Consumer Behavior Models

1.      Consumer Behavior Models

Overview Consumer Behavior Model

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The preceding framework presents a general idea for the analysis of consumer behavior and its accompanying issues. These help marketing practitioners in their product development initiatives and in the enhancement of their current marketing strategies. It may be used to assist non-profit groups in their consumer dealing, particularly in soliciting support for dole-outs or in offering nonprofit services (12manage.com online).

Cognition Model

Cognition pertains to the prospective customer’s beliefs about a specific product or service offering. In particular, it refers to mental constructs and processes that are involved in rational thinking, comprehension and giving meaning to occurences and environmental stimuli. This encompasses intellect / knowhow, interpretations and beliefs that customer have acquired from their past and have been marked in their long-term memories. Moreover, it covers processes that are related to attending to and comprehending stimuli and incidents, recalling previous events, making assessments, and undertaking buying decisions (Hammond, McClelland, & Mumpower, 1980).

Behavior Model

Behavior pertains to observable actions of customers that lend themselves to the senses (i.e. sight, smell, feel, etc.) and to being measured. It is deemed crucial in marketing decisions because it is only through it that profit may be yielded by the organization. While many such marketing initiatives are aimed at having an effect on consumer’s feelings or emotions, the main goal is for all these to translate to a buying decision that is of concrete value to the company. Thus, it may be indispensable for marketing executives to carry out an analysis of behavior and have a profound comprehension of its determinants (Hammond, et al, 1980).

Environment Model

When the consumer environment is spoken of, pertains to anything within the surrounding of the customet that may have an impact on his cognition, affect, and behavior. This encompasess social triggers, including cultural, subcultural, social variables, distinctive groups, and familial determinants of customer decisions. Moreover, it involves those triggers that are physical in nature, including selling centers, physical product offerings, commercials and signs that may modify their thinking, emotions, and behavior. Such environment is critical in drafting strategies in marketing since it is the means through which these triggers influence customers (Einhorn & Hogarth, 1981).

Consumer Decision Making Model

All facets of feeling and belief contribute in the decision of consumers, encompassing knowhow, interpretations, and cognitions which are culled from memory and attended to. The consumer then give meaning to the novel data and the context in which it exists. The core process in decision making is the synthesis of knowhow to assess optional behaviors and make a final decision to carry out one alternative. The result of this synthesis is a decision, embodied rationally as a behavioral intention. The said model is sufficient in explaining multiple decisions that transpire in real problem solving situations (Hammond et al, 1980).

Problem Solving Model

In actuality, consumer problem soling is a constant flow of interplay among enviromental variables, thinking and feeling processes, and behavior. These processes may be categorized into phases and subphases to be able to have more straightforward analysis and comprehension of each. This primary model determines various crucial tasks entailed in resolving an issue, starting with the acknowledgement of the problem, which then leads to the intent to solve it. Some other tasks which are involved in this model include data search of information pertinent to the issue, assessing options, and selecting the appropriate alternative (Hammond et al, 1980).

2.      Consumer Behavior Topics
Customer Service Relationships: Zooming In on Relationship Marketing
Traditional Marketing: Transactions and Exchange
Kotler (2000) defines marketing as: “the process of planning, and executing the conception, pricing, promotion, and distribution of goods, ideas, and services, to create exchanges that satisfy individual and organizational goals.” Through manipulation of the “4 Ps” (Product, Price, Place, Promotion or the marketing mix), marketers seek to meet and satisfy customer’s needs and wants through a process of exchange that may culminate in a transaction.

What forms the bases of the “4Ps” framework? Christopher, Clark, Peck, and Payne (1999) trace the framework’s origins to Borden’s work in 1960s. Borden identified 12 factors that comprised the “marketing mix” that influenced demand. These 12 factors would later be simplified in the popular “4Ps” framework. The prevailing mass manufacturing – mass marketing conditions of the 1950s and 1960s, with its emphasis on customer acquisition rather than retention, provided ample evidence of transaction-based marketing’s efficacy.

Beyond The Transaction: Establishing Long-Term Relationships
Government deregulation has resulted in increased competition in industries such as transportation, energy, and telecommunications. Companies have broader geographic market scope and partnering with international suppliers. Efficient supply chains and the Internet have allowed for more sophisticated customer needs acquisition, fulfillment, and tracking. Christopher et al (1999) relates the eventual inadequacy of the transaction-based model:

“Critics have long argued that these models and the assumptions on which they were based were inappropriate for industrial and services contexts, where relationships with customers were often on-going and of pivotal importance. They were also felt to be inadequate when applied to marketing in the international arena. Marketing management, as it was usually taught, represented neither the aspirations nor the reality of these branches of marketing. With the arrival of the recession in the 1990s it became widely recognized that, even in consumer markets, this classical marketing paradigm had lost its potency.”

