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Monday, August 6, 2018

consumer behaviour relationship for a firm's healthy business relationship


Consumer Behaviour in a general sense can be considered to be everything, as every aspect of our lives revolves around the consumption of goods and services. The field of consumer behaviour covers a wide stretch of bases as it focuses on the entire consumption process, involving issues that influence a consumer before, after and during a purchase. Almost all behaviours that people participate in are in one way or another linked to consumption. Whether it be travelling, shopping, or watching television, individuals are directly or indirectly engaging in consumer behaviour. It can be defined as the processes involved when individuals select, purchase and use products or services to fulfil their needs and desires.
Over years numerous psychologists have produced different theories of Motivation. There are some that have similar theoretical foundations but others that are not comparable. Two approaches that provide useful insights into consumer behaviour are Maslow’s Hierarchy of Needs and McGuire’s Psychological motives. Maslow’s Hierarchy of Needs is a macro theory that emphasizes how human needs can be the underlying factor of consumption. (Jansson-Boyd, 2010). It is based upon four premises. (Maslow, 1970) “The first premises is that all humans acquire the same set of motives through genetic making and social interaction”. The Second is “some motives are more critical than others”. Thirdly, “The basic motives need to be satisfied before other motives are activated” and finally “when the basic motives are satisfied even more advanced motives can take place”. (Maslow, 1970).
Firms needs to have a better relationship with the consumers to understand what the consumer wants. Evaluations are made over time and are personal to an individual’s experiences. They are shaped and formed by perception, personality, motivation and emotion. There are multiple factors that can develop an individual’s attitude, examples of these are friends, family, media, colleagues and so forth. It can describe the way one thinks, feels and acts in an environment whether it’s a classroom, retail outlet or work place. According to physician Morris Fishbein, attitudes can be defined as “evaluations of people, objects and ideas.”(Fishbein& Ajzen, 1975). Attitudes are useful in a marketer’s point of view as they have the capacity to direct consumers to products or services that they favour without a large amount mental energy. Attitudes consist of 3 key elements: Affective, Behavioural and Cognitive. These three components are known as the ABC model of Attitudes. Affect relates to the emotional reaction of a consumer and the way they feel about an object. The Behavioural component focuses upon the consumer’s intention to respond in a certain manner toward an object and finally the cognitive element describes the consumer’s beliefs about the object.

Most people believe that the choices they make result from a rational analysis of available alternatives. In reality, however, emotions greatly influence and, in many cases, even determine our decisions.
According to Antonio Damasio, in his book Descartes Error,  emotion is a necessary ingredient to almost all decisions. When we are confronted with a decision, emotions from previous, related experiences affix values to the options we are considering. These emotions create preferences, which lead to our decision. Damasio’s view is based on his studies of people whose connections between the “thinking” and “emotional” areas of the brain had been damaged. They were capable of rationally processing information about alternative choices, but were unable to make decisions, because they lacked any sense of how they felt about the options.
The influential role of emotion in consumer behavior is well documented:
  • Functional magnetic resonance imaging (fMRI) shows that when evaluating brands, consumers primarily use emotions (personal feelings and experiences), rather than information (brand attributes, features, and facts).
  • Advertising research reveals that the consumer's emotional response to an ad has far greater influence on their reported intent to buy a product than does the ad’s content — by a factor of 3-to-1 for television commercials and 2-to-1 for print ads.
  • Research conducted by the Advertising Research Foundation concluded that “likeability” is the measure most predictive of whether an advertisement will increase a brand’s sales.
  • Studies show that positive emotions toward a brand have far greater influence on consumer loyalty than trust and other judgments, which are based on a brand’s attributes.
Emotions are the primary reason why consumers prefer brand-name products. After all, many of the products we buy are available as generic and store brands with the same ingredients and at cheaper prices. Why do we decide to pay more for brand-name products?
A nationally advertised brand has power in the marketplace, because it creates an emotional connection to the consumer. A brand is nothing more than a mental representation of a product in the consumer’s mind. If the representation consists only of the product’s attributes, features, and other information, there are no emotional links to influence consumer preference and action. The richer the emotional content of a brand’s mental representation, the more likely the consumer will be a loyal user.
While emotion can be communicated effectively in a print ad or television commercial, there are other important components of a brand, which also have emotional dimensions. For example:
  • Rich and powerful mental representations of a brand include its personality. Research reveals that consumers perceive the same type of personality characteristics in brands as they do in other people. And just like with people, they are attracted more to some personality types than others — attractions which are emotion-based, not rational. Brand personality is communicated by marketers through packaging, visual imagery, and the types of words used to describe the brand.
  • Another important foundation for a brand’s emotions can be found in its “narrative” — the story that communicates “who” it is, what it means to the consumer, and why the consumer should care. This narrative is the basis for brand advertising and promotion.
But for consumers, perhaps the most important characteristic of emotions is that they push us toward action. In response to an emotion, humans are compelled to do something. In a physical confrontation, fear forces us to chose between fight or flight to ensure our self-preservation. In our daily social confrontations, insecurity may cause us to buy the latest iPhone to support our positive self-identity.
Over time, marketers have developed theories about why consumers buy. Most of these err by viewing the consumer through the lens of the product. Marketers start with the features and benefits of a product and conduct consumer research to find matching needs and motivations. More recently, Internet and digital media companies added a new layer of suppositions to explain and predict consumer behavior. Their approach views the consumer through the lens of digital technology. However, they misinterpret data about the activity of online users as being a valid insight into the consumer decision-making process.
Consumers do not have a Pavlovian response to products and to their marketing programs. Nor do the fundamentals of consumer behavior change to accommodate the latest innovation in digital technology.
An understanding of consumer purchase behavior must be based on knowledge of human emotion and include the paramount influence that emotions have on decision-making. 

