Marketers With Useful Information example essay topic

Why Measuring Consumer Behavior is Important Feb. 24, 2005 Ryan Brophy Management 480 (408) 390-0941 Introduction Insight into consumer decision-making and buyer behavior is at the heart of the marketing concept (Arndt 1968). To date, researchers in the field have had little success in developing substantial scientific theory to describe stable laws in marketing. Most of the progress over the past few centuries has focused on understanding and identifying observable similarities consumers share. Michael H. Halbert (1964) said: "From the viewpoint of the established sciences, marketing has no theory that is defensible on the grounds of its logical consistency, philosophic adequacy, or experimental foundation". Developing a theory in this field has been a grueling process, and no consistent law has yet been discovered. The research and measurement of buyer behavior is vitally important to the field of marketing because it can provide insight into a possible future scientific law in this field.

Before the question "Why measure buyer behavior?" can be addressed, the applicable terms, "buyer behavior" and "measurement" should be identified. The American marketing Association defines buyer behavior (AMA refers to this as "consumer behavior") as: "The dynamic interaction of affect and cognition, behavior, and the environment by which human beings conduct the exchange aspects of their lives" (web). To understand the importance of the application of this term, marketers ask questions such as; "Why do consumers make certain purchases?" , "What factors are involved in the influence of these purchases?" , and "Do changes in society have an effect on these decisions?" Marketers value the knowledge gained by examining buyer behavior because a consumer's needs cannot be met unless they have been identified clearly. No two people have exactly identical preferences, beliefs, and behaviors. Ideally, a marketer would like to understand each person as thoroughly as possible. Traveling door to door, speaking to each member of the household and spending the time to learn about their likes and dislikes would be impossible.

Fortunately, buyers tend to have consistent behavior patterns and habits in the market place. This consistency provides marketers with the opportunity to measure similarities among buyers, predict their future behavior, and apply that knowledge to encompass groups of people with parallel behaviors. Once again, I will rely on the American Marketing Association to provide a definition for the term "measurement". Measurement is "A rule for assigning numbers to objects to represent quantities of attributes" (web). Measuring buyer behavior is a practice used by marketers to gain information that can help prescribe effective approaches for strengthening customer relationships and increasing product satisfaction. Now that these terms have been recognized, the question at hand may be examined.

Why is measuring buyer behavior important? To understand the significance of this question in the field of marketing, the value of measurement knowledge to consumer behaviorists and practitioners must be appraised. If measuring buyer behavior is important then this information must aid in the development of more proficient marketing activities. Is this knowledge truly valuable? Measurement should provide marketers with useful information. Can this knowledge provide a marketer with useful information in the market place?

Marketing activities, if successfully improved, should provide companies with positive results. Is there supporting evidence to prove that companies are actually using this knowledge? Value of Measurement Knowledge to Consumer Behaviorists and Practitioners Marketers utilize models to describe similarities between consumers. The buyer behavior decision-making model is used to recognize the progressive process of a consumer when making decisions to purchase a product or service. This process has been investigated and accepted as a current and acceptable theory. These steps are considered the fundamental progression a buyer travels through.

Problem Recognition occurs once a person recognizes a difference between his current condition and an ideal state. When the perceived ideal state becomes significant, it will trigger a response which initiates the decision-making process. Problem recognition can be triggered simply by seeing an empty bottle of juice or by advertisements. After the process has been initiated, a person will search for more information. This step is named Information Seeking. This stage helps to clarify possible options available and will begin with an internal search.

This consists of any past memory or knowledge concerning the purchase. The internal search can be quick and easy but only sufficient for frequently purchased products. If internal information is inadequate, past knowledge will not suffice, and risk of making a wrong decision is high, an external information search will be necessary. The principal sources for gaining information are through friends and family, public resources, and marketing sources such as advertisements and sales people.

Seeking information aids in the clarification of a given problem. Once this is accomplished, one must evaluate the information. The next stage, Evaluation, leads a buyer through a process of comparing individual product features. He compares these attributes against his personal performance expectations. Each product will be ranked, based on the buyer's perceived value of acceptable choices.

