sophisticated in their purchasing and consumption behaviour towards the close of the twentieth century. Marketing management’s response has been to advocate a shift from product or sales orientation towards greater customer focus. In practice this has led to the development of what has become known as relationship marketing. The chapter looks at the rise of relationship marketing and what it has sought to achieve. It suggests that as, presently practised, it has failed strategically because it still takes a passive view of the consumer and has never been nested in an understanding of their social context and evolving goals. Rather, the consumer needs to be understood as a more complex, sophisticated entity able and willing to manage their own ‘relationships’ who is far from passive in the marketing process and who has actively responded to relationship marketing.

The Marketing Choice – Relationship, what Relationship?

As consumers we probably face more choices than we do as citizens or even people. We may have no more than a handful of political parties to choose from, the choice of school to send our children to is likely to be numbered in single digits and, in many countries, there may be limited or even no choice at all when it comes to using other public services such as libraries and hospitals. However, in daily consumption of food and goods the situation is very different, with a vast array of new products and brands sitting on supermarket shelves. The nature of the choices we make has changed in a postmodern world and during our lifetime we will see even more of these choices changing. One response to the surfeit of choices available to the consumer has been the development of relationship marketing, where companies, brands and services engage with us in long-term partnerships in the hope that they will get to know us better and respond to our needs in an ongoing and mutually beneficial way, or at least that is the rhetoric. If we are positively involved with a company we will stay with them and be ready and able to receive new offers, product line extensions and other innovations. The key element of positive involvement is trust. Once you have a base of customers who trust you, the risk involved to the business in the introduction of innovations is mitigated to some degree, as its customers put their trust in the business meeting their needs.

Early proponents of relationship marketing identified its usefulness primarily in the services and business-to-business sectors, and then in the mid-1990s Sheth and Parvatiyar directly linked relationship marketing to consumer behaviour. Critical to their argument explaining why consumers would want to engage in relationships was the idea that reducing choice helped to simplify buying and consuming, which they described as ‘tasks’. In particular, the transaction and search costs involved in choice were minimized, benefiting those consumers who were increasingly income-rich but time-poor. They suggested that the willingness and ability of consumers and businesses to engage in this form of marketing should be mutually beneficial, ‘unless either consumers or marketers abuse the mutual interdependence and cooperation’ (1995: 255). Clearly, in a competitive market, success should depend on demonstrating to the consumer that the relationship is mutually beneficial. This could fail either because there was some advantage to a business, possibly albeit in the short term, in ignoring this or alternatively simply because of a failure to identify the nature of benefits sought by the consumer. As we shall discuss later, there are a number of arguments that have been made against the usefulness of the relationship marketing paradigm, but we will begin with just a couple that relate directly to the notion of a creative consumer. First, one needs to examine whether the relationship is balanced in terms of equity, is the consumer getting as much out of it as the supplier? Second, do consumers always view shopping and consuming as a task? If not, the variety given to them by a range of transactions with different suppliers may be more beneficial than one or two long-term relationships.

The other day I was struck by the what now seems like the ubiquitous relationship metaphor (O’Malley and Tynan, 1999) and its emptiness for consumers. In the post I had just received a renewal reminder for a well-known fashion magazine for which I have had a subscription for the past five years (at least). Yet again it reminded me of how much I would lose out if I did not take up their wonderful opportunity to remain in the front line of fashion by reading their magazine and I would even gain a little financial advantage if, as they suggested, I took out a two-year subscription. I had, I suppose a relationship of some kind with them. How did I feel then when out of my latest copy of the same magazine a card dropped, offering much more advantageous rates for a one- and two-year subscription but with the proviso ‘This offer is limited to new subscribers’? I felt that all this relationship held out to me was empty promises. They saw me as a sucker whom they assumed didn’t know how to add up.

If there is to be any meaning in the relationship metaphor, then there has to be an exchange of value. For this to happen, building business may conflict with a short-term focus on profit. A company’s technical advice would tell them that a new consumer is much more responsive to price than an existing consumer. Or, as an economist might put it, the price elasticity of demand is lower for existing consumers, making it profitable to separate the old and new as market segments. However, this approach ignores the fact that we are in a relationship where trust is an element and this strategy undermines it. Consumers aren’t dumb; they understand the way the world works.

Given the widespread use of the metaphor, it is worth considering some of the more emotive meanings around the notion of ‘relationship’ in a marketing context. The analogy which was often used by marketing academics (Hunt and Morgan, 1995; Levitt, 1983) was the deeply personal one of marriage. Marriage implies exclusivity, longevity, and fidelity. Social psychologists who distinguish between personal and social relationships (Radley, 1996) warn of the dangers of generalizing from one to another. We do things and act in ways in one sphere that might be unacceptable in another. Social relationships at work are often necessary without being desired, with the motives and rewards being closely linked to the needs of the parties involved. Personal relationships may depend to a greater degree on the individual, psychological and emotional make-up of the parties than do social relationships. Distinctions such as these lead to the question of whether such exclusive metaphors as marriage hold up? Indeed, the metaphor has been criticized for failing to deliver in terms of the number and nature of the parties involved, the attendant costs and benefits and timescale of the relationship (Tynan, 1997). More than this, it needs to be re-examined from the point of view of consumers and how they conceptualize the relationships in which they willingly participate or just find themselves. A brief examination of the work of Thibaut and Kelley (1959) on comparison levels helps to understand how people operate their relationships. Thibaut and Kelley said that every relationship is embedded in a network of other relationships, both actual and possible. Each party uses their own experience and expectations to compare outcomes within the relationship against some minimum level they would find acceptable (the comparison level) and against the outcomes available from alternative relationships (the alternatives comparison level). It is the perceived balance of rewards and costs of a given relationship against these two comparison levels which determines a person’s satisfaction with a relationship. Different consumers will of course perceive the balance between rewards and costs differently but the key is that they do perceive actual and potential benefits on the basis of what provides value for them.

