Customer Value Appraisal and Consumer Trends

Consumer Attitudes and Trends

Consumer needs substantially differ from consumer wants during the process of becoming our customers. Marketing managers try to understand consumer needs (and unmet needs) while attempting to influence consumer wants. The hope is that consumer wants will be indistinguishable from needs in the mind of the consumer (or corporate purchasing agent). For example, consumers need toothpaste and businesses need spare parts for machinery, but we try to influence them to demand our taste, color, packaging, pricing, distribution, service, etc., and associate those characteristics with our brand.

Consumer attitudes are very different from consumer behavior and attitudes often are not good predictors of behavior. Marketing managers must understand that consumer attitudes as reported in surveys can vary widely from behavioral data, what they actually buy, and how they use the product. For example, a consumer, who is registered to vote, may tell you that they will vote for Republican candidate or that they did vote for the Republican party candidates in the last election; however, there are whole host of social context issues that influence what they will actually do at the time the decision is made or what they will actually say when asked to report what they did.

Marketing managers must develop intuition about customers’ needs, wants, and behaviors that allow them to recognize trends. Of course, competitors are also trying to do so as well, so there is a need to be timely in gathering and acting upon intelligence. It is the marketing department’s job to be evangelists within the organization. Consider also that such intuition must be grounded in current knowledge about the customer; intuition alone is no substitute for solid research.

Industry and Competitive Trends

Oftentimes, marketing managers must integrate data collected for their current research needs (i.e., primary) with data collected by the company or an outside party (i.e., secondary). Knowing when to collect data directly as opposed to repurposing existing data is a critical decision making skill. It is important for marketing managers to have knowledge of the industry and competitor actions to formulate and test hypotheses about trends. For example, it is pedestrian that security is required today in the provision of customer service and safeguarding of information technology networks, but what is the next trend? Business empires are built on such knowledge.

Customer Feedback

Sources of Customer Feedback – in any organization, the marketing manager must be capable of identifying the voice of the customer and representing that voice to the entire organization. Moreover, marketing managers cannot respond to every customer issues nor direct organizational resources toward every issue, instead there is a balance to be struck between statistical significance and business risk. For example, if we ignore all little issues and never follow up with customers, we run the risk of having customers view our customer feedback process as hogwash. Still, organizations have neither the time nor resources to address every issue. It is up to the marketing function to be arbiter of depth and magnitude of the customer’s voice.

Drivers of Customer Value

Customer value is in the eyes of the beholder. The depth and magnitude of the 4P’s (Product, Price, Place, and Promotion) should be defined by the marketing manager but the customer will interpret the value of the marketing mix on their own. Never forget this reality and in doing so delude your organization into thinking that customers “will eat whatever we set out for them.” The marketing manager is always challenged to take this understanding of what customer’s perceive as valuable and let it be embodied in all marketing strategies and operational tactics. Normally, consistent delivery of real customer value drives meaningful and profitable customer relationships.

Customer Acquisition and Retention Objectives

Marketing activities can be subdivided into those that are focused on acquisition, retaining and nurturing customers. Alternatively, one could think of these activities as getting, keeping, and growing customers. Important: it is often extremely expensive to acquire customers, moderately expensive to keep customers, and extremely profitable to grow existing customer relationships. Always establish clear objectives for getting, keeping, and growing customers relative to the marketing budget. Marketing managers will be evaluated by the accounting and finance function when the marketing budget is renewed. Pardon the analogy, but just like an army, how much food, bullets, and fuel you are given is a function of killing, capturing and taking territory away from the enemy. Moreover, you need long term objectives for each of the three activities but you are often judged on short term results; don’t be discouraged by this myopia.

Segmentation Analysis and Segment Profitability

Segmenting markets can be a difficult process but it is critical; it narrowly defines how you will profitably attack the marketplace in the minds of your customers relative to the competition. You will need access to customer data to make decisions on what variables to define your customers and purchase media to reach them. Demographics (i.e., age, gender, education, and income), Psychographics (i.e., personality, preferences, social group membership, etc.) and behaviors (i.e., hunter, smoker, shopper, student, etc.) are used to segment the market. Business markets are often carved up using industry classification, company size in annual sales volume, geographic region, and markets served, etc. Sometimes customer needs overlap the above segmentation variables and can be segmented based on needs. Marketing managers are ultimately faced with choosing the most actionable segments in terms of what is doable (i.e., operationally possible) and profitable (i.e., financially sound). There will be tradeoffs between segments and the investment in time and resources required to pursue the segments. Establishing informed segmentation priorities is critical.

Reference

Kerin, R.A., Hartley, S.W., Berkowitz, E.N., & Rudelius, W. (2006). Marketing. (8th ed.). New York: McGraw-Hill.

