The Effect of Consumer Behaviour in Marketing of an Organization

Consumer behaviors control the type of marketing strategy that organizations such as small
businesses employ, so they conduct studies to determine which strategies are likely to prove
most effective. Small businesses need to know the members of their target audience, what they
want, where they are located and how they'll react to product promotions. They gather this
information via surveys and studying data regarding the past behavior of consumers. Data is
obtained from a variety of sources such as marketing databases, sales history and the Internet.

Sales Forecasts

Organizations study past consumer behaviors to determine future sales. Sales forecasts
estimate the expected sales for a particular market during a specified time period. Sales
forecasts cannot be higher than the market potential and usually fall short of expectations.
Different methods exist for forecasting sales, most of which revolve around obtaining
information directly from past buyers. Some examples of forecasting methods are quantitative
and qualitative. Quantitative forecasts predict the sales of products based on past results and
qualitative forecasts predict sales based on expert opinions in the field.

Research Surveys

Research surveys are conducted for the purpose of studying consumer behaviors. They help
companies learn what consumers want, as well as how they respond to advertising. They also
help pinpoint potential problems. Some examples of research surveys are new-product concept
tests, product use tests and brand name recognition. Organizations conduct surveys in person,
on the phone, through the mail and online. These surveys target specific population groups
who share a similar set of characteristics.

Internet Research

Companies, including small businesses, use the Internet to conduct much of their research,
monitoring the Web-based behavior of consumers. Based on their findings, organizations
determine the right prices, attributes and sales promotions for their products. They also reveal
the optimal places and market conditions in which to sell. The Internet is a cost-effective tool
marketing research tool because it pinpoints target areas and is flexible enough to adapt to the
changing demands of consumers.

Market Sensing

Market sensing processes can help small businesses develop a competitive advantage by giving
them a deeper understanding of customers. Organizations use different resources to study
consumer behavior, and the process of compiling that data into a marketing and management
information database is called market sensing. The database provides the framework for
integrating information and presenting it to management for decision-making purposes.
Social Class in Consumer Behaviour

In a social class, people try to make the same kind of purchases as are expected by their peers.
Marketeers try to target their products on class-based market segments.

Upper Upper Class

Upper-Uppers are the social elite who live on inherited wealth and have well-known families.
They maintain more than one home and send their children tothe best schools. They are in the
market for jewelry, antiques, homes, and foreignvacations. While small as group they serve as a
reference group to others tothe extent that other social classes imitate their consumption
decisions.

Lower Upper Class

Lower Uppers are persons who have earned high income or wealth through exceptional ability
in their profession or business. They usually come from the middle-class. They tend to be active
in social and civic affairs and seek to buy the symbols of social status for themselves and their
children, such as expensive cars, homes and schooling. Their ambition is to be accepted and the
upper-upper status, a status that is more likely to be achieved by their children than
themselves.

Upper Middle Class

Upper Middles possess neither family status nor unusual wealth. The primarily concerned with
“career”. They have attained positions as professionals, independent businesspersons, and
corporate managers. They believe in education and want their children to develop professional
or administrative skills so that they will not drop into the lower stratum. They are civic minded
and are a quality market for good clothes, homes, furniture and appliances.

Lower Middle Class

The common man represents this group. Some are highly paid workers and small business
owners and may not have a very high education.This class aspires for respectability. They wish
to have well maintained houses in good neighbourhoods. Marketeers sell products, to this
group, which have respectability and social acceptance in the society.

Upper Lower Class

Upper Lowers are working, though their living standard is just above the poverty line. They
perform unskilled work and are poorly paid. Often they are educationally deficient. Although
they fall near the poverty line, they manage to maintain some level of cleanliness
Lower Lower Class
Lower Lowers are visibly poverty-stricken and usually out of work. Some are not interested in
finding permanent jobs and most are dependent in charity for income. Their homes and
possessions are “dirty, ragged, and broken-down”.

The Engel Kollat Blackwell Model of Consumer Behavior

The Engel Kollat Blackwell Model of Consumer Behavior was created to describe the increasing,
fast-growing body of knowledge concerning consumer behavior. This model, like in other models,
has gone through many revisions to improve its descriptive ability of the basic relationships
between components and sub-components.

