Consumer Behaviour and its Impact on the Marketing Plan

Welcome to Topic 7: Consumer Behaviour and its Impact on the Marketing Plan.

As we know, the study of consumer behaviour is highly complex and multidimensional process as marketers aim to understand individuals, consumer groups and organisations. Understanding consumer needs, trends and the underlying processes are critical for the development of a marketing plan. Marketers also need to understand how their actions (for example, advertisements and promotions) influence consumer behaviour through the ongoing evaluation of marketing initiatives, campaigns, brand studies, and research into specific situations, products and product categories.

In this topic, you will learn about:

• The marketing strategy
• Consumer behaviour.

These relate to the Subject Learning Outcomes:

1. Discuss the current trends in consumer behaviour and apply them to the marketing mix.
2. Identify the impact of social and cultural factors on consumer behaviour.
3. Discuss how consumers make decisions that impact on their buying behaviour.
4. Review the effectiveness and impact of advertising, promotions and media on consumer behaviour.
5. Write effective marketing plans to influence consumer decision-making.

Welcome to your pre-seminar learning tasks for this week. Please ensure you complete these prior to attending your scheduled seminar with your lecturer.

Click on each of the following headings to read more about what is required for each of your pre-seminar learning tasks.

Consumer behaviour and the marketing strategy

This section will look at the interplay between consumer behaviour and the marketing strategy. As discussed in previous topics, marketing planning starts with an analysis of the market and most profitable market segments. For example, demographic, geographic, lifestyle, media preferences. This occurs before developing a suitable marketing strategy that delivers superior value to the customer and better satisfies customer needs than competitive products.

The marketing mix involves decisions around four (4) Ps:

• Product features
• Price
• Placement (distribution)
• Promotion.

In an increasingly competitive environment where products are commodities, marketers must clearly differentiate their product through service delivery and creating memorable experiences that enhance the total product. This achieves another layer of engagement with the consumer at an intellectual, physical, emotional, or spiritual level.

The following figure outlines a simple overview of the relationship between consumer behaviour and marketing strategy.

• Where Outcomes include:
  • Individual
  • Organisation
  • Society.
• Consumer decision process includes:
  • Problem recognition
  • Information search
  • Alternative evaluation
  • Purchase
  • Use
  • Evaluation.
• Marketing strategy includes:
  • Product
  • Price
  • Distribution
  • Promotion
  • Service.
• Market segmentation includes:
  • Identify product-related need sets
  • Group customers with similar need sets
  • Describe each group
  • Select attractive segment(s) to target.
• Market analysis includes:
  • Company
  • Competitors
  • Conditions
  • Consumers.

In addition to a thorough understanding of consumer behaviour, marketers also need to understand the company’s strengths and capabilities, its competitors and competitive advantages, and the external market conditions that may present threats and opportunities. In order to determine these aspects, marketers should conduct extensive SWOT analysis as part of the process of developing a marketing plan.

Market segmentation process

Choosing the right target market and market segments or individuals is most likely the most important marketing decision a company makes.

According to Mothersbaugh et al. (2019) there are four (4) steps in the market segmentation process:

1. Identifying product-related need sets
2. Grouping customers with similar need sets
3. Describe each group
4. Selecting an attractive segment(s) to serve.

Management needs to identify the product-related set of needs that the company is capable of meeting. For example, a watch can be much more than a device that tells us the time. It can be a fashion accessory, a piece of art, it could track fitness goals, enable communication, GPS, work as a personal assistant or simply meet status needs as a symbol of success. Whatever the product-related needs are, the product needs to be marketed in such a way that will satisfy the needs in a superior way to competitive brands.

Developing a marketing strategy

Mothersbaugh et al. (2019, p. 15) explain that “better-defined segments will generally be discovered by focusing first on needs and then on consumer characteristics associated with those needs, both approaches are used in practice, and both provide a useful basis for segmentation”. The marketing strategy is usually developed during the segmentation process and then further defined as part of developing the marketing mix.

Marketers aim to ensure customers are satisfied in order to drive repeat and loyal behaviour, create positive word-of-mouth, and influence the self-concept and lifestyle to influence needs and desires as outlined in the following figure.

The marketing strategy should answer how a company can provide superior value to its target segments through the right marketing mix. The marketing mix includes product and product-related decisions such as logos, branding and packaging, pricing, distribution, and communication decisions. Marketing communication involves decisions around key marketing messages, images, content, marketing, and media channels.

Marketers develop integrated marketing communication (IMC) programs by mixing and matching communication channels thus creating an effective and efficient communication program (Mothersbaugh et al. 2019). According to Batra and Keller (2016), the communication program should involve the following six criteria:

1. Coverage
2. Contribution
3. Commonality
4. Complementarity
5. Conformability
6. Cost.

Different communication options can accomplish different goals, but most importantly, all options need to support and enhance each other. Coverage is about reach, while contribution is related to creating a desired response. Commonality is about designing the IMC program in such a way that it creates a cohesive brand image through consistent, persuasive messaging.

