Consumer Behaviour and Marketing Strategy

Consumer Behaviour and Marketing Strategy

Consumer behavior is a crucial factor in shaping marketing strategies. By understanding how consumers think, feel, and make purchasing decisions, businesses can create more effective and targeted marketing campaigns.

Certainly! Marketing strategy involves a set of activities and techniques that businesses use to promote their products or services, meet customer needs, and achieve their overall goals. A well-developed marketing strategy is essential for businesses to connect with their target audience, differentiate themselves from competitors, and drive sales.

Buyer behaviour controls the type of marketing strategy that organizations employ, so they conduct studies to determine which tactics are likely to prove most effective.

Following are the ways to gather info about consumers and then plan a marketing strategy

  1. Sales Forecasts
  2. Research Surveys
  3. Internet Research
  4. Market Sensing

Sales Forecasts

Organizations study past consumer behaviours to determine future sales. Sales forecasts evaluate the expected sales for a specific market during a specified time period. Sales forecasts cannot be higher than the market potential.

Research Surveys

These surveys are conducted for the purpose of studying consumer behaviour. They help companies learn what consumers want, as well as how they respond to advertising. They also help pinpoint potential problems.

Internet Research

Companies, including small businesses, use the Internet to conduct much of their research, monitoring the Web-based behaviour of consumers. Based on their findings, organizations determine the exact prices, attributes and sales promotions for their goods. They also reveal the optimal places and market situations in which to sell. The Internet is a cost-effective tool marketing research tool because it locates target areas and is flexible enough to adapt to the changing demands of consumers.

Market Sensing

These processes can help businesses develop a competitive advantage by using different resources to study consumer behaviour, and process that data into a marketing and management information database which in simple language is called market sensing.

Methods of Consumer Research

Research used to examine the psychological reasons is called motivation research. It contains why individuals buy specific types of merchandise or why they respond to specific advertising, appeals to regulate the base of brand choices and product preferences.

Research can be done in multiple stages i.e. primary and later secondary research. For a producer, the study of consumer behaviour is very important so that he may sell his product in the market successfully. Quantitative and Qualitative information are required for marketing decisions with regard to consumers.

Types of information sought

Marketing persons are interested in buyer‘s behaviour for two aspects:

Why do people behave in such a way?

How to make them behave as per the marketing person‘s desires?

Many strategies in marketing such as campaigns have failed because the attitude expected of the customers proved to be wrong. Motivation research can help reduce this error.

Attitude research

Different groups of people have different attitudes towards the products they purchase and their buying decision. What complicates matters sometimes is the fact that an individual consumer’s behaviour as well as the attitude with regard to one class of product is no indication of his behaviour and attitude with regard to another class of products.

Application of Consumer Behaviour

Consumer behaviour principles are applied in many areas of marketing as discussed below:

Analysing market opportunity

Consumer behaviour study helps in recognising the unfulfilled needs of consumers. This requires examining the trends and conditions operating in the marketplace, consumers’ lifestyles, income levels and emerging influences.

This may reveal unsatisfied needs and wants. the trend towards swelling number of dual income households and greater emphasis on suitability and leisure have led to emerging needs for household gadgets such as childcare centres etc. Mosquito repellents have been marketed in response to a genuine and unfulfilled consumer need.

Selecting target market

A review of market openings often helps in identifying distinct customer segments with very unique wants and needs. Customer responses matter a lot as they differ and non-responses create lot of problems if questionnaire method is used.

Identifying these groups, learning how they act and how they make purchase decisions enables the marketer to design and sell products or services particularly suited to their wants and needs.

For example, consumer studies revealed that many existing and potential users did not want to buy shampoo packs priced at Rs. 60 or more and would prefer a low priced sachet containing enough quantity for one/ two washes. The finding led companies to introduce the sachet which became a good seller.

Marketing-mix decisions

Once unsatisfied needs and wants are identified, the marketer has to determine product, price, distribution and promotion. Target groups [focus groups] play an important role in leading us to find a consumer decision as they understand the issues involved in it very well.

Use in Social and Non-profits Marketing

Customer behaviour studies are useful to design marketing strategies by social, governmental a not-for-profit organisations to make their programmes on family planning, awareness about AIDS, crime against women, safe driving, environmental concerns and other more active. UNICEF, Red Cross and CRY etc. make use of customer behaviour understanding to sell their services and goods and also try to encourage people to support these institutions.

Consumer Behaviour and Product Strategy

The products and services that a company has to offer are generally organized around its customers‘ needs in addition to the level of proficiency and production competences of the firm. Creating a strategy for product growth is a multifaceted segment of running a successful enterprise.

