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Summary - Multicultural Consumer Behaviour
Summary of all the lecture notes and book chapters needed to pass the exam
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Multicultural consumer behaviorChapter 1: Technology-Driven Consumer Behavior
Marketing is the activity, set of institutions, and processes for creating, communicating,
delivering and exchanging offerings that have value for customers, clients, partners, and
society. Consumer behavior is the study of consumers´ actions during searching for
purchasing, using, evaluating and disposing of products and services that expect will satisfy
their needs. The core of marketing is identifying unfilled needs and delivering products and
services that satisfy their needs.
The marketing concept
Marketing and consumer behavior stem from the marketing concept, which maintains that
the essence of marketing consists of satisfying consumer´s needs, creating value and
retaining customers. It maintains that companies must produce only those goods that they
have already determined that consumers would buy. Market-oriented companies do not try to
persuade consumers to buy what the firm already has, but they produce products they know
they can sell, thereby satisfying consumers ‘needs.
The production concept, a business approach conceived by Henry Ford, maintains that
consumers are mostly interested in product availability at low prices; its implicit marketing
objectives are cheap, efficient production and intensive distribution. This approach makes
sense when consumers are more interested in obtaining the product than they are in specific
features.
As more and more companies studied customers ´needs and offered products that satisfied
them well, companies began offering more and more versions and features, often
indiscriminately. They were guided by the product concept, which assumes that consumers
will buy the product that offers them the highest quality, the best performance and the most
features. A product orientation leads the company to strive constantly to improve the quality
of its product and to add features if they are technically feasible, without finding out first
whether consumers really want these features. This orientation often leads to market myopia,
a focus on the product rather than on the needs it presumes to satisfy.
The selling concept maintains the marketers ´primary focus is selling the products that they
have decided to produce. The assumption of this concept is that consumers are unlikely to
buy the product unless they are aggressively persuaded to do so. This does not consider
customer satisfaction.
Implementing the marketing concept requires sellers to use different tactics.
Consumer research
This term refers to the process and tools used to study consumer behavior. Consumer
research is a form of market research, a process that links the consumer, customer and
public to the marketer through information in order to identify marketing opportunities and
problems, evaluate marketing actions and judge the performance of marketing strategies.
Market segmentation, targeting and positioning
Market segmentation, targeting and positioning are the foundation of turning consumers into
customers. Market segmentation is the process of dividing the market into subsets of
consumers with common needs or characteristics. It consists of identifying groups with
shared needs that are different from those shared by other groups. Targeting means
selecting the segments that the company views as prospective customers and pursuing
them. Positioning is the process by which a company creates a distinct image and identity for
its products, services and brands in consumers´ minds. The image must differentiate the
,company´s offering from competing ones and communicate to the target audience that the
particular service or product fulfills their needs better than competing offerings do.
The marketing mix
The marketing mix (four P´s) consists of 4 elements:
1. Product or service
2. Price
3. Place
4. Promotion
Social responsible marketing
The marketing concept is somewhat shortsighted. Some products that satisfy some may be
harmful to others. All marketing must balance the needs of society with the needs of the
individual and the organization. The societal marketing concept requires marketers to fulfill
the needs of the target audience in ways that improve, preserve and enhance society´s well-
being while simultaneously meeting their business objectives. It maintains that companies
would be better off in a stronger, healthier society and that marketers that incorporate ethical
behavior and social responsibility attract and maintain loyal customer support over the long
term. Many companies have incorporate social goals into their mission statements and
believe that marketing ethics and social responsibility are important components of
organizational effectiveness.
Technology enriches the exchange between consumers and marketers
Technology has revolutionized the marketing mix, as well as segmentation, positioning,
targeting and customer retention. When consumers use their electronic gadgets, they
provide marketers with the kind of information that enables companies to target them
immeasurably more effectively. Online technologies create a value exchange. Marketers
provide value to consumers in the form of information that turns shoppers into sophisticated
customers.
advertisers are offering more and more original content online because viewers are now
accustomed to watching programs on their devices that the lines between TV and internet
video have become blurred. Technology also enables marketers to refine their strategies
because they can readily customize their offerings and promotional messages.
Behavioral information and targeting
In the online world, specialized information exchanges track who is interested in what
through cookies. Cookies save your searching behavior and they help companies advertise
in the way you search. The internet drastically improved consumer´s access to the
information they need when they buy products for the first time or replace them. Internet
enables marketers to gather truly behavioral data.