Complementarity is about ensuring that communication options complement one another, and conformability ensures that the messages reach both types of consumers – those who have been exposed to the message before and those who see it for the first time. Cost relates to the actual cost of implementing the program and the evaluation of results to determine the return on investment weighted against specific objectives.

Integrated Marketing Communication Framework

The Integrated Marketing Communication (IMC) framework helps marketers understand online vs. offline communications and which messages are controlled by marketers and which ones consumers create and influence (Batra & Keller 2016). For example, the framework looks at the reach of the desired effect of different communication platforms. These major communication platforms include:

• Advertising
• Sales promotion
• Event and experiences
• PR and publicity
• Online and social media marketing
• Mobile marketing
• Direct and database marketing
• Personal selling.

Once the communication platform is considered, it is next important to look at the communication outcomes and objectives. This means looking at the message that is communicated to the consumer and keeping in mind the specific objectives and outcomes. These messages may include the propensity to:

• Create awareness and salience
• Convey detailed information
• Create brand imagery and personality
• Build trust
• Elicit emotions
• Inspire action
• Instil loyalty
• Connect people.

The final part of the model looks at the stages of the consumer decision journey. The appropriate media combination can be selected that best meets the needs or gaps at each stage along the journey. This journey consists of 12 steps including:

1. Needs and wants
2. Knowing (can recall and recognise)
3. Considerations
4. Searching for more information and building brand knowledge
5. Liking and having trust
6. Willing to pay (more)
7. Having (high) desire to act
8. Consuming and using
9. Satisfaction
10. Attitudinal and behavioural loyalty
11. Engagement and interaction
12. Advocating for this particular brand.

The following figure outlines Keller’s IMC Conceptual Framework.

Keller Bs

Keller (2020) also offers eight (8) pieces of valuable advice on general communication guidelines, also referred to as ‘Keller Bs’ (Keller & Swaminathan 2020, p. 253).

1. ”Be analytical: Use frameworks of consumer behavior and managerial decision making to develop well-reasoned communication programs.
2. Be curious: Better understand customers by using all forms of research, and always be thinking of how you can create added value for consumers.
3. Be single-minded: Focus your message on well-defined target markets (less can be more).
4. Be integrative: Reinforce your message through consistency and cuing across all communication options and media.
5. Be creative: State your message in a unique fashion; use alternative promotions and media to create favorable, strong, and unique brand associations.
6. Be observant: Keep track of competition, customers, channel members, and employees through monitoring and tracking studies.
7. Be patient: Take a long-term view of communication effectiveness to build and manage brand equity.
8. Be realistic: Understand the complexities involved in marketing communications”.

Self-concept and lifestyle

Effective marketing activities can impact consumer behaviour and affect the self-concept and lifestyle.

The following figure is a conceptual model of consumer behaviour and may aid your thinking. It outlines the effects of internal and external influences on people’s self-concept and lifestyle that trigger needs and desires and, in turn, activate the consumer decision process.

Marketing activities are a key external factor. Other external influences include:

• Culture
• Subculture
• Demographics
• Social status
• Reference groups
• Family.

Internal influences include:

• Perception
• Learning
• Memory
• Motives
• Personality
• Emotions
• Attitudes.

To bring the various concepts discussed together and enable you to better comprehend how the consumer decision-making process influences marketing decisions, refer to the following GIF.

Consumer behaviour

According to Mothersbaugh et al. (2019) there are many challenges ahead that act as forces and drive consumer behaviour at a rapid pace. Among these challenges are:

• The evolution of marketing and customer experience
• Marketing to consumers versus marketing for consumers
• Social media.

Let us expand on these important challenges.

Evolution of marketing and customer experience

Marketers offer various ways for consumers to obtain a cup of coffee. Think about all the different ways you may have purchased coffee.

• Did you buy coffee beans and make the coffee at home?
• Did you buy Nespresso pods and brew a single cup of coffee?
• Did you go to the coffee shop and order a cup of coffee?
• Did you go to Starbucks and buy a cup of coffee?

Maybe you have done all of them. But which one do you think is the more expensive option? Likely you said option one is the least costly, and Starbucks is the most expensive. And generally, you would be correct.

But why do you think that is the case? Well, there are layers of value that marketers can add to ‘commodity-like’ products. These layers include services and experiences that consumers indicate are of value to them. This means that as a product moves from being a commodity to a good, to a service, to an experience, consumers are likely to pay more.

For example, Starbucks has become successful because of customers' willingness to pay more for a cup of coffee because they layer their core product with service and experience. Your cup of coffee is personalised and becomes a double caramel macchiato with cinnamon. Starbucks is now going one step further and has opened a store in New Orleans where the store is designed to provide intense experiential aspects that reflect the historical and cultural ambience of the store’s local community. This is known as the hyper local approach.

Marketing 2 consumers versus marketing 4 consumers

Marketing has changed its offerings but also the relationships with consumers. This means that ‘marketing 2 consumers’ has shifted to ‘marketing 4 consumers’.

