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Dr. Thomas J. Dammrich

Recruiting key management personnel just became easier, thanks to Marine Resources. | Dr. Thomas J. Dammrich, DBA

The global leisure marine sector experienced growth during the pandemic, amidst a slowdown in so many other manufacturing sectors. For a sector already struggling with a skills shortage, the problem became more acute. And now in the era of  “the Great Resignation” our sector is under more pressure  to identify AND retain knowledgeable staff.

 

 

Luckily our very own Dr.Thom Dammrich and Nick Hopkinson, former editor and owner of International Boat Industry magazine, has joined international marine specialist recruitment company, Marine Resources. This partnership aims to offer businesses in the leisure marine industry assistance with identifying and recruiting key management personnel.

 

 

Marine Resources offers bespoke headhunting and recruitment services. CEO and founder of Marine Resources Recruitment, James Ward says: “We have invested more in resources, time and people on an ongoing basis. Joining forces with Nick and Thom, alongside Oli Wells our head of executive search for Marine Resources, will strengthen our recruitment services offering and ensure the recruitment jigsaw is confidently put together.”

 

Dammrich and Hopkinson have extensive knowledge of the global market, having engaged with leading figures and companies in the industry for many decades and in numerous countries during their previous careers.

 

Dammrich says: “I am delighted to work with long-time colleague, Nick Hopkinson, in association with Marine Resources to help marine businesses find the talent they need to be successful and executives to find the position where they can make a significant contribution.”

 

“I am very pleased that Thom and myself are teaming up with Marine Resources to extend the company’s reach into the area of top-level international senior executive placement,” says Hopkinson. “Our long experience of the industry means that we are well positioned to provide this service and look forward to working with companies seeking to strengthen their management teams as well as with individuals looking for new opportunities.”

 

Companies or controlling shareholders who wish to have a discussion in complete confidence about their senior executive search requirements and likewise individuals wishing to explore new senior-level opportunities can the contact Thom Dammrich or Nick Hopkinson.

 

Dr. Thomas J. Dammrich, DBA
Email: thomas.dammrich@gmba.blue or info@gmba.blue
Mobile:+1 847 274 5167
Website: www.gmba.blue

 


Disclaimer: Global Marine Business Advisors and its associated website www.gmba.blue are not registered legal entities. GMBA is a network of independent marine industry advisors. In all articles the opinions expressed are those of the author and does not necessarily reflect those of GMBA

No Time for Complacency | Dr. Thomas J. Dammrich, DBA

The marine industry globally has been on a strong run for nearly two years now. Many, if not most, new boat manufacturers are reporting record backlogs of sales; some stretching into 2024.   In the US, nearly half of these new boat buyers are first time boat buyers.  Clearly good times for the boating industry!

But let us not forget, this is a cyclical industry and while new boat sales have been growing for over 10 years now, we are still subject to the laws of economics.  And boat sales historically ebb and flow with consumer confidence, growth in GDP, and other leading indicators.  There are clearly some red flags ringing alarm bells for the boating industry.  I hope we are not so busy trying to figure out how to build more boats, how to manage difficult supply chains and how to hire more workers that we miss the telltale signs that the cycle may be changing.

In a recent Axios/Ipsos poll, 40% of consumers cited inflation as their biggest worry.  While the same total said wages were rising faster than they have in more than a decade, 94% said their salaries weren’t keeping up as their costs of food, gasoline and housing were rising faster.  And the price of new boats have risen into the stratosphere.  Historically, there is strong evidence that the price of boats is highly elastic.  That is, as prices rise, demand falls.

In an NBC News survey done the third week of March, 71% of U.S. adults said they felt the country is headed in the wrong direction versus 22% who think it is heading in the right direction.  Sixty-two percent said they believe their family income is falling behind their costs of living as the US government reports inflation is at 8.5%.  Eighty-three percent of Americans are concerned the cost of goods and services like gas will continue to increase as a result of the Russian attempt to redraw country boundaries.