Interactive and novel communication channels
Electronic communications enable a two-way interactive exchange in which consumers
instantly react to marketers´ messages by clicking n links within websites or leaving them
quickly. Thus, marketers can gauge the effectiveness of their promotional messages
instantly.
Technology innovations sometimes forces marketers to alter long-established marketing
strategies. Consumers can now skip ads. Marketers responded by embedding promotional
messages directly into TV shows.
Cross-screen marketing consists of tracking and targeting users across their electronic
,devices. New software enables marketers to try to figure out when a mobile user is the same
person as a desktop user. The new technology enables advertisers to push ads to mobile
phones based on interests expressed while surfing on the internet.
Customizing products and promotional messages
Researchers pointed out that customization requires that customers clearly understand their
preferences and express them, and also be involved with the products. this indicates that
high involvement products (infrequently purchased and pricey items) represent the best
prospects for customization.
companies can also customize promotional messages. If you bought a certain brand before,
you will see a different display of the site if a company works with this.
Better price and distribution
Because customers can compare prices online, department stores are forced to match their
prices to the online prices. Some stores are creating new personal touches. In addition to
better prices, distribution strategies are also improving. Combating failed package delivery,
some stores have lockers where packages will be delivered when one is not home. The web
also enables marketers to improve customer services inexpensively.
Customer value, satisfaction and retention
Customer value is the ratio between customers´ perceived benefits and the resources they
use to obtain those benefits. Customer satisfaction refers to customers´ perceptions of the
performance of the product or service in relation to their expectations.
Customer retention
This involves turning individual consumer transactions into long-term relationships by making
it in the best interest of customers to stay with the company rather than switch to another
firm. It is more expensive to win new customers than to retain existing ones:
1. Loyal customers buy more products and constitute a ready-made market for new models
of existing products as well as new ones, and also represent an opportunity for cross-
selling. Long-term customers are more likely to purchase ancillary products and high-
margin supplemental products.
2. Long-term customers who are thoroughly familiar with the company´s products are an
important asset when new products and services are developed and tested.
3. Loyal customers are less price-sensitive and pay less attention to competitors´
advertising. Thus, they make it harder for competitors to enter markets.
4. Servicing existing customers, who are familiar with the offerings, is cheaper. It is
expensive to train new customers and get them acquainted with a seller´s processes and
policies.
5. Loyal customers spread positive word-of-mouth and refer other customers.
6. Marketing efforts aimed at attracting new customers are expensive
7. Increased customer retention and loyalty make the employees´ jobs easier and more
satisfying. In turn, happy employees freed back into higher customer satisfaction.
, Technology and customer relationships
Technologies often enhance customer relationships and retention by engaging consumers
with brands. The opportunities for technology-enabled added value are virtually limitless.
Researchers have identified two interrelated forms of customer engagement with marketers:
emotional bonds represent a customer´s high level of personal commitment and attachment
to the company. Transactional bonds are the mechanics and structures that facilitate
exchanges between customers and sellers. Savvy marketers always strive to build emotional
bond with customers. Social media is the most innovative and versatile tool for engaging
customers.
social media include means of interaction among people in which they create, share and
exchange information and ideas in virtual communities and networks. In addition to engaging
customer with marketers, social media have transformed market research. Many companies
can easily collect input about customer´s preferences.
Emotional bonds vs transaction-based relationships
It has become more important to understand what makes customer satisfied during
electronic transactions. Studies have identified the following determinants of customer
satisfaction with online websites and merchants:
1. Adaption: the merchant´s purchase recommendations match one´s needs; one is
enabled to order products that are tailor made, personalized advertisements and
promotions; feeling like a unique and valued customer.
2. Interactivity: ability to view merchandise offerings from different perspectives.
3. Nurturing: receiving reminders about making purchases; providing relevant information
for one´s purchase; acknowledgement of appreciating one´s business
4. Commitment: delivering goods on time; responding to problems etc.
5. Network: customers sharing experiences about their product purchases on the
merchants’ website etc.
6. Assortment
7. Transaction ease
8. Engagement: attractive design; enjoyable shopping
9. Loyalty: seldom consider switching to another merchant.
10. Inertia: unless becoming very dissatisfied, changing to a new merchant would not be
worth the bother.
11. Trust
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