Once expectations are met, the buyer may decide purchase the product with the greatest perceived value. The buyer has now arrived at the Purchase Decision stage. There may be a time dimension between the decision and the actual purchase. The buyer may need time to decide from whom he would like to do business, and when he would like to make the purchase. Past experiences, atmosphere of the store, added benefits such as warranties, and many other factors may have influence during the decision. After a decision has been made and a transaction occurs, the buyer will reflect back on the overall process.

He will evaluate his experience by weighing his initial expectations against the added benefits he received from the purchase. This reflection will either generate a level of satisfaction or dissatisfaction. Either way, the experience gained through this decision-making process is stored in memory. Therefore, each purchase will influence the buyer's future behavior. If he is continually satisfied with a specific brand or product, he will continue to make the same decisions. Buyer behavior can be predictable in the sense that satisfaction promotes a willingness to purchase and dissatisfaction guarantees that a customer will seek alternative solutions.

Creating a single model that can ensure constant satisfaction poses as a problem with no single concrete answer. The decision-making model provides marketers with a foundation, offering them valuable insight for the creation of more detailed measuring tools. Buyers are armed with a multitude of internal influences as they make their way through the decision-making process. These influences include sociocultural, social and psychological factors. Among these are personal attitudes, perceptions, learning and memory, group influences, opinion leadership personality, and a self concept that influence a buyer's behavior in a positive or negative way at any point in the decision process. By understanding this process, marketers can observe, record, measure the behavior of a buyer and learn what needs to be done in order to create a positive experience.

Gaining sociocultural knowledge of buyers can give important information about specific cultural and social class factors. Religious beliefs, customs, and income levels are all important considerations when targeting a specific market. Psychological influences can help measure the effort and tactics needed to motivate the buyer's willingness to purchase a product. Personal needs may also be influenced by opinion leaders, reference groups, and family members. Studying these factors can assist with the development of a marketing strategy to demonstrate how a product should be presented, (as an anal irritation soother or facial astringent) and who should be providing the information. The marketing concept, when applied properly, can increase a firm's performance.

Through the marketing concept philosophy, business prosperity rests in the hands of its ability to satisfy the customer's needs (Woods 1981). Meeting a customer's needs can be accomplished more effectively if a marketer is aware of who his customers are and what they want. Successful research allows a business to use its current resources to develop products tailored to meet the expectations of its customers. Additional information gained through measuring and analyzing psycho graphic information directs a firm's ability to initiate a successful marketing strategy. A sound strategy will enable a company to successfully produce a product that appeals to a majority in the target market. Observation of the consumer allows for the creation of a product that provides benefits to the consumer and reaches them in a way they prefer.

Psycho graphics will enable a firm to set prices suitable to its customers, where gained value exceeds cost while still generating profit. It helps a firm decide on an appropriate time and place to sell and can be used to promote the product successfully. Strategic information can be useful for a wide variety of companies, from those selling luxury goods such as sports cars to those selling indistinguishable products such as toilet paper. Developing an organized market strategy is extremely useful. However, it would be impossible to appeal to all buyers in the market when using a single strategy.

A product must be described differently depending on the audience. Market segmentation is defined as "The process of subdividing a market into distinct subsets of customers that behave in the same way or have similar needs" (web). The world is too large and diversified for a single marketing mix to appeal to everyone. Segmentation allows a product's benefits to be described in ways that impact a smaller segment. Segments are grouped based on similar characteristics, lifestyle choices and other similar qualities.

This practice would not be possible without the ability to measure the population. Similar product features have different value to different groups of people. Marketers distinguish between different segments by evaluating their needs and deliver different messages based on what will appeal to them. Marketing an ice-cold beer during the early spring months in Phoenix would probably work.

Appealing to a population in Alaska during the same time period, may not work unless the message is changed. To segment properly, detailed information must be obtained in relation to the buyer's preferences and used in a precise manner designed to influence demand. The properly deciphered information gained through measuring the personal, psychological and social influences can prove to be an extremely valuable way to develop market strategy and segmentation. When monitored carefully, the analysis of this information provides a company with useful information. Firms can recognize the need for a new product, and can help in a decision to reposition an old product. It can show how existing products could be modified to increase perceived benefits to a given segment.