In a March Tracking Poll by the  Kaiser Family Foundation, 55% of Americans said Inflation was their top concern; 71% say they are “very/somewhat worried” about being able to afford gasoline or other transportation costs followed by unexpected medical bills (58%), monthly utilities (50%), food (47%), long-term care services (45%), health insurance deductible (44%), rent/ mortgage (43%), prescription drugs (43%) and health insurance premiums (36%).

And, let’s not forget, that once inflation concerns are ingrained in the consumer psyche, it becomes self-fulfilling and becomes very hard to break.  That is why the Federal Reserve system is acting quickly and aggressively on interest rates with as many as ten increases in interest rates expected over the next two years, with some talk that the next two will be 50 basis points each.  In my experience, economic policy is a fairly blunt tool.  It will be difficult to manage inflation successfully without throwing the US and world economy into recession.

While there is a need to refill dealer inventories, is your production backlog as solid as you think it is?  Will it hold in the face of inflation, rising interest rates and a coming recession?

The latest numbers from NMMA showed boat production up 6% earlier this year but new boat sales up only 1.5%.  This diversion between the increase in boat production and boat sales warns of an inventory buildup.  Some of that is clearly needed, but when is enough?  We need to continue to watch these numbers because production can exceed sales for only so long.

In the latest University of Michigan survey of consumer confidence, 32% of surveyed adults anticipate their finances will worsen over the next 12 months–the largest recorded share since the survey started in the mid-1940s. Consumer sentiment sank to 59.4 from 62.8 in March– down from a year-ago reading of 84.9 and the most pessimistic sentiment in 11 years.  And, Morning Consult reported that consumer confidence dropped 7% among those earning more than $100,000 a year with a much larger dip among those earning less than $50,000 a year.

As we focus on solving supply chain issues and building more product, let’s not fail to pick our head up and look around at the signals telling us boat sales may have peaked in the first quarter of 2022 or may be peaking now.  A recession and consumer confidence induced drop in demand by 20% or 30%  from current levels doesn’t need to be a disaster for the industry if we are prepared for it.

Now is not the time for complacency.  Hold on.  The boating industry is about to experience some turbulence.

Dr. Thomas J. Dammrich, DBA
Email: thomas.dammrich@gmba.blue or info@gmba.blue
Mobile:+1 847 274 5167
Website: www.gmba.blue


Disclaimer: Global Marine Business Advisors and its associated website www.gmba.blue are not registered legal entities. GMBA is a network of independent marine industry advisors. In all articles the opinions expressed are those of the author and does not necessarily reflect those of GMBA

Online Now: EXPORT INSIGHTS online seminar series developed by MIN and GMBA

MIN Export Sessions:

The third online seminar collaboration between Marine Industry News, Global Marine Business Advisors (GMBA) and PSP Logistics is now available to view.

In this comprehensive session, Mr Kai Malmivaara (GMBA) takes a look at the United Arab Emirates marine market and offers insights for those wishing to explore the opportunities offered by exporting to the UAE.

Malmivaara details the financial regulations within the UAE that make it more attractive to buy locally built boats, rather than import, and explains how these regulations impact the Emirates leisure marine market.

The online seminar was made possible by sponsorship from PSP Logistics. In the session Shaun Parsons, PSP director, describes how having the right paperwork and logistical support is integral to exporting success.

“The most important thing is to have a trusted agent in the UAE to help with the arrival of goods,” says Parsons. “It’s not an area that we have historically shipped a lot to, but we have started to ship a lot from the UAE, so we are actively working with dealers to make this process as smooth as possible.”

https://www.youtube.com/watch?v=IRl5NPw0RC8&t=4s

Kai Malmivaara, GMBA-Middle East
+971 50 276 0287
kai.malmivaara@gmba.blue


GMBA is excited to collaborate with Marine Industry News on an online seminar series covering export markets. The first seminar was focused on France and Jean-Michel Gaigné, CMM, our French market specialist, shared his key insights about the French market.