The Engel Kollat Blackwell Model of Consumer Behavior or consists of four distinct stages;

1. Information Input Stage: At this stage the consumer gets information from marketing
and non-marketing sources, which also influence the problem recognition stage of the
decision-making process. If the consumer still does not arrive to a specific decision, the
search for external information will be activated in order to arrive to a choice or in some
cases if the consumer experience dissonance because the selected alternative is less
satisfactory than expected.
2. Information Processing Stage: This stage consists of the consumer’s exposure, attention,
perception, acceptance, and retention of incoming information. The consumer must first
be exposed to the message, allocate space for this information, interpret the stimuli, and
retain the message by transferring the input to long-term memory.
3. Decision Process Stage: The central focus of the model is on five basic decision-process
stages: Problem recognition, search for alternatives, alternate evaluation (during which
beliefs may lead to the formation of attitudes, which in turn may result in a purchase
intention) purchase, and outcomes. But it is not necessary for every consumer to go
through all these stages; it depends on whether it is an extended or a routine problem-
solving behavior.
4. Variables Influencing the Decision Process: This stage consists of individual and
environmental influences that affect all five stages of the decision process. Individual
characteristics include motives, values, lifestyle, and personality; the social influences are
culture, reference groups, and family. Situational influences, such as a consumer’s
financial condition, also influence the decision process.
It can be seen that many of the elements of the model are similar to Howard Sheth model of
consumer behavior, however the structure of presentation and relationship between the
variables differs somewhat.

The Engel Kollat Blackwell Model of Consumer Behavior incorporates many items, which
influence consumer decision-making such as values, lifestyle, personality and culture. The model
did not show what factors shape these items, and why different types of personality can produce
different decision-making? How will we apply these values to cope with different personalities?
Religion can explain some behavioral characteristics of the consumer, and this will lead to better
understanding of the model and will give more comprehensive view on decision-making.

The Freudian Theory of Personality

Sigmund Freud is considered to be the father of psychiatry. Among his many accomplishments
is, arguably, the most far-reaching personality schema in psychology: the Freudian theory of
personality. It has been the focus of many additions, modifications, and various interpretations
given to its core points. Despite many reincarnations, Freud’s theory is criticized by many (e.g.
for its perceived sexism) and it remains the focus of hot discussions on its relevance today.

Etymology

Freud was a one of a kind thinker. There can be little question that he was influenced by earlier
thinking regarding the human mind, especially the idea of there being activity within the mind
at a conscious and unconscious level yet his approach to these topics was largely conceptual.
His theoretical thoughts were as original as they were unique. It is a testament to Freud’s mind
to know that whether you agree, disagree, or are ambivalent about his theory, it remains as a
theoretical cornerstone in his field of expertise.

Definition

Human Personality: The adult personality emerges as a composite of early childhood

experiences, based on how these experiences are consciously and unconsciously processed
within human developmental stages, and how these experiences shape the personality.

Not every person completes the necessary tasks of every developmental stage. When they
don’t, the results can be a mental condition requiring psychoanalysis to achieve proper
functioning.

Stages of Development

Believing that most human suffering is determined during childhood development, Freud
placed emphasis on the five stages of psychosexual development. As a child passes through
these stages unresolved conflicts between physical drives and social expectation may arise.
These stages are:

 Oral (0 – 1.5 years of age): Fixation on all things oral. If not satisfactorily met there is the
likelihood of developing negative oral habits or behaviors.
 Anal (1.5 to 3 years of age): As indicated this stage is primarily related to developing
healthy toilet training habits.
 Phallic (3 – 5 year of age): The development of healthy substitutes for the sexual
attraction boys and girls have toward a parent of the opposite gender.
 Latency (5 – 12 years of age): The development of healthy dormant sexual feelings for
the opposite sex.
 Genital (12 – adulthood): All tasks from the previous four stages are integrated into the
mind allowing for the onset of healthy sexual feelings and behaviors.

It is during these stages of development that the experiences are filtered through the three
levels of the human mind. It is from these structures and the inherent conflicts that arise in the
mind that personality is shaped. According to Freud while there is an interdependence among
these three levels, each level also serves a purpose in personality development. Within this
theory the ability of a person to resolve internal conflicts at specific stages of their development
determines future coping and functioning ability as a fully-mature adult.

Super ego

Each stage is processed through Freud’s concept of the human mind as a three tier system
consisting of the superego, the ego, and the id. The super ego functions at a conscious level. It
serves as a type of screening center for what is going on. It is at this level that society and
parental guidance is weighed against personal pleasure and gain as directed by ones id.
Obviously, this puts in motion situations ripe for conflict.

Ego

Much like a judge in a trial, once experiences are processed through the superego and the id
they fall into the ego to mediate a satisfactory outcome. Originally, Freud used the word ego to
mean a sense of self, but later revised it to mean a set of psychic functions such as judgment,
tolerance, reality testing, control, planning, defense, synthesis of information, intellectual
functioning, and memory.

Id

The egocentric center of the human universe, Freud believed that within this one level, the id is
constantly fighting to have our way in everything we undertake.