Gummesson (2002a) points out the shortcomings of current marketing theory:

“The texts (referring to marketing textbooks) do not interlink phenomena in a deeper sense although they may offer some overriding framework. The continuous building of core variables to an increasingly more general level does not take place. For that, basic and scholarly research is required.”

By the 1980s, the concept of relationship marketing began to emerge.

Defining Relationship Marketing
The theoretical values of relationship marketing are organic and developing in new beliefs and direction as it faces changes in the market place (Christopher, 1999) as well as changes in the methodologies and tools (Gummesson, 2003) with which to assess it.
For example, relationship marketing has often been seen as a means of creating value with individual customers, “marketing based on interactions within networks of relationships”, interactions stages of development, customer retention (Stone, Woodcock, and Machtynger, 2000). While relationship marketing has often been defined as the relationship between the company and the customer, recent literature has also introduced the concept of being concerned with other parties external to the company, such as distributors, suppliers, etc. (Christopher et al., 1999). This variation may be attributed to the differences in interpretation of phenomena; Gummesson (2003) points out the interpretation-research connection: “Let’s stop fooling ourselves: All research is interpretive!… There is interpretation all along, from the very start of the project until the very end.”

Despite the variations in definitions, relationship marketing borrows heavily from studies on customer service and customer retention. Scholars suggest that more than single-sale transactions, it is often desirable for companies to establish a longer-term, mutually beneficial (value-creating) relationship between the organization and its customers (Stone, Woodcock, & Machtynger, 2000). Blattberg & Deighton (1996) posit that the growth of a business may be viewed as acquiring and retaining customers so as to realize the full potential value of the customer base. From the seller’s point of view, such relationships serve as effective entry barriers, improve differentiation, and in the long-term, result in more profitable returns. (Venetis & Ghauri, 2004).

Christopher et al (1999) report that while relationship marketing’s initial phases delved into establishment of long-term, mutually beneficial relationships, the concept rapidly evolved to include internal marketing.

Internal Marketing
Literature on internal marketing has been linked with relationship marketing in recognition of the cross-functional dynamics involved in implementing any strategy. Kotler (1997) provide this definition of internal marketing:
“Internal marketing is the task of successfully hiring, training, and motivating able employees who want to serve the customer well.”
A study by Guenzi and Pelloni (2004) on the impact of interpersonal relationships on customer satisfaction and loyalty to the service provider showed that strong employee-customer relationships “can drive to the firm’s success by fostering customer satisfaction, behavioral loyalty, and loyalty intention, and also by reducing customer intention to follow “friend” customers switching to other service providers.” The retention of such key employees is critical, as the study suggested that customers may be willing to “follow” the employee to a new service provider.

Given the importance of such frontline personnel in delivering the relationship marketing strategy, Guenzi and Pelloni point out managerial implications in terms of personnel selection, training, rewards systems, facilities, processes, and peripheral services. Other research similarly connect employee contribution to marketing effectiveness (Gronroos, 1990).

While the realities of an integrated implementation of relationship marketing necessitate high levels of employee-employee and employee-customer collaboration, other authors have also articulated the need to manage external relationships.

External Relationships and Relationship Marketing
Majority of literature on relationship marketing discuss internal marketing and marketing to customers. Few authors discuss the management of external (non-customer) relationships. These select authors include Gummesson (1994) and Christopher, Payne, and Ballantyne (1991).

Gummesson (1994) identifies 30Rs or 30 relationships that operationalizes the philosophy or relationship marketing. Among the 30Rs, Relationship 3 (Megamarketing), Relationship 11 (Non-commercial relationship), Relationship 14 (Megaalliances), Relationship 23 (Criminal network), Relationship 27 (Green relationship), and Relationship 29 (Mass Media Relationship) provide examples of non-customer relationships that must also be managed in the relationship marketing approach.

Christopher et al. (1991) labels such  non-customer, external relationships as “influence markets”. Influencer applies to a “range of third parties who exercise influence over the organization and its potential customers.” Christopher identifies the possible participants of the influencer group as follows: governments and their agencies, press and other media, professional bodies, investors, and pressure groups.

The value of managing this external group is captured by Christopher et al. (1999):

“While relationships with these parties may not directly add value to a product or service, they can directly influence the likelihood of purchase or prevent an offer from even reaching the market.”
Aside from managing such external relationships, organizations must also contend with managing virtual or electronic relationships.

