Download 3724685573 Marketing paper: consumer decision making

Marketing paper: consumer decision making
This paper deals with consumer decision making. The understanding of this topic is given in the
example of one of the most well-known entertainment centers in Australia Dreamworld and
recently
opened
a
new
theme
park
called
White-Water
World.
To begin with, let’s first put into the focus what Dreamworld and White-Water World are as
entertainment places.
According to the official cites:
“After 25 years Dreamworld is still Australia's favourite theme park. With so many worlds in one
location, you can plan your own adventure.
Dreamworld is home to 13 worlds. From the tallest and fastest thrill rides, to live interactive shows
and unique animal attractions, there's something for everyone at Dreamworld!”
Australia’s new water park, WhiteWater World, is next door to Dreamworld!
WhiteWater World, on the Gold Coast, delivers thrills for all ages. Woof it up on the HOTTEST
water rides on the planet. We've got all four of the "world's best" water slides. Plus, there's
something for the whole family with Nickelodeon’s Pipeline Plunge and the toddler playground,
Wiggle Bay. WhiteWater World is brought to you by Dreamworld ...so expect an action packed
day!
WhiteWater World is where the fun is; where surf, sand and sea converge. Paying homage to
everything Australian, WhiteWater World is like nothing you've experienced before. Feel the
ultimate
rush
and
get
ready
to
experience
water-powered
WOW!
WhiteWater World is packed with Australian firsts and the only park where you can experience all
four of the hottest waterslides on the planet!
WhiteWater World and Tourism Queensland are giving you the chance to win your way to the Gold
Coast and Australia's newest theme park, WhiteWater World.
The ultimate shrine to the surf, sand and sea, WhiteWater World pays homage to everything
Australian, even dogs on a beach. So, get ready to experience the water-powered WOW factor!
You and your family could be VIP guests at WhiteWater World and run free amongst
Nickelodeon's Pipeline Plunge and Wiggle Bay before opening hours.
The total prize value is $9902 and includes return economy airfares from your nearest Australian
capital city, 3 nights accommodation on the Gold Coast, 2 days car hire, 2 day Family World Pass
that includes access to both WhiteWater World and Dreamworld, and get exclusive use for one hour
of Nickelodeon Pipeline Plunge and Wiggle Bay at WhiteWater World before opening hours.” (1)
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WhiteWater World and Dreamworld are bright representatives of the entertainment business. It is so
popular among the people, because it attracts the major number of citizens and tourists, that is all
members of a family will find something there to their taste.
It is very important to know about business entertainment because you cannot recover input tax
incurred on the provision of business entertainment expenses. You can normally recover, as input
tax, VAT incurred on goods or services used for a business purpose. However input tax incurred by
you on the provision of business entertainment is blocked from recovery under a special legal
provision.
“What is meant by ‘entertainment’?
The following are examples of entertainment:
1.
provision of food and drink;
2.
provision of accommodation (such as in hotels);
3.
provision of theatre and concert tickets;
4.
entry to sporting events and facilities;
5.
entry to clubs and nightclubs;
6.
use of capital assets such as yachts and aircraft for the purpose of entertaining.
In our case we have not only the entertainment place, but also the place, where people can
improve their health.” (2)
How do consumers make decisions? This question is at the core of much of marketing examination
over the past 60 or 70 years. As marketers manipulate the various principles of marketing, so do the
consumers they seek to reach–choosing which products and services to buy, and which not to buy,
choosing which brands to use, and which brands to ignore.
Marketers use an assortment of strategies to guide how, when, and where product information is
presented to consumers. Their goal is to persuade consumers to buy a particular brand or product.
“Successful marketing strategies create a desire for a product. A marketer, therefore, needs to
understand consumer likes and dislikes. In addition, marketers must know what information will
convince consumers to buy their product, and whom consumers perceive as a credible source of
information. Some marketing strategies use fictional characters, celebrities, or experts (such as
doctors) to sell products, while other strategies use specific statements or "health claims" that state
the benefits of using a particular product or eating a particular food.” (3)
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The tremendous spending power and influence of children on parental purchases has attracted
marketers, and, as a result, marketing strategies aimed at children and adolescents have increased.