Consumers assess a product along several levels. Its basic characteristics are inherent to the generic version of the product and are defined as the fundamental advantages it can offer to a customer. Generic products are distinct by adding value through extra features, such as quality or performance augmentations.

The ultimate level of consumer perception involves amplified properties, which offer less tangible benefits, such as customer assistance, maintenance services, training, or appealing payment options. In terms of competition with other goods and companies, consumers greatly value these added benefits when making a purchasing decision, making it important for manufacturers to understand the notion of a total package‖ when marketing to their customers.

In industrial product development, a marketing strategy is flexible and adaptive to changing market circumstances stands a greater chance of being effective in the long-term. Products and consumer perceptions are variable, so changes in the strategy may be required to better address purchaser needs, technological developments, new laws and regulations, and the overall product life-cycle.

Variations in the cost of materials, new application requirements, and changing brand consciousness are just a few of things that cause consumer needs to change. Keeping a close track of customer response to a product and taking their demands into consideration are important for maintaining market share.

Consumer Behaviour and Pricing Strategy

The buyer‘s behaviour is equally important in having price policies. The buyers of some products purchase only because particular articles are cheaper than the competitive articles available in the market.

In such a case, the price of such products cannot be raised. On the other hand, some other articles are bought because it improves the status of persons. The price of such things can easily be raised. Some articles are purchased under particular attitudes and emotions such as khadi.

Consumer Behaviour and Distribution Channel Strategy

The goods, which are sold and bought solely on the basis of low price, must have inexpensive and economical distribution channels. In case of those articles, which require after sale services such as TV sets, they must have diverse channels of distribution. Thus, decision regarding channels of distribution is taken on the basis of consumer behaviour.

There are three main approaches to the explanation of buyer behaviour on which marketing success depends:

  1. The economic approach.
  2. The psychological approach.
  3. The structural approach.

Buying behaviour may be observed as an orderly process, whereby the individual interrelates with his or her environment for the purpose of making market place decisions on products and services.

The individual specific behaviour in the market place is affected by in-house factors such as needs, motives, perception and attitudes as well as by external or environmental influences. Distribution is usually associated with moving boxes to retailers and other channels for sale to end-users.

In a service context, however, we often have nothing to move. Experiences, performance, and solutions are not being physically shipped and stored. In addition, more and more informational transactions are conducted via electronic and not physical channels. We will first discuss the options for service distribution and delivery.

Determining the Type of Contact: Options for Service Delivery

Several factors have an impact on distribution and delivery strategies for services. A key question is: Does the nature of the service or the firm‘s positioning strategy require customers to be in direct physical contact with its personnel, equipment, and facilities?

If so, do customers have to visit the facilities of the service organization or will the service organization send personnel and equipment to the customers‘ own sites? Alternatively, can exchanges between provider and customer be completed at arm‘s length through the use of either telecommunications or electronic channels of distribution?

Distribution Options for Serving Customers As shown in Table Below, there are six possible choices for a firm in terms of distribution sites. Should it expect customers to come to a company site? Or should service personnel go to visit customers at their own locations? Alternatively, can service be delivered at arm‘s length, without either side having to meet? For each of these three options, should the firm maintain just a single outlet or offer to serve customers through multiple outlets at different locations?

Distribution Options for Serving Customers

Customers Visit the Service Site

When customers have to visit the service site, the following factors need to be considered.

  • The convenience of service factory locations elaborate statistical analysis using retail gravity models is sometimes used to help firms make decisions on where to locate supermarkets or similar large stores, relative to the homes and workplaces of future customers.

  • Operational hours many banks, for instance, are extending their opening hours to meet the needs of busy professionals who do not have time to take care of their banking needs during office hours.

Service Providers go to their Customers

  • Going to the customer‘s site is unavoidable whenever the object of the service is some immovable physical item, such as a tree to be pruned, installed machinery to be repaired, or a house that requires pest-control treatment.

  • In remote areas like Alaska or Canada‘s Northwest Territory, service providers often fly to visit their customers, because the latter find it so difficult to travel. Australia is famous for its Royal Flying Doctor Service, in which physician‘s fly to make house calls at farms and sheep stations in the Outback.

  • In general, service providers are more likely to visit corporate customers at their premises than to visit individuals in their homes, reflecting the larger volume associated with business-to-business transactions.

Channel Preferences Vary Among Consumers

The use of different channels to deliver the same service has different costs for a service organization. It also affects the service experience for the customer. Banking services, for instance, can be delivered remotely via computer and cell phone, a voice response system, a call centre, and automatic teller machines.