Measuring can aid in the creation of new promotional strategies to match a change in culture. They can even help in the exploration of improved distribution channels. All of these factors can improve a firm's ability to gain a competitive edge over its competition by creating an image of greater value for the consumer. Usage Measurement techniques are used to gain information about behavior. Assumptions can be made based on these measurements to predict how buyers will react to marketing techniques. Measuring attitudes can be helpful to a marketer because a buyer's attitudes are lasting impressions that influence their perceptions of stimuli.

Attitudes are usually measured on specialized scales. "Non comparative rating scales require the consumer to evaluate an object or an attribute of the object without directly comparing it to another object". (Hawkins, Best, Coney, 1998 pp. 767) Memory is measured because it is important to understand how to develop strategies that will leave a lasting impression in potential buyers. An effective advertising campaign should draw attention from the audience and cause them to store the information in their long-term memory. Developing a strong product image can motivate a customer to buy your product, so understanding how this can be done effectively entails in-depth testing and analysis of a consumer's buying behavior.

Measuring these results will provide appropriate directions to pursue. A keen knowledge of buyer behavior can be very useful in the market place. "Marketing managers who really understand their customers often develop better products, services, promotional strategies, etc. and are most times able to foster sustainable competitive advantages in the marketplace" (web). In the market place, it is important to develop a detailed competitive marketing strategy, beginning with an overall objective. The objective should include a desire to meet the needs of current and future customers. This can be accomplished by utilizing business strengths and grasping a firm understanding of the competitive arena.

Goals should be clearly defined and focus on increasing the appeal of consumers by distancing the company from its competitors. Information should be gathered to research cultural influences, cultural values and demographics such as location, income levels, and age. A marketer must create an effective way to identify with target customers by providing a product with the best attributes, giving them a sensible reason to buy. Suitable prices must be carefully assessed. If the price is set too high, customers may explore alternative solutions. When a price is set too low, customers may perceive the product as having lesser quality.

Low prices could prevent a company from investing money into the creation of market barriers. A successful marketer should also strive to produce innovative products in response to its customers' needs. Determining the realm of market coverage is also an important part of the development of the strategy. A choice should be made among three basic possibilities. Broad market coverage uses a common strategy across all segments. Broad market coverage with tailored strategies can be used when preferences for each segment require a different approach.

Focusing coverage of a single segment within a market can be effectively used to cater to the specific needs of one segment. Each of these possibilities places importance on different attributes desired by the customer. Focused coverage is used to create a narrow scope capable of placing emphasis on customer value. Tailoring strategies focuses on costs.

Broad market coverage provides convenience. An appropriate scope must be chosen with the customer in mind. The product will fail unless its placement in the market matches consumer expectations. Measuring consumer behavior is a crucial component involved in productive implementation of a marketing strategy. Decisions during the creation of this strategy should not be made until the consumers reaction has been taken into account. To predict possible reactions a marketer will study buyer behavior through the development of theory or models.

Theories and models are designed after data and statistical information describing characteristics about behavior have been collected then measured. Measurement models are useful tools for measuring buyer behavior because they allow different mathematical and statistical operations to be carried out (O', 1992). The nominal scale is used to measure individuals and classes. This model is used to assign numerical value to categorize results. Very little information can be gained about behavior using a nominal scale technique. The ordinal scale is used to rank results.

The calculation of brand preferences may be used to rate a product's desirability among consumers. The interval scale is used to measure distances between items. Although this technique has an arbitrary zero point, it is still possible to reflect a measurement of distance. The ratio scale does have a meaningful zero point which is used to measure data through multiplication and division.

This information is analyzed, interpreted, and then retested to check the validity of the measured results. The scientific method model is the most commonly used research method used by marketers. When using this research method, an applicable theory should be designed, such as "sex will sell to this target market". A hypothesis should be made to test the theory. This hypothesis could be something to the effect of; "using attractive models in our advertisement campaign will increase revenue, increase our customer base and appeal to a larger demographic region". Merely making this statement by observed data is insufficient.

