Wednesday, 7 October 2015

Dimensions of consumer behaviour

Marketing is an activity set of institutions and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners and society. Consumer behaviour is a study of consumers’ actions during searching for, purchasing, using, evaluating and disposing of products and services they expect can satisfy their need. In other words consumer behaviour results due to marketing and also other factors that constitute the customer itself.

The study of consumers helps organizations as to how they should drive their marketing strategies by keeping in mind the issues listed below:
  • The psychology of how consumers think, feel, reason, and select between different alternatives (e.g., brands, products, and retailers);
  • The psychology of how the consumer is influenced by his or her environment (e.g., culture, family, signs, media);
  • The behaviour of consumers while shopping or making other marketing decisions;
  • Limitations in consumer knowledge or information processing abilities
  • How marketers can adapt and improve their marketing campaigns and marketing strategies to more effectively reach the consumer.
Except the basic definition consumer behaviour can be understood by some points below:

  •  Behaviour occurs either for the individual, or in the context of a group (e.g., friends influence what kinds of clothes a person wears) or an organization (e.g.,people on the job make decisions as to which products the firm should use).
  •  Consumer behaviour involves the use and disposal of products as well as the study of how they are purchased. Product use is often of great interest to the marketer, because this may influence how a product is best positioned or how we can encourage increased consumption. Since many environmental problems result from product disposal (e.g., motor oil being sent into sewage systems to save the recycling fee, or garbage piling up at landfills) this is also an area of interest.
  • Consumer behaviour involves services and ideas as well as tangible products.(e.g., when going out to a fine dining restaurant the behaviour of the consumer will be definite and predictable).
  • The impact of consumer behaviour on society is also of relevance. (e.g.,aggressive marketing of high fat foods, or aggressive marketing of easy credit, may have serious repercussions for the national health and economy.

Applications of Consumer Behavior

Today I am going to write about why the world going gaga over consumer behavior or in other words customer intelligence. The industry uses this intelligence or data to analyze the market to gain better insight into the life of customers and hence make better strategic decisions. The main applications of consumer behavior:
  • The most obvious is for marketing strategy—i.e., for making better marketing campaigns. For example, in the simplest case, by understanding that consumers are more receptive to food advertisements when they are hungry, they learn to schedule snack advertisements late in the afternoon.  That is the reason why you see all those pizza ads in the afternoon or evening and not right in the morning. Okay lets take another case, by understanding that new products are usually initially adopted by a few consumers and only spread later, and then only gradually, to the rest of the population, they learn that (1) companies that introduce new products must be financially well equipped so that they have the capability of suffering the losses initially until their products become a commercial success and (2) it is important to please initial customers, since they will in turn influence many subsequent customers’ brand choices. It is also important to understand that what kind of products are more receptive to the people who try new things out(in technical language, innovators). A new type of razor may be more receptive to the people than a new OLED TV.
  • Social marketing involves getting ideas across to consumers rather than selling something. Dr. Marty Fishbein, a marketing professor, went on for leave to work for the Centers for Disease Control trying to reduce the transmission of diseases through illegal drug use. The best solution, obviously, would be if we could get illegal drug users to stop. This, however, was seeming to be impossible. It was also determined that the practice of sharing needles was too habitual in the drug culture to be stopped. As a result, using knowledge of consumer attitudes, Dr. Fishbein created a campaign that inspired the cleaning of needles in bleach before sharing them. This served their purpose.
  • The next one is public policy. In the 1980s, Accutane, a near miracle cure for acne, was introduced. Unfortunately, Accutane resulted in severe birth defects if taken by pregnant women. Although physicians were instructed to warn their female patients of this, a number still became pregnant while taking the drug. To get consumers’ attention, the Federal Drug Administration (FDA) took the step of requiring that very graphic pictures of deformed babies be shown on the medicine containers. The same thing can be seen with cigarettes where a picture is embedded on the pack showing a pair of lungs full of tar. 
  • This one is for the customer. Studying consumer behavior should make us better consumers and judge decisions of the others correctly before getting influenced. Two people buying the same thing may (1) pay different prices (2) have different reasons to buy them (3) have different attitude towards it. An example is always helpful. Meera buys an android phone after telling her friend Asha that she prefers Apple. Asha perceives this purchase as an opinion from Meera that Mac is not worth it as it doesn't have Bluetooth and other features. However it just may be the case that Meera didn't have enough money to buy an Apple iPhone and hence bought the Android.

Tuesday, 6 October 2015

Perceived risks of shoppers

Consumers who generally shop go through a definite process before selecting the chosen product. The very basic steps constituting the decision process of a consumer are shown below:

The ultra-important factor which is not being clearly shown in this, is the term we are going to deal with i.e. Perceived risks. This can be simply called the consumer’s level of uncertainty regarding the outcome of a purchase decision, especially in the case of a high priced item such as a car, or a complex item such as a computer. Apart from the technical jargon, it is all the questions which come into your mind regarding the product.

The perceived risk are as follows:
  1. Functional risks: The uncertainty that the product will not perform as expected. Especially for products whose attributes cannot be very well defined (eg. apparels) just through ads, this is a huge risk in judging and matching their price to the benefits actually provided by them.
  2. Physical risks: The uncertainty faced by a consumer whether the product offering can be harmful to self or others. Again, its related with the attributes and can cause doubts in your mind. For example in food items, whether an organic unpasteurized milk safe to drink or not.
  3. Financial risks: The feeling that the product will not be worth its cost. Due to increasing involvement of consumers and stiff competition, innovation has become a regularity. An LED TV which may be a big thing in the market in the present scenario may be available 6 months from now at a cheaper price due to finer variants.
  4. Psychological risks: The uncertainty whether the product I am looking for will suit my self image and whether the society will accept it or not. Subjective norms play a huge role in this, which is basically the how much my purchases will be acceptable and regarded by the people around me whom I consider as relevant. 
  5. Time risks: Time spent in search of the product may be wasted if it does not perform as intended or. It mainly occurs with high involvement products which need a lot of information search and comparison with the other brands.
These risks can be decreased too. A few very simple ways are by :
  • Seeking information about the product
  • Staying brand loyal to their previously sought out brand
  • Select by brand image, especially when the consumer has no experience with a product
  • Buy the most expensive model, especially when price is perceived to be an indicator of the product's quality.