Critique
So where does this leave us? In the words of Jim Morrison in a song he wrote for the Doors “I
want the world and I want it NOW!” seems to be on the tip of many persons lips. It could have
been entitled Ode to the Id.

Trait Theory

There are many mental illnesses that place the id in the forefront decision making. In particular,
there are those whose lives are lived on a totally narcissistic level. Then there are those with
anti-social personalities, psychotic like illnesses, and more. In the world of Freud, it is the
neurotic person that is most affected by the principles of his theory.

As a result Freud laid out his plan for treatment: psychoanalysis. The treatment has been in use
for many years with many adaptations given to it. On the plus side, psychoanalysis do present a
client with the structure and time to resolve neurotic issues. On the negative side there is
always expressed concern over the cost. Being that it does take time for psychoanalysis to be
effective there is an associated cost that can be prohibitive.

If someone asked you to describe a close friend's personality, what kind of things would you
say? A few things that might come to mind are descriptive terms, such as "outgoing," "kind"
and "even-tempered." All of these represent traits. What exactly does this the word "trait"
mean?

A trait can be thought of as a relatively stable characteristic that causes individuals to behave in
certain ways. The trait approach to personality is one of the major theoretical areas in the study
of personality. The trait theory suggests that individual personalities are composed of these
broad dispositions.

Unlike many other theories of personality, such as psychoanalytic or humanistic theories, the
trait approach to personality is focused on differences between individuals. The combination
and interaction of various traits form a personality that is unique to each individual. Trait theory
is focused on identifying and measuring these individual personality characteristics.

Gordon Allport’s Trait Theory

In 1936, psychologist Gordon Allport found that one English-language dictionary alone
contained more than 4,000 words describing different personality traits. He categorized these
traits into three levels:

Cardinal Traits: These are traits that dominate an individual’s whole life, often to the point that
the person becomes known specifically for these traits.

People with such personalities can become so well-known for these traits that their names are
often synonymous with these qualities. Consider the origin and meaning of the following
descriptive terms: Machiavellian, narcissistic, Don Juan, Christ-like, etc.
Allport suggested that cardinal traits are rare and tend to develop later in life.

Central Traits: These are the general characteristics that form the basic foundations of
personality. These central traits, while not as dominating as cardinal traits are the major
characteristics you might use to describe another person.

Terms such as "intelligent," "honest," "shy," and "anxious" are considered central traits.

Secondary Traits: These are the traits that are sometimes related to attitudes or preferences.
They often appear only in certain situations or under specific circumstances. Some examples
would be getting anxious when speaking to a group or impatient while waiting in line.

CRM theory

Customer Relationship Management, commonly referred to as CRM, is defined as the

customer-oriented approach of a business that comprises of analysis, planning, controlling and
co-ordinating of the relationship between a company and its customers; the relationship is
developed and nurtured by means of various state-of-the-art technologies required for
information gathering and database maintenance Buttle (2008). According to Siems (2010), it is
viewed as the combination of three key elements i.e. customer strategies, technology and
business processes; when these three aspects are taken into account, an organisation can get
in-depth information about its customers and achieve much enhanced customer loyalty and
increased profitability.

The primary role of CRM is to engage each customer in a productive exchange of dialogue that
will help a company to customize its product or service offerings in ways that will ensure that
the customers are attracted, cordial relations with them are developed and they can be
retained for long time by offering them higher level of offerings (Yim, Anderson &
Swaminathan, 2004).

CRM allows the companies to emphasize on the areas that are important for the customers by
monitoring their behaviour as it gives insights about their varying needs, demands and
preferences. When a valuable pool of data is gathered, an organisation can successfully offer a
service to a customer that exceeds their expectation level; in order to make successive
progression, the company will have to employ the mechanisms that will improve the service
excellence such as using multiple communication channels like sales and marketing.

Consumer Attitude and Belief

Belief and attitudes are closely linked to values. A belief is an organized pattern of knowledge
that an individual holds as true about his or her world. These beliefs may be based on
knowledge, faith, or hearsay. Consumers tend to develop a set of beliefs about a product’s
attributes and then through these beliefs form a brand image, a set of beliefs about a particular
brand. An attitude is a learned tendency to respond consistently toward a given object, such as
a brand. Attitudes rest on an individual’s value system, which represents personal standards of
good and bad, right and wrong.

Negative attitude changed: Once formed, attitudes can be very difficult to change. Thus, if a
consumer has a negative attitude toward a particular issue it will take considerable effort to
change what they believe to be true. Marketers facing consumers who have a negative attitude
toward their product must work to identify the key issues shaping a consumer’s attitude then
adjust marketing decisions (e.g., advertising) in an effort to change the attitude. For companies
competing against strong rivals to whom loyal consumers exhibit a positive attitude, an
important strategy is to work to see why consumers feel positive toward the competitor and
then try to meet or beat the competitor on these issues. Alternatively, a company can try to
locate customers who feel negatively toward the competitor and then increase awareness
among this group.
Consumer belief changed example: easier and cheaper to take traditional film to be developed
than it is to print their own digital photos. Kodak set up kiosks in retail outlets and let
consumers print their digital photos. The Kiosks eliminated the need for consumers to purchase
their own printer.