The hypothesis must be tested to prove validity. The hypothesis test could be conducted among a smaller random sample that represents the entire target market as a whole. Conducting multiple tests can help prevent incorrect results. Repeat testing using similar measurement tools in different situations will give a more accurate reading of the results. If the test reports different results, then the hypothesis should be modified and retested. If the results are similar and match the hypothesis then that marketing strategy could be put to use throughout the target market.

A marketer uses these techniques to develop models, capable of measuring applicable results. Once these results are measured clearly, they will facilitate a plan of action. These strategies are used by many companies around the world. Effective use of these measuring tools can have positive results. However, if used incorrectly, they may prove to create serious problems. Supporting Evidence Measuring buyer behavior must be conducted with cautious precision.

Incorrect interpretation of collected data could lead to undesirable results. A failure or misrepresentation of data could potentially cause severe economical consequences and damage a company's reputation among consumers. Mars Incorporated experienced a devastating economic loss in the United Kingdom after failing to reposition the Mars bar effectively. After measuring a change in the populations' increasing health conscious behavior, Mar inc. attempted to change its slogan so it would appeal to more women and young girls. In 2002 they decided to abandon their well-known "A mars a day helps you work, rest and play" line and introduced "Pleasure you can measure".

Since this slogan was introduced, Mars inc. had constant decrease in sales. Sales dropped 11% during the year, while Cadbury Dairy Milk increased sales by 13% (Haymarket Publishing services, 2004). This difference between companies suggests that difficulties Mars Inc. experienced could not be blamed on the increase in weight conscious consumers. Mars inc. was able to measure a change in the country, but failed to utilize that information correctly. On January 1, 2005 Blockbuster launched its "No more late-fee" campaign. This campaign was developed after Blockbuster conducted surveys that measured an overwhelming dissatisfaction with its late-fee policy and aggressive fee collection tactics, including the use of collection agencies.

The campaign was an overwhelming success in January. Unlike Mars, Blockbuster developed a new slogan creating an obvious return in sales. However, they misled consumers by failing to inform them that this new policy would also force customers to buy late movies if not returned within eight days. This deceptive campaign leads customers to believe that no fee, even if the movie was returned late, would be incurred. Blockbuster used an effective, but unethical. The measurement of buyer behavior can be an extremely effective tool for predicting consumer response.

Blockbuster knew that this slogan would attract new consumers and increase loyalty. Companies must adhere to ethical standards, and should not attract customers through dishonest or incomplete means. If a business chooses to operate unethically, they may suffer consequences. The state of New Jersey on February 18, 2005 on grounds of fraudulent business practices (Munoz 2005). It is possible to effectively measure buyer behavior and apply that information to create an ethical and profitable marketing strategy. Pepsi Co. has attained a great deal of success throughout the years by demonstrating a superior ability to relate to its target audience, providing value and satisfaction.

During the 1960's Pepsi-Cola launched its "Pepsi Generation" campaign with intentions of cornering the "youth market" (Hollander, Germain 1993, p. 2). Pepsi-Cola used the evaluation of demographic and psycho graphic data to locate its target consumer segments. This information was used to develop a value-based price strategy, rather than a cost-based strategy and focused their efforts to appeal to youth and those who wished to feel young. This was the first time segmentation was used in the soft drink industry.

This strategy eventually transformed Pepsi into a symbol for youthfulness. Segmentation made it possible for Pepsi to reach adult consumers by tailoring to their specific attitudes and perceptions. Pepsi Co. reached its adult customers by utilizing market strategies to create a sense of nostalgia. Pepsi has continued to build off of these original practices while creatively reacting to the progression and changing cultural behavior. Six years ago, Pepsi co. launched its newest campaign, increasing the bar in the soft drink industry once again. The "Drink Pepsi, get stuff" has been a tremendous success.

Pepsi Co. redesigned it logo in order to catch the eye. While continuing to focus on its youthful attractiveness, the recognition of present cultural changes forced the company to develop a plan with the ability to increase the value. This was accomplished through a rewards program. Each bottle cap was given a value.