Thus some firms have started a Customer Relationship Management (CRM) or Customer Service Department. This is a strategy for managing an organisation's relationships and interactions with customers and potential customers. As a system, it helps companies stay connected to customers, streamline processes, and improve profitability. As a tool, it is used for contact management, sales management, productivity, and more. The goal of the system is simply to Improve business relationships. However, the following factors affect Consumer behaviour and her sustainability using different brands, according to The Guardian (2014);
1. Consumers value certification
Despite the array of labelling on shop shelves, Fairtrade Foundation’s Barbara Crowther says 76% of the public believe independent third-party certification is the best way to verify a product’s social or environmental claims.
However, according to Lucy Atkinson, an assistant professor at the University of Texas, while the trust of US consumers lies in government or third-party labels, the appeal of a company doing good is found in a brand’s own labelling. Could there be the need for a collaborative approach with a joint labelling scheme, asks Atkinson, or even standardised metrics based on specific concerns such as worker rights or environment, suggests reader, Eleanor Mc.
2. Ethical supply chains touch the heart, but not always the head
Eco fashion expert, Marci Zaroff, explained that sustainability speaks to the heart as it plays on “a connection for the greater good”. However, people use their heads to make purchases and consider factors such as style and quality, so these must be met first. Money is also a deciding factor. The added cost of ethical products is unaffordable for those on tight budgets while others can be swayed by discount deals, explained Crowther. “If conventional products are being deeply discounted, it really interferes with people’s desire to do the right thing.”
3. Tell emotive stories - but they have to be authentic
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Consumers vary widely on what aspects or qualities of sustainability they value. For example, for some people the environment is an important factor, for others human rights. By focussing on one area and not another, you can alienate market segments, wrote Atkinson.
Envero’s James Cashmore explained that telling an emotive narrative is key: “Many brands use rational/corporate language and concepts when talking about sustainability, when what they need to do is think about creating consumer advocacy by building much stronger emotional connections.” But Atkinson adds, with “the vast majority of ads [being] ambiguous or misleading or deceptive” companies need to make sure claims have substance. 
4. Brands should do the work, so that consumers don’t have to
In the US, often the onus is on the consumer to become informed but this is an unrealistic expectation for most shoppers, who are happy to spend time researching a high involvement purchase such as a computer, but less likely to invest in finding out about everyday, low involvement purchases like bananas. 
Technologies like QR codes that can be scanned to provide further information are helpful, but it’s a two pronged approach said Crowther, and the consumer expectation is to trust that companies are “sorting this out for them”.
5. Product category matters
Consumer priorities differ depending on the type of product. Cashmore explained: “In certain categories - dairy, coffee, chocolate for example - consumers have a more developed understanding of what the supply chain is. In others - soft drinks, snacks, cereals, babyhood and most non-food categories except fashion - the concept of supply chain is a little vaguer.” For fashion and jewellery, aesthetics are always paramount so it’s only when the style and fit are right, that ethics come in to play, wrote Crowther.
6. Packaging doesn’t always tell the full story
While packaging that comes from a recognised renewable resource (ie wood) is often seen as being more sustainable, there are hidden benefits from non-recyclable materials that consumers are unaware of. 
“In the case of plastic films for example there is actually some clever technology in use that enables a longer shelf life for the product. Although a consumer might see that style of packaging as ‘bad’ it is often much less impactful if it can minimise the product being wasted,” wrote Simon Oxley a packaging technologist at Marks and Spencer. 
It’s also about the product inside the packaging too, said one reader: “Customers may feel they are making a sustainable purchase because of the packaging when the product itself is not ie a plastic Barbie doll.”
7. Consumer expectations vary from country to country
Perceptions of the role that business should have in ensuring ethical supply chains differs from market to market. “It’s interesting how broader cultural beliefs shape expectations of the obligation and potential for businesses to play their part in solving social and environmental problems,” commented Cashmore.
8. Education is not enough
Simply correcting consumers’ information deficit isn’t enough, said Atkinson. “Think about smoking. Most people know that smoking is bad for them, but many still do it. Providing information about the benefits (or dangers) isn’t sufficient,” she said.
Emphasising the human benefits of buying ethical is the most important factor, as Crowther explains: “It is not just about functional information or education, but a genuinely emotional connection to the positive benefits that can be delivered.” Bringing consumers closer to the farmers who produce their purchases is one way to forge this connection.
9. Sustainability should be a must, not a maybe
In an ideal world all products would be ethically produced, with sustainability embedded throughout the supply chain. An example of a supermarket already following these principles is Swiss chain, Migros, which won’t stock products it’s not happy with. “It’s decisions like this that consumers notice when they are decoding the underlying values behind a company or brand. Migros definitely earns trust and loyalty from its principled position,” wrote Cashmore. 
While the long term vision is for sustainability to be the norm, until this is achieved “the public has a massively important role to play in sending a clear message to companies in where they spend their money,” Crowther concluded. The question is: How do we motivate consumers to value sustainable attributes and make those attributes a priority?
10. There is a conundrum between price and value
The true value of sustainability needs to be costed in to products as a norm, so consumers can see that sustainably-sourced goods don’t just reflect their values, but also provide better value. Also, adds Atkinson, we must make these options more accessible and more available to consumers who have less disposable income. “It shouldn’t just be the wealthy and better off who can afford to shop this way.”