Currently, about one-fourth of all television commercials are related to food, and approximately
one-half of these are selling snacks and other foods low in nutritional value. Many of the
commercials aimed at children and adolescents use catchy music, jingles, humor, and well-known
characters to promote products. The impact of these strategies is illustrated by studies showing that
when a majority of television commercials that children view are for high-sugar foods, they are
more likely to choose unhealthful foods over nutritious alternatives, and vice versa.
However, as one might expect, consumers are typically not completely rational, or consistent, or
even aware of the various elements that enter into their decision making. In addition, though
consumers are good at estimating relative frequencies of events, they typically have difficulty
translating these frequencies into probabilities. This Utility model, even though it had been viewed
as the dominant decision-making paradigm, had serious shortcomings that could not be explained
by the model.
“The study of consumers helps firms and organizations improve their marketing strategies by
understanding issues such as how

The psychology of how consumers think, feel, reason, and select between different
alternatives (e.g., brands, products);

The psychology of how the consumer is influenced by his or her environment (e.g., culture,
family, signs, media);

The behavior of consumers while shopping or making other marketing decisions;

Limitations in consumer knowledge or information processing abilities influence decisions
and marketing outcome;

How consumer motivation and decision strategies differ between products that differ in their
level of importance or interest that they entail for the consumer; and

How marketers can adapt and improve their marketing campaigns and marketing strategies
to more effectively reach the consumer.” (4)
Understanding these issues helps us adapt our strategies by taking the consumer into consideration.
For example, by understanding that a number of different messages compete for our potential
customers’ attention, we learn that to be effective, advertisements must usually be repeated
extensively. We also learn that consumers will sometimes be persuaded more by logical arguments,
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but at other times will be persuaded more by emotional or symbolic appeals. By understanding the
consumer, we will be able to make a more informed decision as to which strategy to employ.
“One "official" definition of consumer behavior is "The study of individuals, groups, or
organizations and the processes they use to select, secure, use, and dispose of products, services,
experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and
society." Although it is not necessary to memorize this definition, it brings up some useful points:
1.
Behavior 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 (people on the job make decisions
as to which products the firm should use).
2.
Consumer behavior 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.
3.
Consumer behavior involves services and ideas as well as tangible products.
4.
The impact of consumer behavior on society is also of relevance. For example, aggressive
marketing of high fat foods, or aggressive marketing of easy credit, may have serious
repercussions for the national health and economy.” (5)
There are four main applications of consumer behavior:
1.
The most obvious is for marketing strategy—i.e., for making better marketing campaigns.
For example, by understanding that consumers are more receptive to food advertising when
they are hungry, we learn to schedule snack advertisements late in the afternoon. 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, we learn that (1)
companies that introduce new products must be well financed so that they can stay afloat
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.
2.
A second application 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
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Federal Drug Administration (FDA) took the step of requiring that very graphic pictures of
deformed babies be shown on the medicine containers.
3.
Social marketing involves getting ideas across to consumers rather than selling something.
Marty Fishbein, a marketing professor, went on sabbatical to work for the Centers for
Disease Control trying to reduce the incidence of 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 deemed to be infeasible. It was also determined that the practice of
sharing needles was too ingrained in the drug culture to be stopped. As a result, using
knowledge of consumer attitudes, Dr. Fishbein created a campaign that encouraged the
cleaning of needles in bleach before sharing them, a goal that was believed to be more
realistic.
4.
As a final benefit, studying consumer behavior should make us better consumers. Common
sense suggests, for example, that if you buy a 64 liquid ounce bottle of laundry detergent,
you should pay less per ounce than if you bought two 32 ounce bottles. In practice, however,
you often pay a size premium by buying the larger quantity. In other words, in this case,
knowing this fact will sensitize you to the need to check the unit cost labels to determine if
you are really getting a bargain.
