Consumer Behavior

University Degree Business and Administrative studies

INTRODUCTION

In recent years there have been many forces, which have compelled organizations to analyze the way in which they operate. A comprehensive understanding of Consumer Behavior, has today become a growing phenomenon among businesses as it can be seen as the key to staying competitive in today’s rapidly changing globalized environment.

Consumer Behavior can be distinguished as the mental, physical and emotional processes that people engage in when selecting, purchasing, using and disposing of products or services to satisfy particular demands.

It’s a subdivision of marketing that fuse elements from economics and psychology by examining the traits of individual consumers in spheres such as demographics, psychographics, and behavioral variables.

FACTORS THAT INFLUENCE CONSUMER BEHAVIOR

There are a number of determinants that propels consumers to make the decisions which they make. Among them are Environmental Factors, Social Factors and Individual Factors.

ENVIRONMENTAL FACTORS

CULTURE & SUBCULTURE

As stated by P Kotler” cultural factors exert the broadest and deepest influence on consumer behaviour” (p172). It is seen as the most crucial determinant of a person’s desires and behavior as these are the external influences that are endorsed by others which impacts the consumer.

Subcultures provide more specific identification and socialization for its members. It has its own distinguishing modes of behavior and is categorized on the basis of demographics such as sex, age, family size, religion, race, occupation, family life cycle, income and education.

SOCIAL FACTORS

SOCIAL CLASS

Social class is seen as a relatively homogenous division in a society that contains people with similar values, needs, lifestyles, and behavior. It is used as a basis for identifying and reaching particularly good prospects for products and services. Some marketers focus on one social class as these consumers choose products that communicate their role and status in society.

REFERENCE GROUPS

Reference groups are interpersonal influences that go beyond family, friends and co-workers which directly or indirectly manipulate a person’s attitude or behavior. Consumers are significantly influenced by these groups as they expose individuals to new behaviors and lifestyles influencing the person’s attitudes and self concept.

FAMILY

Consumer behavior starts in the family unit as this is seen as the most influential primary reference group. The family’s influence on consumer behavior derives from three perspectives:

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Consumer Socialization – (See Appendix 1)
Family Life cycle – (See Appendix 1)
Family decision-making – (See Appendix 1)

PSYCHOLOGICAL FACTORS

CONSUMER LEARNING

Learning is the process that changes consumer’s knowledge or behavior patterns through marketing communications or experience. “Learning involves a change in the content or organization of long term memory and or behavior. It focuses on what we know and can thus put to use. It can be thought of as the process by which individuals acquire the purchase and consumption knowledge and experience that they apply to future related ...

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Consumer Socialization – (See Appendix 1)
Family Life cycle – (See Appendix 1)
Family decision-making – (See Appendix 1)

PSYCHOLOGICAL FACTORS

CONSUMER LEARNING

Learning is associated with two basic theories: Behavioral Learning Theory and Cognitive Learning Theory.

BEHAVIORAL LEARNING THEORY

Behavioral learning focuses on changes in behavior which occurs as a result of experience. It emphasizes stimuli and response behaviors. It’s categorized into three segments.

CLASSICAL CONDITIONING – (See Appendix 2 )
INSTRUMENTAL CONDITIONING – (See Appendix 2)
MODELING OR OBSERVATIONAL LEARNING – (See Appendix 2)

COGNITIVE LEARNING THEORY

This aspect focuses on explanation and development of cognitive structures, processes, and representation that mediate between instruction and learning. It is subdivided into two aspects:

INFORMATION PROCESSING – (See Appendix 3)

According to Engel et al this “refers to the process by which a stimulus is received, interpreted, stored in memory, and later retrieved.” (p 472).

INVOLVEMENT THEORY – this is the basic premise of the split-brain theory. It relates to an individual’s intensity of interest in a product and the importance of the product for that person. There are two aspects to this theory.

High involvement decisions ( See Appendix 3)

Low involvement decisions ( See Appendix 3)

ATTITUDES & ATTITUDE FORMATIONS - attitudes are learned predispositions to respond favorably or unfavorably to an object or class of objects. It has structure, direction, degree and intensity which are shaped by our values and beliefs.

“The formation of an attitude is the shift from having no attitude toward a given object to having some attitude towards it.” (Lecturers notes 29.10.05)

INDIVIDUAL FACTORS

MOTIVES

Motives are the inner energizing forces that orient a person’s activities toward satisfying a need for achieving a goal.

PERCEPTION

Perception is an approximation of reality. It is the process of selecting, organizing and interpreting information inputs to develop meaning. This is important as consumers selectively perceive what they want which affects how consumers see risks in a purchase.

PERSONALITY

Personality forms the internal traits and behaviors that make a consumer unique. It affects the way consumers behave as these distinguishing psychological characteristics leads to relatively consistent lasting responses to stimuli in the environment.