CONCLUSION:
Understand your customers
Building positive relationships with your customers requires you to have a good understanding of their needs and wants. By improving your understanding of your customers, including their purchasing motivations and habits, you can personalise the customer service you provide. In addition, profiling your customers, analysing customer touch points, conducting market research and using your customer data to improve your relationship with customers.
Understanding your customers will help you to:
  • decide on the best price to set your products and services
  • build relationships and rapport with your customers
  • increase your sales and profitability
  • increase how much and how often your customers buy from you
  • decrease the costs associated with attracting new customers.
Profile your customers
Customer profiling involves building a description of your customers, or a set of customers, that includes their characteristics, location and behaviour. By segmenting (grouping) them based on their gender, age, where they live, where they work, their family size and how, why and what they spend money on, you can get an idea of how your products and services may best meet their needs.
Here are some questions to consider when profiling your customers:
  • Where are your customers located?
  • What are their spending habits? What motivates them to buy?
  • Do they have a budget?
  • What is their average age, gender, occupation, interest and hobbies?
  • Do they work in certain industries?
  • Are they influenced by seasonal trends?
  • How to they access and use your products and services?
  • Have they used your products or services before?
  • How likely are they to refer your business to others?

Analyse customer interactions with your business
Customer interactions or ‘touch points’ are any aspect of your business that customers may encounter or come in contact with. This may be as simple as the moment they step through the doors of your business, to which pages they visit on your website. Customer touch points are important as they help shape a customer’s impression and experience with your business.
When looking at customer touch points, consider tracking your customers’ experience or journey with your business from start to finish. If you have a website, this could include analysing how customers found your site, which websites they entered and exited from, how long they stayed on your website and which pages they visited. This could be using their online browser cookies.
Improving these touch points can help improve your customers’ experience and perception of your business. It may even be helpful putting yourself in their shoes and trialling being a customer of your business to gather ideas and identify gaps for improvement.

Conduct market research
You can use market research or the data collected on your existing customers to identify trends and patterns. These trends and patterns can help you understand what motivates customers to buy, and the best approach to take in your marketing activities. It can also be used to help build customer awareness of your products and services.
There are several ways you can conduct market research to understand your customers, including:
  • Setting up customer surveys, scorecards or feedback forms.
  • Conducting focus groups with customers.
  • Giving away free samples and ask for customer feedback.
  • Using mystery shoppers to anonymously buy from your business and report back to you on their experience. Mystery shoppers should not be known to your employees, so that the feedback report you receive is as close to the everyday customer experience as possible.
  • Monitoring online reviews and forums. Depending on your business, customers may have submitted online reviews of your business on forums or other third party websites. These sites may contain unbiased feedback to help you improve your operations.
  • Understanding customer behaviour in your industry. This is important when looking at the factors that may influence your customers buying behaviour and when benchmarking against your competitors.

One of the best ways to understand your customers is to communicate with them. Ask for their feedback on your business and ways that you can improve your business products or services to better meet their needs.
Talking to customers directly and asking them questions will help you check and clarify your understanding, build on your existing knowledge, and help build engagement and relationships with your customers.

Use your existing customer information
You may already have information on your customers that can help you better understand them. This can include sales trends, survey or feedback data, or customer database information.
This information can be useful for identifying customer trends or insights (e.g. more sales during lunch hours, or an increase in sales of a particular item over the summer period). It can also help you in business planning or marketing activities, or when deciding on things like employing additional staff during particular hours or during peak months.

Use your information from Market Research
Market research is a valuable tool for all businesses. Statistics and other market research data help you make informed decisions about the marketing of your business. Using market research, you can understand your potential customers and their needs, as well as what your competitors are doing. 
Obtaining statistics and conducting market research can give you a better understanding of your market, your customers and their needs, as well as giving you a better insight into your competitors. This greater understanding of your market can help you better focus your marketing efforts, make informed decisions about your business and make the most of available opportunities.


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