Marketing 2 consumers meant mass marketing, which focused on reaching as many consumers as possible and resulted in wasting resources on customers who had no interest in the product. In addition, the market was saturated with advertisements repeatedly and frequently.

Marketing 4 consumers focuses on reaching the consumers who want the product offering and applying a more targeted approach. It appreciates that consumers have the power to choose to want the marketers to engage. For example, consumers will download, click on and seek out products via the internet. Consumers can initiate and participate in product innovation by funding an idea. They can review competitive prices and do not have to rely on the marketers because they can access customer reviews. For example, Amazon.com or Productreviews.com have extensive customer reviews of products.

Social media

Have you ever wondered how the rapid increase in social media has affected marketing? Facebook, Pinterest, Snapchat, Twitter and TikTok are just a few social media platforms that have shifted marketer-to-consumer communication to consumer-to-consumer communication.

For example, the company CVS trended on Twitter in 2014, where more than 8,000 tweets were reporting the abnormally long receipts CVS gives its customers. Check it out in the story Why CVS receipts are so long. Customers uploaded photos of shopping receipts from CVS that were extensively long. The reason for the big receipts is because of big data. When a customer purchases a product and uses their CVS card, the data is tracked, and it prints out receipts with coupons that are mined from the history of the previous purchases. Hence why they are so long.

Customer reactions were negative because of the environmental impact and they suggested that the coupons be moved directly to the CVS card. If we think about the pre-social media era, this data mining would not have been possible.

Welcome to your seminar for this topic. Your lecturer will start a video stream during your scheduled class time. You can access your scheduled class by clicking on ‘Live Sessions’ found within your navigation bar and locating the relevant day/class or by clicking on the following link and then clicking 'Join' to enter the class.

Click here to access your seminar.

The following learning tasks will be completed during the seminar with your lecturer. Should you be unable to attend, you will be able to watch the recording, which can be found via the following link or by navigating to the class through ‘Live Sessions’ via your navigation bar.

Click here to access the recording. (Please note: this will be available shortly after the live session has ended.)

In-seminar learning tasks

The in-seminar learning tasks identified below will be completed during the scheduled seminar. Your lecturer will guide you through these tasks. Click on each of the following headings to read more about the requirements for each of your in-seminar learning tasks.

The lecturer will start off with a re-cap of pre-seminar learning tasks for Topic 7.

Welcome to your post-seminar learning tasks for this week. Please ensure you complete these after attending your scheduled seminar with your lecturer. Your lecturer will advise you if any of these are to be completed during your consultation session. Click on each of the following headings to read more about the requirements for each of your post-seminar learning tasks.

Each week you will have a consultation session, which will be facilitated by your lecturer. You can join in and work with your peers on activities relating to this subject. These session times and activities will be communicated to you by your lecturer each week. Your lecturer will start a video stream during your scheduled class time. You can access your scheduled class by clicking on ‘Live Sessions’ found within your navigation bar and locating the relevant day/class or by clicking on the following link and then clicking 'Join' to enter the class.

Click here to access your consultation session.

Should you be unable to attend, you will be able to watch the recording, which can be found via the following link or by navigating to the class through ‘Live Sessions’ via your navigation bar.

Click here to access the recording. (Please note: this will be available shortly after the live session has ended.)

Read the following web articles:

• Charm, T, Dhar, R, Hass, S, Liu, J, Novemsky, N & Teichner, W 2020, Understanding and shaping consumer behavior in the next normal, McKinsley & Company.
• Riserbato, R 2021, 5 Marketers reveal how they understand & influence consumer behavior, HubSpot.
• Wong, HY, Radel, K & Ramsaran-Fowdar, R 2011, ‘Analyzing the target market, Part 2: Consumer behavior and target marketing process’, Harvard Business Publishing.

References

• Batra, R & Keller, KL 2016, 'Integrating marketing communications: New findings, new lessons, and new ideas', Journal of Marketing, 80(6):122-145.
• Dorbala, R 2017, Consumer behaviour and marketing strategy, streaming video, YouTube, https://www.youtube.com/watch?v=yozt2xPdmyM
• Keller, KL & Swaminathan, V 2020, Strategic brand management: Building, measuring, and managing brand equity, 5th Global edn., Pearson Global Education.
• Kotler, P 2021, Marketing strategy 2021: Philip Kotler on marketing strategy, streaming video, YouTube, https://www.youtube.com/watch?v=ghFwpoH71NM
• Manis, KT 2021, Marketing strategy and consumer behavior, streaming video, YouTube, https://www.youtube.com/watch?v=LxCStJMCJMI
• Mothersbaugh, DL, Hawkins, DI & Best, RJ 2007, Consumer behavior: Building marketing strategy, 10th edn., McGraw-Hill Education.
• Mothersbaugh, DL, Hawkins, DI & Kleiser, SB 2019, Consumer behavior: Building marketing strategy, 14th edn., McGraw-Hill Education.
• Zhang, T, Omran, BA & Cobanoglu, C 2017, 'Generation Y's positive and negative eWOM: use of social media and mobile technology', International Journal of Contemporary Hospitality Management, 29(2):732-761