So what’s wrong with relationship marketing? And can it offer consumers anything that they will perceive as value such that they are motivated to reduce the number of associations with companies they hold? The rhetoric of marketing in recent years has been that companies will achieve their profit and other objectives by satisfying (even delighting) customers (Houston, 1986), and exceeding their competition at so doing. The modern marketing definition has been framed in absolute focus on the customer, such as this from Jobber, ‘The achievement of corporate goals through meeting and exceeding customer needs better than the competition’ (1998: 4). Note that mutual benefit is clearly central. It was this kind of consumer-centric thinking which suggested the feasibility of a form of marketing now known as relationship marketing, although as previously noted, its actual evolution owes more to services and business-to-business marketing where the nature of the offering lent itself easily to a longer-term association, than to relationships between businesses and individual consumers.

After analysing the work of various authors in this area, Peterson (1995) concluded that an individual customer–seller relationship needed both parties to benefit over some length of time. If the consumer is to gain, then there clearly should be something in it for him or her: additional value of some kind. The questions which need further investigation are, what kind of value? How much? In what circumstances will customers embark upon a commercial relationship? And also what do they require to maintain that relationship over time? As noted above, Sheth and Parvatiyar (1995) developed an efficiency approach. This involves what might seem like a contradictory notion of value in such terms. They concluded that, ‘the fundamental axiom of relationship marketing is, or should be, that consumers like to reduce choices by engaging in an ongoing loyalty relationship with marketers’ (1995: 256). Consumers, they said, engage in relationships with suppliers because this facilitates efficiency in their decision-making, helping them reduce their information processing requirements, achieving more cognitive consistency in their decisions and potentially reducing the perceived risks associated with future choices. They also suggested that brand loyalty is a form of relationship that a consumer has with a supplier’s products and symbols. Such a basis for forming a relationship is essentially functional and implies that consumers choose in a sense to make life simpler, a way of easier navigation of the everyday shopping routines. While not disputing that these motives may precede relationship choices, Peterson (1995) suggests that such a theory leaves out the affective dimension of relationships which might explain why some do survive over a longer term and others do not. This affective, attitudinal aspect is essentially about how the two parties get on with one another, after all, you want to have a relationship with someone you like. The relationship may break down or not lead very far, not for any functional or efficiency reason, but simply because the two sides cannot develop the appropriate rapport.

A quite contrary argument to Sheth and Parvatiyar’s efficiency argument was put forward by Weinberger who suggested that not all consumers want their world managed so efficiently, ‘The idea that we can manage our world is uniquely twentieth century and chiefly American’ (2000: 40). There is, he says, tremendous advantages to believing that life can be managed; it avoids risk, it provides smoothness and, particularly important from the point of view of relationship marketing, it creates ‘discretionary attention’. So in a managed world you can have discretionary attention because the risks have been mitigated and for organizations it may be better for consumers to be managed. If consumers are prepared to forgo choices in light of the benefits that may accrue to them through a relationship, then this is an opportunity that no organization which thinks it can win the relationship prize is likely to turn down.

The Balance of Power

However, in considering the future of relationship marketing, there are a number of issues which need to be addressed from the consumer’s perspective. First, despite my earlier example, the idea of developing a relationship between producer and consumer may have an inherent appeal and sense of fair play and, indeed as Sheth and Parvatiyar (1995) point out, in some situations, this may be the preferred choice. But let us examine what is really happening in these relationships in a little more detail. What has become apparent in the last few years is that many consumers have come to realize that relationship marketing is too often about the relationship that the producer wants and very little about the relationship that the consumer requires. When the balance of power lies in the hands of the producer, there is little the consumer can do other than refuse to respond to calls for further and deeper relationships, although depending on the choices available in the marketplace this may be more or less difficult. Even when consumers expressly exclude themselves from a relationship, the producer can still ignore their customers’ wishes.