Customers were encouraged to collect their caps and exchange them for merchandise. The addition of this concept to its already stellar strategy triggered enthusiastic support. The introduction of Pepsi Stuff was strategically timed to compete with Coca-Cola, during the Atlanta summer Olympic Games. Coke controlled the rights allowing advertising advantages. Pepsi's strategy prevailed, outperforming Coke by a growth rate three times larger. Evidence can be found not only in examples of companies, but also by looking at academic research conducted by practitioners to understand what it is that motivates a consumer's behavior.

Engel, Blackwell, and Mini ard (1990, p. 306) suggest that "attitude can predict behavior". Thus, if one is interested in predicting car buyer behavior, an assessment of potential buyer attitude is needed. Further, Kasper (1988) indicates a connections between perceptions (of brand loyalty) and subsequent behavior. The following is a general formulation for hypotheses relating buyer attitude to buyer behavior. The analysis of this research was conducted by Align B. King (1996) A major goal of this research was to determine what strategic marketing implications new findings about American buyers are for American, Japanese, and European luxury car manufacturers. Consumers have concrete perceptions about products from specific country origins, according to Brown, et. al.

(1987) and Han (1989). It is therefore important that specific consumer behavior be related to specific attitude about cars from specific sources. It is easy to understand that if potential buyers of a luxury car expect a particular level of comfort, their intention to purchase a luxury car that they think provides that particular level of comfort will be higher than their intention to purchase a luxury car that does not provide such a particular level of comfort. The same logic applies to the other attitude variables: safety, durability, performance, etc. In this experiment, a selection of consumers who were known to own three to five year old luxury cars were drawn from a population of car owners with cars registered in the State of Maryland. One thousand respondents were selected.

This sample was selected because these buyers had a reasonable probability of buying another luxury car. These selected consumers were sent a survey asking that they select their top five product features that "would come to mind" with respect to luxury cars made by American, European, and Japanese manufacturers, and what were their perceived characteristics of an ideal car. A numerical value was computed that reflected the overall weighted value of the perception for each car characteristic. This allowed the use of analysis of variance to be used to determine if one or another category best fit the ideal pattern of all the respondents.

The only product characteristics American luxury cars scored highly on with European and Japanese car owners was luxury. Because American cars scored very low on the other tested product characteristics of value, quality and durability, which were rated highly desirable by European and Japanese owners, it will be necessary for American car firms to develop strategies to change such perceptions. It was found that these three product characteristics need to be projected in a variety of promotional efforts to potentially lure present owners of European and Japanese luxury cars to buy American brands. The demographics of the respondents indicate that the American brand car owner is older (i.e. age over forty five) and more than twenty percent are retired.

These demographics are both a marketing strength and a marketing weakness. It is strength in that the demographically important baby boomers as they grow older might switch their buying preferences to American brands that excel in comfort and are perceived to have status with Americans. The weakness is that older markets 'die out'. Presently, many of these middle aged respondents tend to own the European or the Japanese luxury cars. It would be a marketing weakness if these buyers retain their preferences for the European and Japanese makes. Summary Measuring buyer behavior is a valuable way for a marketer to gain knowledge about current and perspective customers.

A consumer has many choices when deciding which product to buy. His final decision to purchase a product is based on perceptions and past experiences in the market place and information he has acquired while searching for the product that best suits his needs and desires. He will stop searching once he finds a suitable product that meets his expectations and purchase that product. The consumer decision-making model was developed to allow marketers to evaluate each stage that consumer travels through when gaining the motivation to purchase a product, searching the market place for alternatives, developing expectations to evaluate, and making a final decision to purchase or continue looking. Gaining an understanding of a consumer's thought process and buying behavior can help a marketer develop an effective strategy for reaching a customer in a positive and effective manner.

The main goal of a business is to satisfy its customers. This marketing concept should be the motivation that drives marketing managers to measure its customers and constantly strive to increase their level of satisfaction. To do this, marketing managers attempt to develop successful marketing strategies. Marketing strategies should be structured to appeal to consumers by creating specific objectives and a course of action designed to meet the needs of consumers. Once again, this could not be accomplished without gaining knowledge about what it is that a consumer is looking for. Understanding influential factors such as a person's attitudes, who and what influences those decisions and how he can be reached must be identified clearly before a strategy can be implemented.