It can also be delivered face-to-face in a branch, or in the case of private banking, in a wealthy customer‘s home. Flowers can be bought from a florist and one can choose the flowers and consult on the arrangement face-to-face. Flowers can also be ordered online, with customers usually choosing one of the arrangements presented on the web site.

Recent research has explored how customers choose between personal, impersonal, and self-service channels, and has identified the following key drivers:

  • For complex and high perceived risk services, people tend to rely on personal channels. For example, customers are happy to apply for credit cards using remote channels, but prefer to talk to the service provider face to-face when obtaining a mortgage.

  • Individuals with higher confidence and knowledge about a service and/or the channel are more likely to use impersonal and self-service channels.

  • Customers who are more technology savvy (have a greater likelihood to accept and use new technology) will view service quality more positively when using self-service technologies.

  • Customers who look for the functional aspects of a transaction prefer more convenience. This is often means the use of impersonal and self-service channels. Customers with social motives tend to use personal channels.

  • Convenience is a key driver of channel choice for the majority of consumers. Service convenience means saving time and effort, rather than saving money. A customer‘s search for convenience is not just confined to the purchase of core products. It also extends to convenient times and places. People want easy access to supplementary services too, especially information, reservations, and problem solving.

Consumer Behaviour and Promotion Strategy

A study of consumer behaviour is also dynamic in making decisions regarding sales promotion. It enables the manufacturers to know what motive prompts buyers to make purchases and the same are utilized in advertising media to awaken the desire to purchase.

The marketer makes decision regarding brand, packaging discount, gifts, etc. on the basis of consumer behaviour for endorsing sales of his products. Competitive strategy is often narrowly focused at direct competitors i.e. from which market products that offer a similar way of achieving the same benefits (colleges offering similar classes).

However, there may also be a serious threat from generic competitors which offer consumers a different way of achieving similar benefits (distance education). It is important to highlight both opportunities and threats to the firm in competitive marketplace, including the presence of generic competitors.

The basic step involved in identifying suitable market positioning and developing strategy to reach it are:

  1. Market analysis
  2. Internal corporate analysis
  3. Competitive analysis

Market analysis

This determines overall level and trend of demand and geographic location of this demand. Alternative ways of segmenting the market should be considered and an appraisal made of the size and potential of different market segments. Research is needed to gain better understating not only of customer‘s needs and preferences within each of the different segments but also of how each perceives the competition.

Internal corporate analysis

This identifies resources and limitations of its management. Using insight from this analysis, the organization is able to select a limited number of target markets which it is willing and able to evolve with either new or existing services.

Competitive analysis

Strengths and weakness of competitors are analysed, which suggests opportunities for differentiations. Relating these insights to the internal corporate analysis should suggest which benefits should be offered to which target market segments.

The outcome of integrating these three forms of analysis is a positioning statement that articulates the planned positioning on the organization in the market. There are a number of reasons why the processes by which individual consumers purchase services are usually from the processes by which organizations purchase services.

  • When a company purchases a service, two sets of requirements are simultaneously met-the company‘s formal requirements as well as the requirements of the individuals making up the company. While the formal needs of the company are more rational, the needs which individuals seem to ratify are affected by their behavioural and perceptual environment in a manner similar to individual consumer purchases.

  • Organizational purchase involves more people. It may be necessary to evaluate high-value services and get them approve at numerous levels in the firm‘s management hierarchy.

  • Organizational purchases are made according to formalized routines. For this, it may be necessary to delegate the task of dealing with previously assessed repeat service orders to a junior buyer. At the other end of the spectrum, it may be possible to make a number of high-value service purchases only at the end of a formal process of bidding and assessment.

  • If there are more people involved in organizational buying, it would take longer to go through entire process. Lengthy feasibility studies are a result of the concern with risk minimization that is present formally in most organizational objectives and informally in most individual‘s aims. An important factor that purchasers concern themselves with at the time of evaluating rival suppliers is trust in the service supplier. Building a trustworthy relationship may take considerable item.

  • The components that are given more significance at the time of evaluating a service offering may vary. In the case of number of services, while organizational buyers lay greater emphasis on performance characteristics and reliability, private buyers give more prominence to price. In numerous instances, poor service performance directly affects the financial position of the firm.


Consumer Behaviour and Marketing Strategy

Consumer behavior is a crucial factor in shaping marketing strategies. By understanding how consumers think, feel, and make purchasing decisions, businesses can create more effective and targeted marketing campaigns.

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