Culture is part of the external influences that impact the consumer. That is, culture represents
influences that are imposed on the consumer by other individuals. Traditional research in marketing
has not been particularly successful in finding a link between personality and consumer behavior.
Part of the problem here is that much of the theory has been developed by clinical psychologists
who have tended to work with maladjusted people. Not surprisingly, research that sought to predict,
based on standard personality inventories, which kinds of consumers would buy Chevrolets as
opposed to Fords was not successful.
Culture is one factor that influences behaviour. Simply culture is defined as our attitudes and
beliefs. But how are these attitudes and beliefs developed? As an individual growing up, a child is
influenced by their parents, brothers, sister and other family member who may teach them what is
wrong or right. They learn about their religion and culture, which helps them develop these
opinions, attitudes and beliefs (AIO). These factors will influence their purchase behaviour however
other factors like groups of friends, or people they look up to may influence their choices of
purchasing a particular product or service. Reference groups are particular groups of people some
people may look up towards to that have an impact on consumer behaviour. So they can be simply a
band like the Spice Girls or your immediate family members. Opinion leaders are those people that
you look up to because your respect their views and judgements and these views may influence
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consumer decisions. So it maybe a friend who works with the IT trade who may influence your
decision on what computer to buy. The economical environment also has an impact on consumer
behaviour; do consumers have a secure job and a regular income to spend on goods? Marketing and
advertising obviously influence consumers in trying to evoke them to purchase a particular product
or service.
“Peoples social status will also impact their behaviour. What is their role within society? Are they
Actors? Doctors? Office worker? and mothers and fathers also? Clearly being parents affects your
buying habits depending on the age of the children, the type of job may mean you need to purchase
formal clothes, the income which is earned has an impact. The lifestyle of someone who earns
£250000 would clearly be different from someone who earns £25000. Also characters have an
influence on buying decision. Whether the person is extrovert (out going and spends on
entertainment) or introvert (keeps to themselves and purchases via online or mail order) again has
an impact on the types of purchases made.” (6)
Emotion. Emotion impacts marketing efforts in several ways. One purpose is to get attention to a
stimulus (since emotionally charged individuals tend to be less predictable than calmer ones, there
has been an evolutionary advantage in paying attention to emotion). Secondly, emotion influences
information processing. In general, happy people tend to scrutinize arguments given (e.g., purported
benefits of using a product) somewhat less, since they do not want to lose their happy moods by
doing too much thinking. In general, happy ads are somewhat better liked, and may be better
remembered. Empathy may also increase liking for the ad and the sponsoring product.
Definition. Consumer attitudes are a composite of a consumer’s 1) beliefs about, 2) feelings about,
3) and behavioral intentions toward some object--within the context of marketing, usually a brand
or retail store. These components are viewed together since they are highly interdependent and
together represent forces that influence how the consumer will react to the object.
Beliefs. The first component is beliefs. “A consumer may hold both positive beliefs toward an
object (e.g., coffee tastes good) as well as negative beliefs (e.g., coffee is easily spilled and stains
papers). In addition, some beliefs may be neutral (coffee is black), and some may be differ in
valance depending on the person or the situation (e.g., coffee is hot and stimulates--good on a cold
morning, but not good on a hot summer evening when one wants to sleep). Note also that the beliefs
that consumers hold need not be accurate (e.g., that pork contains little fat), and some beliefs may,
upon closer examination, be contradictory (e.g., that a historical figure was a good person but also
owned slaves).” (5)
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Affect. Consumers also hold certain feelings toward brands or other objects. Sometimes these
feelings are based on the beliefs (e.g., a person feels nauseated when thinking about a hamburger
because of the tremendous amount of fat it contains), but there may also be feelings which are
relatively independent of beliefs. For example, an extreme environmentalist may believe that
cutting down trees is morally wrong, but may have positive affect toward Christmas trees because
he or she unconsciously associates these trees with the experience that he or she had at Christmas as
a child.