Just the other day the mail brought a magazine from Boots, the UK high street chemist, with the following letter attached:

When you joined the Advantage Card scheme you expressed a preference not to receive mail from us. However, we thought you might like to know that as a result, you’re missing out on Boots Health and Beauty, a fabulous magazine mailed to our most valued Advantage Card holders. As you’ll see, it’s packed with inspirational features on beauty, health and wellbeing, and keeps you up to date with the very best new products and expert advice. Every issue contains exclusive offers, plus a personalized voucher giving you extra Advantage Card points. We’d like to give you the chance to enjoy future issues and other relevant offers from Boots especially for you. To receive your personal copy of the next issue, due out in September, just tick the box below, and return this letter to us in the envelope provided. (Boots promotional material)

So not only has this company rejected my idea of a ‘just friends’ relationship by trying to take it deeper, and at the same time effectively turning down my request for privacy, and potentially making me feel bullied, but also they aim to entice me with flattery, being one of their most valued card holders, they care about me, I am better than the rest and will receive relevant offers that apparently the good people at Boots have been designing especially for me. Of course there is an unwritten implication that perhaps they care less about some of their other customers.

An example which highlights the different sides of the buyer–seller relationship is that of British Telecom. British Telecom (BT) is the leading supplier of domestic and business telephone systems in the UK. If your domestic supply is provided by BT, you may be telephoned at home and offered additional services. Their latest money saving offer is another service, selling me something that they have devised, but on every occasion when I have listened to the well-rehearsed sales patter and asked for some minor adjustments to suit my particular circumstances, they have been flummoxed. They do not know the answer, cannot help, no, that’s not possible. Maybe they cannot personalize their relationship to that degree, but now look at the opposite side of the relationship. When my telephone breaks down, I call them, I do not get to speak to someone straight away but have to enter a long protracted series of recorded messages and pressings of buttons before I finally speak to a human voice. I am only allowed to talk to this person for a limited amount of time because (as one phone operator told me himself) they are required to process a certain number of people per hour. When the technician comes to fix the phone, he does not contact me beforehand to tell me when he is arriving and is upset when I am annoyed at his arrival at a time inconvenient to me. Maybe the consumer is being manipulated, encouraged to think there is a relationship when actually there is none. Recently a business person told me their latest BT encounter and elaborated what they thought was going on:

I wanted to get in touch with BT because an interesting offer had come through on my phone bill. I went through all the press number 1 for this, number 2 for that and so on, finally, I found the line I needed, then another recorded voice came on saying that all their operators were busy, would I leave my name and address, etc., spelling any difficult words. So I did and then when I put the phone down I thought to myself, there was never going to be anybody taking my call. This wasn’t because they were all busy, it was just a ruse to make it look like someone would take the call.

Whether his perception of what was happening was correct, the impression he was left with was one of frustration. These examples are all indicative of a failure to consider the reaction of the consumer to being treated as passive. They understand that the relationship is one-way, more about market segmentation and cross-selling, than building trust.

Of course phone relationships aren’t all bad. Take Boden, for example, a leading UK clothing retailer that operates primarily by mail order. During sale time, when the phone lines are busy, a different message is played to the caller every few minutes. It is the voice of the owner, Johnny Boden, explaining precisely why you are waiting. For example, he explains that all sale catalogues are sent out at the same time as this seems fairer but does mean there can be hold-ups in the sale days; he says how many operators are working at any one time, and he even apologizes after you have been waiting some time. The main thing is that eventually an operator takes your call, and you do feel it is has been worth waiting, even if they have run out of the item you wanted. It’s a more honest relationship that attempts to build loyalty by recognizing that active consumers will accept a reasonable explanation.

While these anecdotal examples reveal something of the frustration that a customer may feel with relationship marketing, the academic literature has further analysed some of the problems with relationship marketing in practice. In 1998 Fournier et al. published a paper precisely concerned with the potential premature death of relationship marketing. They had identified that a key problem for the future of relationship marketing was that relationships involve give and take. Relationships require at least two supposedly willing participants coming together in some mutually beneficial exchange over time, and while it appears to come as a surprise to some organizations, consumers may not be as keen to have such long-term relationships as the suppliers are. Just as Weinberger (2000) suggested, some people just do not want a relationship of any kind from tins of baked beans, through to the supermarket they visit most frequently and the bank where their monthly salary is deposited. What they prefer is a series of suitable transactions or at least the access to choice, even if they do not opt for a different supplier each time they shop. Others (Peterson, 1995) have pointed out that the evidence suggests reducing consumer choice is typically met with resistance. Consumers may enter into what appear to be relationships, but they may have many motives for so doing. The result may be a short- or long-term reduction of choice, which may or may not be important to them.

One-Way or Two-Way Loyalty

If companies want to have a relationship with their customers, if they expect loyalty, the passing on of information and repeat purchasing, then they have to operate by the same rules. Too often our loyalty is assumed in an almost offhand way from the voice telling us every few seconds that our call is valued while allowing us to run up a huge phone bill and wasting our time with no idea of when someone w...

Table of contents

• Cover Page
• Title
• Copyright
• Contents
• Acknowledgements
• Introduction
• 1 The Consumer-oriented Approach to Marketing
• 2 New Products and their Meanings
• 3 Paradoxes of Meaning
• 4 Whose Marketplace is it Anyway?
• 5 Innovation and the Creative Consumer
• 6 Revisiting the Time of Adoption and Resistance
• 7 When Innovation Becomes Creativity
• 8 Conspicuous Consumption, Downshifting and Reconsumption
• 9 Production and Consumption
• 10 Conclusion
• Bibliography
• Index