Cultural differences are a valuable factor to consider when segmenting a population and targeting appropriate buyers. Populations with differing cultural habits and beliefs must be addressed differently. Gaining knowledge about cultural influences can be very rewarding for a marketer. The measurement of buyer behavior can be used in a variety of ways. Marketers can collect data through observation, conducting surveys, or asking for feedback from current customers. The most common way a marketer will measure behavior is through the use of the scientific method.

They will create a hypothesis or develop a model to make predictions about behavior. They will collect data and use statistical information to test these hypotheses. Theories will be developed after rigorous testing has proven their hypothesis to be correct. However, not all hypotheses are correct. If testing shows that they are incorrect, the hypothesis will be modified and retested until useable information has been developed. Successful and unsuccessful implementations of strategy can be witnessed in the practices of companies who actually use this knowledge.

Blockbuster took advantage of the information it gained on consumer behavior. They experienced a large increase in profits, but are currently being sued because of their unethical techniques used to trick its customers. Pepsi co. shows how a company can successfully target a customer base (youth), have that target audience grow to encompass a larger customer base (adults with youth nostalgia), and stand the test of time to arise as Coca Cola's only legitimate competitor. Conclusion Every Sunday I follow the same routine. I wake up, slightly later than my usual weekday regiment. I take a shower, washing with my Dial soap, and my Herbal Essences shampoo.

I put on a pair of my Adidas sneakers, Levi jeans and a Hanes tee-shirt. I grab my shopping list and head for the grocery store to buy my supplies for the upcoming week. With shopping cart in hand I head for the first aisle as I look down at my list. "Toothpaste" is penciled in at the top. Without the slightest hesitation, I grab a box of Crest Whitening Toothpaste, as if it were the only box on the shelf.

Another glance at my list reveals the word "razors". Naturally, I head down the aisle and pick up the first box I see, Mach 3 Turbo with the lubricating strip. I continue walking through the store, putting my supplies into the cart then head for the checkout line. I pay for everything, including my overpriced razors without even flinching. My buying behavior in this example is not rash.

I have been completely satisfied with all of these purchases in the past; therefore, it is much easier for me to repeat these purchases rather than evaluating every available option. Marketers spend a great deal of effort trying to develop a strategy that will allow them to ensure that their product will be accepted in the market place. In order for them to do this, they must understand the cognitive process a consumer travels along before the exchange of money occurs. Buyer behavior is an incredibly detailed process. To create a marketing strategy that would ensure a sale would be sublime.

Marketers have been studying buyer behavior for centuries, trying to gain an in depth understanding as to why consumers choose to buy certain products and choose not to buy equal alternatives to those products. Every day millions of consumers worldwide enter stores and purchase products. This seems like a simple concept, but what if you were the one manufacturing the product. How will you convince the consumer that your product is more desirable than that of your competitors? Consumers are constantly being bombarded with advertisements, directing them to purchase a specific product or service.

The livelihood of a business rests in the hands of consumers. If they don't buy what the business is selling, then that business will be unable to compete in the marketplace. With so many available choices, how can marketers persuade the consumer to buy the specific products that they offer? It is imperative that a marketer makes his product seem more desirable, give greater satisfaction to the consumer, and make them feel that the value they receive is greater than the price they are paying; they must establish a level of trust. To accomplish this, a marketer will measure a consumer's buyer behavior.

Bob Wayland, a vice president with Mercer Management Consulting said: 'The paradigm has shifted. Products come and go. The unit of value today is the customer relationship' (Jacob, 1994: 215). Managers are coming to the realization that measuring improvements in product attributes, quality, and service is not enough. (Holden, 1997) The answer is to improve products based on the expectations of the consumer. A product should not be improved unless its improvements will make it more desirable to the customer.

Measuring buyer behavior is important because it presents an image, for marketers that can clearly define what it is that a customer wants, and how they wish to be reached. A company that creates a product designed specifically for the consumer and uses incentives that the consumer expressly desires will generate a loyal customer who will buy from that company again. A marketer can determine what these characteristics are if he takes the time to get to know his customer.

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