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Analysis of Consumer Behavior and Marketing Strategy Improvement

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 VI International Symposium Engineering Management and Competitiveness 2016 (EMC 2016)
17-18th June 2016, Kotor, Montenegro

ANALYSIS OF CONSUMER BEHAVIOR AND MARKETING

STRATEGY IMPROVEMENT
UDC: 005.5:685.8

Mihalj Bakator*
University of Novi Sad, Technical faculty “Mihajlo Pupin”, Zrenjanin, Republic of Serbia
e-mail: mihaljbakator@gmail.com
Dragica Ivin
University of Novi Sad, Technical faculty “Mihajlo Pupin”, Zrenjanin, Republic of Serbia
Đorđe Vuković
University of Novi Sad, Technical faculty “Mihajlo Pupin”, Zrenjanin, Republic of Serbia
Nikola Petrović
University of Novi Sad, Technical faculty “Mihajlo Pupin”, Zrenjanin, Republic of Serbia

ABSTRACT

Understanding consumer behavior is one of the pillars for building a strong company. The ever-changing market
puts a toll on organizations in a form of dynamic customer behavior. New products, new beliefs and overall
society psychology require thorough examination of market segments and consumer demands. After analyzing
customer behavior, organizations must realize a strong, flexible and effective marketing strategy which will
ensure sales and profit. This is achieved with strategic planning and objectifying the targeted market segment.

Key words: Consumer behavior, Planning, Marketing strategy, Market segment, Behavioral patterns

INTRODUCTION

Consumer behavior can be determined as the study of individuals, groups and organizations. Also, it
includes the processes used to select, secure, use and dispose products, services, experiences and to
satisfy needs and the impacts on the consumer and society (Shimp, 2013). Knowledge of consumer
behavior is very important for influencing decisions of the consumers in a variety of social fields.
Companies have to collect information about specific consumers involved in making marketing
decisions. More often than not conducting research it is necessary to get a wider picture of the
consumer needs.

Questions have to be asked so the company can find out the (Subhash, 2010):
 Consumers’ opinion about the products of companies and competitors
 Opinion about possible improvements of the products
 Reaction to new products
 Thoughts about the products in use
 Attitudes about the products
 Hopes and dreams of the consumers about new, present and past products they used

In today's dynamic business world, it is inevitable for success to understand consumer behavior as this
is the key to planning and managing. Market segments are often prone to change. There are time
windows which allow a product to reach its full potential, but after the window closes, a number of the
sold products drop to almost non-profitable numbers. This is due to rapid trend fluctuations in general.
Consumers tend to buy products because they are marked as trendy or cool. It is really hard to predict
these fluctuations. Companies must arrange market researches in such a manner that will bring the

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closest estimate of the next, ongoing or future trends on specific market segments. It is all about
placing, selling products at the right moment, at the right time and at the right place.

MARKET ANALYSIS

Consumers

The company must understand consumer behavior if it wants to anticipate and react to customer needs
and desires. Needs of customers are very complex and challenging to discover. Market research is a
must. There are different methods that are used in consumer/customer research (Nikolić, 2007):
 Analysis of sales data of past and planned promotional techniques
 Testing in forums and focus groups
 Conversation with staff or product users
 Questionnaires of past and present customers
 Surveys
 Testing product concepts
 Personal interview with focus groups
 Testing emotional responses to product and brand name
 Development of customer feedback forums
 Monitoring customer behavior on social media.

Before conducting any research methods the organization has to identify its research goals. Market
research alongside with consumer behavior research is very tiresome. Therefore, an adequate
documentation, goal definition and specific market targeting are the base points from which every
other research aspect is performed. Managers, teams and fieldworkers have to understand the whole
concept of the company they are working for, the product, the consumers and the past, present and
new customers. The first step is realizing what kind of product has to be sold. The next one is defining
crucial market segments. After that a thorough documentation is desirable. When everything is at
place, it is important to find a wide variety of potential customers so the research results are more
accurate.

Company

The company, before starting any research, has to understand its own ability to meet customer needs.
This requires evaluation of all segments of the company (Kotler, 2003). The evaluation starts from the
main production lines, the technology, the information infrastructure, knowledge base and worker
experience and expertise. Managers have to check if there is an established point from where the
company can start selling product to potential customers. Evaluation is crucial, because it shows from
the very start if the company is strong enough or prepared enough for a battle in the desired market.
When everything is in place, some research can be conducted and therefore product placement and
selling too. The company also must understand its own strengths and weaknesses (Kotler, 2015).
Failing to do so may result in serious consequences. Product misplacement, missed market segments,
zero sales and other threats are very likely to happen.

Competitors

When aiming a better position on the market, the competition and its strengths and capabilities appear
to be very influential factors. Understanding these factors requires the same amount of knowledge as it
does for the own company. Building an effective marketing strategy rolls around the consumer
behavior, the company's strengths and weaknesses and competition capabilities.

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 EMC 2016, 17-18th June 2016, Kotor, Montenegro

Marketing strategy has to be based on the answers to the questions like (Kaser, 2013):
 Which companies will be hurt if our company succeeds?
 How will the competitors respond when our company spreads in their market?
 What capabilities do the competitors have?
 What strategy is going to be used as a preventive measure when the competitors strike?
 What is Plan B?