Selling Democracy to Iraq: Cross-Cultural Marketing Strategy

First Principles

As businesses globalize, the degree to which marketing strategies are standardized (i.e., not localized) within a culture is an important issue for marketing teams to consider. Product packaging, publicity campaigns, and advertising creative executions typically need fine-tuning from one culture and country (i.e., geographic area) to another to achieve maximum return on investment (ROI). However, the expense with respect to elapsed time, effort, and resources expended must be less than the incremental revenue attributable to tailoring the campaign for the culture or geographic area. Hawkins, Best, and Coney (2001) suggested seven cross-cultural considerations for framing the decision to localize geographic marketing campaigns:

• Homogenous Culture
• Product Needs Fulfilled
• Consumer Affordability
• Consumer Values and Behavior Patterns
• Distribution Channels, Regulations, and Applicable Laws
• Available Media to Impact Culture
• Ethics of Targeting Geographic Area
  
  

Application

For example, if an organization were to attempt marketing of democracy in a country with a large Islamic population, such as Iraq the following cross-cultural considerations should be addressed:

• Homogeneous Culture – The Iraqi population is far from homogenous and is comprised of three ethnic groups that traditionally have been in conflict over religious, social, and political issues.
• Product Needs Fulfilled – Democracy would help under-represented groups under the Sunni-controlled government, such as Kurds, Shia, and women, gain more voice in political dialogue. Is democracy needed or wanted in Iraq?
• Consumer Affordability – Can Iraqis afford the religious, social, and political capital required to implement and maintain democratic processes? Participating in democracy could have unanticipated costs to individuals as the adopt beliefs that may not be supported by friends, family, or neighbors.
• Consumer Values and Behavior Patterns – is individual choice or political representation important to the Iraqi people? Allowing women to vote in elections could be perceived as undermining traditional Islamic family values.
• Distribution Channels, Regulations, and Applicable Laws – in what ways is it possible to education the population on democracy, encourage democratic social structures, and make it legal for democratic political processes to take root? It may not be legal to sell or possess democracy or any other product.
• Available Media to Impact Culture – are radio, print, outdoor, and other media available to educate, encourage, and affect political processes toward democratic goals? Existing media infrastructure must be exist to promote awareness.
• Ethics of Targeting Geographic Area – is it ethical to encourage democracy in Iraq? Perhaps what is legal, desirable, or expedient is not ethical or in the best interest of the consumer.
  
  

The above application example of cross-cultural marketing strategies is not meant make a political statement but to show how marketing an idea, service, or product is highly dependent on the geographical and cultural context.

Reference

Hawkins, D.I., Best, R.J, & Coney, K.A. (2001). Consumer behavior: Building marketing strategy (8th ed.). New York: Irwin McGraw-Hill.

Auditing Consumer Behavior: A Process for Building Marketing Strategy

A complete understanding of the influences that affect consumer behavior is an essential foundation for building a marketing strategy. Hawkins, Best, and Coney (2001) suggested a process for identifying information associated with the critical decisions that marketing managers must make about major elements of marketing. The outline for auditing consumer behavior has been simplified and generalized below, but the execution of the process can be invaluable for identifying challenges and opportunities for improving marketing strategy.

Marketing Decision Areas

Market segmentation – division of all possible product users (i.e., consumers) into groups with similar needs to satisfy for product development and media selection.

Product positioning – determination of a desirable product or brand position in the mind of the consumer relative to competing brands.

Price – pricing policy consistent with the determined product position. The price is the all inclusive set of consideration that the consumer must tender in exchange for the product or service, such as time, patience, learning, and money.

Place (Distribution Strategy) – channel or distribution strategy, such as retail, wholesale, or Internet, etc. consistent with the determined product position at which title to the product is relinquished or the service is performed.

Promotion – advertising, visual packaging, publicity, promotion, website, telemarketing and direct sales force activities.

Product – physical product characteristics or service to be experienced for each market segment.

Customer satisfaction – post-purchase policies to promoted customer use, loyalty, reference and repeat purchases.

Customer Influences

External influences

• Culture, subculture, and values


• Demographics, income, and social class


• Reference groups and family / households


• Marketing activities by the company (e.g., product attributes, packaging,
  advertisements, sales presentation, and retail outlet)

Internal influences

• Needs, motives, and emotions


• Perceptions, learning and memory


• Personality and lifestyle


• Attitudes

Situation influences

• Physical features


• Time perspective


• Social surroundings


• Task definition


• Antecedent states and situations (e.g., product or offer communications, purchase, use, or definition)

Decision process influences (i.e., stages)

• Problem recognition


• Information search


• Alternative evaluation


• Outlet selection


• Purchase


• Post-purchase processes (e.g., use, disposition, and evaluation)
  

By interweaving the decision areas with the relevant customer influences listed above, it is possible to outline the areas in which data should be gathered in order to construct a complete consumer behavior audit template as follows:

• Step 1: Market segmentation (…) Identify customer influences
  
• Step 2: Product positioning (…) Identify customer influences
  
• Step 3: Price (…) Identify customer influences
  
• Step 4: Place (Distribution strategy) (…) Identify customer influences
  
• Step 5: Promotion (…) Identify customer influences
  
• Step 6: Product (…) Identify customer influences
  
• Step 7: Customer satisfaction (…) Identify customer influences
  

By completing the above steps and answering all the associated questions regarding customer influences at each of the stages, the marketing manager should have a thorough understanding of the influences on consumer behavior and the key decision areas in which the influences are activated.

Reference

Hawkins, D.I., Best, R.J, & Coney, K.A. (2001). Consumer behavior: Building marketing strategy (8th ed.). New York: Irwin McGraw-Hill.