THE IMPORTANCE OF UNDERSTANDING CONSUMER BEHAVIOUR IN MARKETING ( AT ST. CLAIR MEDICAL CENTRE )

Consumer analysis can be considered the foundation of marketing management. As stated by Mowen & Minor the importance of understanding the consumer is found in the definition of marketing as a “human activity directed at satisfying needs and wants through the human exchange processes.” He also stated that “studying consumer behavior will enhance your understanding of the psychological, sociological, and economic factors that influence all human behavior.” (Mowen & Minor p 6)

Appreciating the role of the consumer and the consumption process brings profuse advantages. One beneficial factor is the knowledge base which marketing researchers attain. It assists managers in their decision-making which empowers marketers to a greater degree to analyze consumers and adapt their strategies by undertaking initiatives which helps them to disclose how customers perceive, feel, reason and select between different alternatives.

As a marketing manager, understanding consumer behavior at St. Clair Medical Centre is vitally important as the public’s perception of the institution is that it caters to the upper social class of society. Today the organization is challenged as the inability to access exceptional health-care services has become a growing concern for the citizens of Trinidad & Tobago.

The general public now access services at the institution which are not available in the public system, hence the need for a greater understanding of the disposal of their services among the current target market and prospective markets.

To effectively address these issues an environmental analysis must be conducted as this would assess the external forces which act upon the organization by evaluating what poses as threats, and the opportunities on which they can capitalize.

Marketing research must be undertaken as this would provide information on factors which impact consumers’ acquisition, consumption, and disposition of the organizations services. Research would also assist in the evaluation of the exposure of their services amongst the wider environment which would enable the company to address the various characteristics of attitudes as it relates to consumer behavior. This would also enable the organization to identify positioning strategies which would allow for the development of a strategic marketing mix.

As the marketing manager segmentation is a critical factor as a marketing mix has to be tailored to meet the needs and wants of both segments. However it is imperative that the usage of services between both social classes is identified as this would enable the organization to maximize effectiveness of the marketing mix based on consistency with social-class attributes.

In order to upkeep consumption from the upper social class, the organization has to maintain the superior value and advantages it has over its competitors, which is the expertise that is available at the institution. The company is comprised of Medical Specialists not only from T & T but the very best within the Caribbean region. This segment is compelled by this as they not only obtain a sense of security but also value for their money. To maintain such relations the organization has to implement a forum for these Specialists to express their concerns and to address any issues which may fetter good relationships among themselves and the organization.

To enhance consumption from the wider public it is imperative that the organization understand the concept of attitudes, attitude formation and change processes. This is critical as they have to address the underlying perceptions harboured by the wider society and reform the psyche of these consumers. This change could come about by the organization creating an alliance with the government and adopting a social responsibility by conducting joint ventures to alleviate the backlog of cases in the public system. This is instrumental as they would have not only fulfilled a need but would have generated positive experiences among these individuals.

Segmentation and product positioning goes hand-in-hand and therefore the implementation of structures that would enhance service demand by the development and promotion of services with specific characteristics, would differentiate them from their competitors. This could be explored by the organization positioning themselves through health workshops which should include basic medical examinations and should also be used as a forum to educate the general public about their facilities and services and also the life long benefits of acquiring such services at their organization.

According to Mowen and Minor “for the manager developing a marketing mix, consumer behavior concepts and principles have their greatest application in the promotional strategy area.” ( p 47 ).

As marketers it is imperative that the level of the hierarchy consumers are at is identified. This helps to cultivate an advertising theme to gain and keep segments by analyzing the motivations and psychographic characteristics of the target market, which enables the organization to adapt and improve marketing campaigns and strategies to more effectively reach the consumer.

The organization could launch advertising campaigns within the public system to enhance lower class consumption by initiating programs that would allow persons registered with the public clinics to obtain services at discounted prices. Consumer demand would be great as patients are unable to access exceptional diagnostic testing on a timely basis within the public system. This aspect should be strategically implemented as this could also be used as a tool to increase repeated consumption by this segment.

Finally a system should be put into place to monitor customer satisfaction as it has been discovered that customer fulfillment propels organizational success. This would also allow the organization to monitor and control the changes in today’s competitive environment and assist in their effort to maintain a sustainable competitive advantage among other private institutions.

CONCLUSION

Consumer behavior is dynamic and requires ongoing research and analysis. For marketing managers, knowledge of consumer behavior has important implications for environmental analysis, product positioning, segmentation of the market place, the design of market research, and the development of a strategic marketing mix.

Understanding consumer behavior is a vital aspect of marketing as it urges marketers to understand the role of involvement and habit, information processing and the concept of life values in consumer behavior as well as cultural determinants which allows organizations to improve their marketing strategies.

Once there is a comprehensive grasp of the determinant factors which influences consumer behavior supplemented with an effective strategic marketing plan, these are the attributes needed to place an organization at a sustainable competitive advantage.

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