Relationship Marketing and Profitability
Perhaps the high degree of interest in relationship marketing is owed to growing empirical evidence which links relationship marketing with profitability. Relationship marketing’s promise of lifetime value and increased profitability per customer provide substantial reason for organizations to keep taking note and continue their organizational learning, despite setbacks.

Customer retention has been high correlated with profitability in service situations. Reichheld’s findings were dramatic: a five percent increase in customer retention resulted in increased profitability in the range of 20 percent to 125 percent. In a similar vein, Gupta and Lehmann (2003 in Gummesson, 2002b) estimated an “increase of 22% to 37% in a customer lifetime value for a 5 % increase in customer retention for Capital One and E*trade”.

Topic 2: Luxury and Consumer Behavior

Luxury has played a significant role in the buying trends of consumers, based on research for the past 3 decades. There has been a noted 30% increase in compulsive buying of luxury items, with females’ percentages rising from 74% to 93% (Black, Repertinger, Gaffney, & Gabel, 1998). There has also been empirical research suggesting that women consumers have scored significantly higher in compulsive buying of luxury items (e.g. Schehorn, Reisch, & Raab, 1990). And yet one study has demonstrated that consumers who are younger are quite similar in scores when compared to males (Magee, 1994), and a study on adolescents whos that male and female consumers score quite similarly in luxury buying (Roberts & Tanner, 2000). It may be said that women consumers are more prone to purchase of luxury items compared to their male counterparts. Such trends in the purchase of luxury items is less pronounced among younger consumers.

Emotional and identity-related dimensions of luxury shopping are more important for women consumers than for male consumers (Babin, Darden, & Griffin, 1994; Dittmar, Long, & Meek, 2004). Consumers in general, especially women tend to have positive attitudes towards browsing, shopping, and social interaction, associating buying with a ‘leisure frame’, whereas men’s attitudes tend to be a negative, seeing buying in a ‘work frame’, as a task that they want to accomplish with the minimum input of time and effort (Campbell, 2000).

Clearly, this general tendency may be less strong or even reversed for particular types of goods (e.g. tools or computer equipment), but it can be argued that, overall, luxury shopping plays a stronger emotional, psychological, and symbolic role for consumers (Dittmar & Drury, 2000). Luxury buying behavior is likely to remain gendered among consumers in the way described only as long as cultural norms and shared representations continue to frame shopping as closely-linked to consumers’ social, personal, and gender identities. Women consumers are still the majority of home-makers and primary careers for children-have fewer opportunities than male consumers for other psychological compensation strategies.

Factors Found in Consumer Decision-Making Styles
The advent of global markets has resulted in a plethora of product choice, retail channels (e.g., mail catalogues, television, Internet, and stores) and promotional activity, which make consumers’ decision increasingly complex. In the extant consumer behavior literature, most studies that all consumers approach shopping with certain decision-making traits that combine to form a consumer’s decision-making style. Some of these traits, such as brand/store loyalty, quality-consciousness or value consciousness, have been identified by other authors , but a more comprehensive instrument that measures these and other traits is provided by Sproles and Kendall’s (1986) Consumer Styles Inventory (CSI). This instrument measures eight mental characteristics of consumer’s decision-making: Perfectionism, Brand Consciousness, Novelty-Fashion Consciousness, Recreational, Price-Value Consciousness, Impulsiveness, Confused by Overchoice, and Brand-Loyal/Habitual. Sproles (1985) defines consumer decision-making styles as “a patterned, mental, cognitive orientation towards shopping and purchasing, which constantly dominates the consumer’s choices resulting in a relatively-enduring consumer personality.” Although some concerns about the generalizability of the inventory have been expressed, the CSI represents the most tested instrument currently available to assist marketers in examining cross-cultural decision-making styles. Marketers intending to enter or to expand into new overseas markets are more likely to succeed if they gain a good understanding of different cultures. With such knowledge, retailers can differentiate and target their luxury offerings, locations, and promotional efforts according to the varying patronage responses of the basic shopper types. From an international marketing point of view, a single instrument measuring decision-making styles that is applicable to many different countries  would be desirable because such an instrument could be used to identify similarities and differences in consumer decision making between countries and could enhance comparability. To date, however, there is no single accepted decision-making typology (Mitchell & Bates, 1998). There is evidence that decision-making styles can vary across different cultures (Mitchell & Bates, 1998; Fan & Xiao, 1998), but it is not known how they vary across all cultures, not even those markets that can represent major export opportunities. Thus far, the CSI has been applied to seven countries: The U.S., Korea, New Zealand, Greece, India, the United Kingdom, and China. However , Rosenthal and Rosnow (1984) suggest that a study needs to be replicated at least fifteen times before results can be generalized.

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