The above mentioned questions are the most important ones. If the company doesn't have a good
answer to all of them, it shouldn't consider stepping in a new market segment.

MARKETING STRATEGY BASED ON CONSUMER BEHAVIOUR

The key in marketing strategy is to provide more value to the targeted customers than is provided by
its competitors. Customer value is the difference between all the benefits derived from total product
and all the costs of acquiring those benefits. (Hawkins, 2011) The company has to consider value from
the customer's viewpoint. Maybe a certain price is not a big deal for the company, but it is a deal
breaker for the customer. Pricing is difficult, because companies have to optimize it for the best profits
and also the more sales the better. A high price doesn't mean a bigger profit. A huge number of sales is
somewhat better, but only if it keeps the company going and growing. Organizations have to anticipate
the reactions and needs of consumers so it can deliver the best value for the best money, therefore
achieving the most profits. The basis of marketing strategy formulation is indeed consumer behaviour.
(see also Figure 1.)

Figure 1: Marketing strategy (Hawkins, 2011)

Marketing strategies have to be formulated. Strategies seek to provide the consumer more value than
the competition. Marketing strategy involves the marketing mix: products, price, communications,

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distribution and services. It has to be considered that an entire set of characteristics of a product is
determined as the total product. This so called total product is served to customers. The total product
engages with the market, giving value to maintain and boost the quality of life in general (Online
article - Customer research methods).

The main influential factors represent the perception or sensation of the product and the company.
Affects and beliefs of the consumer play a great role in the whole marketing strategy. Also, cognition
and social influences have an impact on the consumer. These factors have a so called two-way impact.
It means that the consumer determines these factors and at the same time these factors have an impact
on the consumer. Consumers define the informational structure around a product, the choices they
make and the preferences they have which are all parts of integral entity that is a consumer.
Communication allows information flow about the company and the product. It all comes down to
market research and developing the marketing strategy and delivering high value products for
affordable prices. (see also Figure 2)

Figure 2: Impact factors on the consumer (Hartline, 2011)

As seen, the above figure clearly shows the integrity of the consumer, company, product and impact
factors. They represent a unity which helps to define the marketing strategy. The company must take
in consideration every aspect of the market and every influential factor. Only then the company can
provide adequate products which will satisfy the needs and wishes of the consumer, automatically
ensuring profit and a stable market position. Very often the consumer has a different perception of the
product from the perception the company has to that product. This is due to misconception of the
purpose, quality or price of the product. There are very high quality low priced products which don't
sell as good as highly priced lower quality products. The price is the reason for the different
perception. Other situation is when a company develops a new, expensive technological innovation,
for example, a mobile device, and the company percepts this innovation as very valuable and asks a
higher price for the mobile device. However, the consumer doesn't consider that particular feature
innovative and doesn't want to pay extra for that innovation. The result is: the company loses money
on developing and advertising the new innovation, and it loses market position due to lack of interest
of the consumers. It is very important to have an objective view on any new product or innovation.

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CONCLUSION

In the modern business world an organization has to develop high quality, optimized valued, medium
priced products so it would ensure a solid market position. There are many impact factors which
determine the success of a new product or innovation. Perception of the product, communication
between consumers and overall market segment situation is crucial for understanding customer needs
and wishes. An organization which wants to enter a new market segment, has to make sure that the
competition is not fierce, and has a strategically developed plan to ensure a strong position on the new
market. This is where market research is necessary. Market research allows companies to get to know
its new, potential consumers. Optimizing and documenting every future step is very important.
Without market research it is like shooting without a scope. The company could "shoot its own leg" if
the market in which it wants to take a position, is not researched. Through various methods, the
company can get to know its new customers, and therefore ensure that the products it offers fulfill the
expectations of the customers.

We can conclude that even the strongest organizations, with the most money and the most innovative
products can fail, in a new market, if there is no thorough research. Consumers won't buy a product,
even if it has high quality and low price, if it doesn't fulfill their expectations and needs.

REFERENCES

Hawkins, M., (2011) Consumer Behavior: Building Marketing Strategy, 11th ed. New York, McGraw-Hill/Irwin
Online article - Customer research methods - source: https://www.business.qld.gov.au/business/starting/market-
customer-research/researching-customers/customer-research-methods accessed: 10.01.2016.
Kotler,. Ph., (2003). Marketing Insights from A to Z: 80 Concepts Every Manager Needs To Know. Hoboken,
New Jersey,John Wiley & Sons
Kotler, Ph., Keller, K. L., (2015). Marketing Management 15th ed. Essex, England, Pearson Education Limited
Kaser, K., (2013). Advertising & Sales Promotion. Mason, Ohio: South-Western CENGAGE Learning
Shimp, T. A., (2013). Advertising, Promotion and other aspects of Integrated Marketing Communications. 9th
ed. Mason, Ohio: South-Western CENGAGE
Nikolić, M., (2007). Strategijski menadžment. Tehnički fakultet “M. Pupin”, Zrenjanin
Subhash, C.,J., (2010). Marketing: Planning & Strategy.Self Published, Lulu publishing
Hartline, M.,D., Ferrell, O.C. (2011). Marketing Strategy. Mason, Ohio, South-Western, Cengage Learning,

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