Alter beliefs: Change to relative importance of beliefs about an attribute. Change affect by
using classical conditioning, influence via attitude toward the ad, use repeated exposure.
Change Cognitions by alter beliefs (confidence, valence strength), alter importance weights,
introduce new beliefs, alter ideal points. Change behavior, use marketing promotions (free
coupons, sales)m alter the normative components, alter the important weights between
cognitive and normative components, alter the decision model used by customers
For example: Daimler Chrysler’s Jeep unit positions itself as being rugged but promotes its
luxury features

Classical Conditioning

Classical conditioning (also known as Pavlovian conditioning) is learning through association

and was discovered by Pavlov, a Russian physiologist. In simple terms two stimuli are linked
together to produce a new learned response in a person or animal.

John Watson proposed that the process of classical conditioning (based on Pavlov’s
observations) was able to explain all aspects of human psychology.

Everything from speech to emotional responses was simply patterns of stimulus and response.
Watson denied completely the existence of the mind or consciousness. Watson believed that all
individual differences in behavior were due to different experiences of learning.

Classical Conditioning Examples

There are three stages of classical conditioning. At each stage the stimuli and responses are
given special scientific terms:
Stage 1: Before Conditioning:

In this stage, the unconditioned stimulus (UCS) produces an unconditioned response (UCR) in
an organism.

In basic terms, this means that a stimulus in the environment has produced a behavior /
response which is unlearned (i.e., unconditioned) and therefore is a natural response which has
not been taught. In this respect, no new behavior has been learned yet.

For example, a stomach virus (UCS) would produce a response of nausea (UCR). In another
example, a perfume (UCS) could create a response of happiness or desire (UCR).

This stage also involves another stimulus which has no effect on a person and is called the
neutral stimulus (NS). The NS could be a person, object, place, etc.

The neutral stimulus in classical conditioning does not produce a response until it is paired with
the unconditioned stimulus.

Stage 2: During Conditioning:

During this stage a stimulus which produces no response (i.e., neutral) is associated with the
unconditioned stimulus at which point it now becomes known as the conditioned stimulus
(CS).

For example, a stomach virus (UCS) might be associated with eating a certain food such as
chocolate (CS). Also, perfume (UCS) might be associated with a specific person (CS).

For classical conditioning to be effective, the conditioned stimulus should occur before the
unconditioned stimulus, rather than after it, or during the same time. Thus, the conditioned
stimulus acts as a type of signal or cue for the unconditioned stimulus.

Often during this stage, the UCS must be associated with the CS on a number of occasions, or
trials, for learning to take place. However, one trail learning can happen on certain occasions
when it is not necessary for an association to be strengthened over time (such as being sick
after food poisoning or drinking too much alcohol).

Stage 3: After Conditioning:

Now the conditioned stimulus (CS) has been associated with the unconditioned stimulus (UCS)
to create a new conditioned response (CR).

For example, a person (CS) who has been associated with nice perfume (UCS) is now found
attractive (CR). Also, chocolate (CS) which was eaten before a person was sick with a virus (UCS)
now produces a response of nausea (CR).
 Operant Conditioning
Operant conditioning can be described as a process that attempts to modify behavior through
the use of positive and negative reinforcement. Through operant conditioning, an individual
makes an association between a particular behavior and a consequence.

 Example 1: Parents rewarding a child’s excellent grades with candy or some other prize.
 Example 2: A schoolteacher awards points to those students who are the most calm and well-
behaved. Students eventually realize that when they voluntarily become quieter and better
behaved, that they earn more points.
 Example 3: A form of reinforcement (such as food) is given to an animal every time the animal
(for example, a hungry lion) presses a level.

The term “operant conditioning” originated by the behaviorist B. F. Skinner, who believed that
one should focus on the external, observable causes of behavior (rather than try to unpack the
internal thoughts and motivations)
Reinforcement comes in two forms: positive and negative. We will explain this below.

Positive and negative reinforces

 Positive reinforces are favorable events or outcomes that are given to the individual after the
desired behavior. This may come in the form of praise, rewards, etc.
 Negative reinforces typically are characterized by the removal of an undesired or unpleasant
outcome after the desired behavior. A response is strengthened as something considered
negative is removed.

The goal in both of these cases of reinforcement is for the behavior to increase.