“Behavioral intention. The behavioral intention is what the consumer plans to do with respect to the
object (e.g., buy or not buy the brand). As with affect, this is sometimes a logical consequence of
beliefs (or affect), but may sometimes reflect other circumstances--e.g., although a consumer does
not really like a restaurant, he or she will go there because it is a hangout for his or her friends.” (3)
Types of buying behaviour.
There are four typical types of buying behaviour based on the type of products that intends to be
purchased. Complex buying behaviour is where the individual purchases a high value brand and
seeks a lot of information before the purchase is made. Habitual buying behaviour is where the
individual buys a product out of habit e.g. a daily newspaper, sugar or salt. Variety seeking buying
behaviour is where the individual likes to shop around and experiment with different products. So
an individual may shop around for different breakfast cereals because he/she wants variety in the
mornings! Dissonance reducing buying behaviour is when buyer are highly involved with the
purchase of the product, because the purchase is expensive or infrequent. There is little difference
between existing brands an example would be buying a diamond ring, there is perceived little
difference between existing diamond brand manufacturers. (4)
If to take all this information to our example with thematic parks we will see that the project
leaders, marketers and all the people who worked under this business know the information
excellently.
“According to the recent research on consumer behaviour on the Internet users (Cotte, Chowdhury,
Ratenshwar & Ricci, 2006), there are four distinct consumer groups with different intentions and
motivations:
1.
Exploration
2.
Entertainment
3.
Shopping
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4.
Information” (7)
A marketing strategy is most effective when it is an integral component of corporate strategy,
defining how the organization will engage customers, prospects and competitors in the market arena
for success. It is partially derived from broader corporate strategies, corporate missions, and
corporate goals. They should flow from the firm's mission statement. They are also influenced by a
range of microenvironmental factors.
A strategy consists of well thought out series of tactics. While it is possible to write a tactical
marketing plan without a sound, well-considered strategy, it is not recommended. Without a sound
marketing strategy, a marketing plan has no foundation. Marketing strategies serve as the
fundamental underpinning of marketing plans designed to fill market needs and reach marketing
objectives. It is important that these objectives have measurable results.
“One of the best known models explaining the interactions involved is that of Howard and Sheth.
This contains a deal of common sense, although, as is often the case with such models, the rather
obscure terminology makes it appear more confusing than it really is. The 'inputs' (stimuli) that the
consumer receives from his or her environment are:
1. significative - the 'real' (physical) aspects of the product or service (which the co make use
of)
2. symbolic - the ideas or images attached by the supplier (for example by advertising)
3. social - the ideas or images attached to the product or service by 'society' (for example, by
reference groups)” (8)
The 'outputs' are what happens, the consumer's actions, as observable results of the input stimuli.
Between the inputs and outputs are the 'constructs', the processes which the consumer goes through
to decide upon his or her actions. “Howard and Sheth group these into two areas:
1. perceptual - those concerned with obtaining and handling information about the product or
service
2. learning - the processes of learning that lead to the decision itself” (10)
A good marketing strategy should integrate an organization's marketing goals, policies, and action
sequences (tactics) into a cohesive whole. Many companies cascade a strategy throughout an
organization, by creating strategy tactics that then become strategy goals for the next level or group.
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Each group is expected to take that strategy goal and develop a set of tactics to achieve that goal.
This is why it is important to make each strategy goal measurable.
Every marketing strategy is unique, but if we abstract from the individualizing details, each can be
reduced into a generic marketing strategy. There are a number of ways of categorizing these generic
strategies. “A brief description of the most common categorizing schemes is presented below:
1.
Strategies based on market dominance - In this scheme, firms are classified based on their
market share or dominance of an industry. Typically there are three types of market
dominance strategies:
2.
a.
Leader
b.
Challenger
c.
Follower” (9)
Porter generic strategies - strategy on the dimensions of strategic scope and strategic
strength. Strategic scope refers to the market penetration while strategic strength refers to
the firm’s sustainable competitive advantage.
3.
a.
Cost leadership
b.
Product differentiation
c.
Market segmentation
Innovation strategies - This deals with the firm's rate of the new product development and
business model innovation. It asks whether the company is on the cutting edge of
technology and business innovation. There are three types:
4.
a.
Pioneers
b.
Close followers
c.
Late followers
“Growth strategies - In this scheme we ask the question, “How should the firm grow?”
There are a number of different ways of answering that question, but the most common
gives four answers:
a.
Horizontal integration
b.
Vertical integration
c.
Diversification
d.
Intensification” (15)
But according to another source “There are only three marketing strategies needed to grow a
business: 1) Increase the number of customers 2) Increase the average transaction amount, and3)
Increase the frequency of repurchase. Every marketing strategy should be measured by it's ability to
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directly impact and improve upon each of these three factors. Increasing only one factor will
produce linear business growth. Increasing all three factors will produce geometric business growth.
Remembering all this we can make the following conclusion.
Increasing the total number of customers is the first step most business owners and managers take to
grow their business. Losses can occur when inexperienced sales personnel are put in charge of
designing and implementing a marketing program - investing corporate resources to find more
customers. Executed correctly, basic marketing strategies cost efficiently produce new prospects
who are ready, willing and able to buy products or services. “The main purpose of a marketing
strategy is to give sales personnel prospects to convert into paying customers. Rewarding existing
customers for referring new ones is one easy step business owners can take to increase their total
number of customers.” (11)
Owners and managers spend most of their time operating their business and searching for new
customers. They often overlook the customers they see regularly. These repeat customers are
usually taken for granted and left to conduct entire transactions without ever being asked if they
would like to buy more product or service. “Complacency, expecting customers to buy a minimum
amount of product or service without ever being asked to buy more, can be the undoing of a
business. This attitude can eventually cause customers to spend less money. Customers who aren’t
continuously offered compelling reasons to keep buying more of the same products and services
from one business will look for new reasons to buy from another.” (12) Cross selling and upselling,
systematically offering customers more value via additional products or services at the point of sale,
are two simple steps business owners can take to increase their average transaction amount.
In an established business, an average customer purchasing pattern develops and (like the average
transaction amount) is usually taken for granted and rarely improved upon. “A customer's repeat
business is earned by the business who gives the customer what they want. Without having basic
marketing strategies or processes for consistently offering customers more of what they want, repeat
business is earned less frequently.” (14) Frequently communicating news and offers to past and
present customers via telephone or mail generally increases their frequency of repurchase and is one
more step owners can take to grow their business.
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References:
1. en.wikipedia.org/wiki/WhiteWater_World
2. www.tq.com.au/.../fms/fmsdownload.cfm?file_
3. http://www.consumerpsychologist.com/#Strategy
4. http://nova.umuc.edu/~black/umax000.html
5. http://www.wiso.uni-koeln.de/finanzfors/pdf/FiFo%20UD%2099-2.pdf
6. www.economicswebinstitute.org/consumerbehaviour.htm
7. http://en.wikipedia.org/wiki/Consumer_behaviour
8. http://en.wikipedia.org/wiki/Category:Consumer_behaviour
9. http://en.wikipedia.org/wiki/Marketing_strategy
10. http://www.marketingprinciples.com/marketstrategy/default.asp?cat=117
11. http://www.decisionanalyst.com/publ_art/DecisionMaking.asp
12. www.whitewaterworld.com.au/
13. http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal
14. www.economicswebinstitute.org/consumerbehaviour.htm
15. http://www.faqs.org/nutrition/Kwa-Men/Marketing-Strategies.html
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