A prominent representative of the French marina industry, Jean-Michel is a member of the ICOMIA Marinas Group, Chairman of TransEurope Marinas, Member of the advisory board of Global Marina Institute and member of The Yacht Harbour Association Council. He has just left the general management of Saint-Quay Port d’Armor, a 1000+ berth marina in Brittany, France, and now acts as a marketing, development and innovation consultant for marinas, marine tourism, cruise ships and waterside activities.

Click here to watch the session online:

https://www.youtube.com/watch?v=OIhx_FJiYRQ

Jean-Michel Gaigné, CMM | GMBA- France
+ 33 682 112 524
jm.gaigne@gmba.blue


Marine Industry News’ second online seminar, in conjunction with Global Marine Business Advisors (GMBA), entitled Export Insights: USA, sponsored by PSP Logistics, took place on the 25th May.

The session was presented by Thomas Dammrich, who has spent over twenty years leading the National Marine Manufacturers Association (NMMA) and has over thirty years of experience as a CEO. Dammrich is currently advising organisations on business strategy and has broad experience in organisational development and trade. He discussed the United States boating market, give tips on exporting and look at ways to help businesses run smoothly in the USA.

Click here to watch the session online:

https://www.youtube.com/watch?v=Tfz8onaJklE&t=137s

Dr. Thomas J. Dammrich, DBA
Email: thomas.dammrich@gmba.blue or info@gmba.blue
Mobile:+1 847 274 5167
Website: www.gmba.blue


Disclaimer: Global Marine Business Advisors and its associated website www.gmba.blue are not registered legal entities. GMBA is a network of independent marine industry advisors. In all articles the opinions expressed are those of the author and does not necessarily reflect those of GMBA

A Return to the Good Old Days (For better and worse) | Dr. Thomas J. Dammrich, DBA

The boating industry is on fire.  Sales have returned to levels not seen since before the Global Financial Crisis.  The industry, for the most part cannot build boats fast enough to keep up with growing demand.  By many accounts 50-70% of new boat buyers are first time boat buyers.  If we can retain them it bodes well for industry growth for many years as the average boater will own 4-5 boats in their lifetime.  Life is great.

Also part of the good old days were  complaints from dealers that manufacturers shipped them boats that were not finished and the dealer became the last fifty feet of the production line.  Aside from the problems this caused the dealer, it created new customer satisfaction issues as well.

This winter I recommended a friend to buy a new boat from a top brand and made sure I referred him to a dealer I was confident would serve him well and make sure he had a good experience.  Recently, he was called to say his boat was ready for delivery and he should come in to sign the paperwork.

Very excited, he drove 90 minutes with a friend to pick up the boat.  His family of four is looking forward to many fun days on the water this summer.  The finance department took good care of him.  He gave them a certified check for $20,000 and signed the paperwork to borrow the balance of the purchase price.  He could have paid cash, but the dealer gave him a little better deal to finance.

That all settled, they took him to see his new boat, and unfortunately had to inform him that several parts and accessories he ordered did not come in with the boat. Frustrated and angry, he would not take delivery of the incomplete boat and when he got home wrote the dealer to tell them he wanted a complete list of what was missing and when it would be provided in writing in 24 hours or he would call the bank and cancel the deal.

The dealer’s service manager, who had spoken to my friend on the day of “delivery” called him over the objections of other dealer personnel who said no one should call him. Did they not believe he would cancel the deal?  This is a top Top 100 dealer!  The service manager explained all they were doing to get the parts to finish the boat and hoped to have it ready by Memorial Day weekend.  My friend would be happy if the dealer could accomplish that.

I know manufacturers experiencing supply chain disruptions like many industries.  And, are working very hard to satisfy consumer and dealer demand for new boats.   But, I would have hoped we had matured as an industry to leave these kind of practices in our history.  The manufacturer didn’t want a partially finished boat sitting on his lot in inventory.  By shipping an incomplete boat he could recognize revenue.  The boat dealer should have discussed the problems with the missing parts before the customer paid and signed all the paperwork.  But, the dealer wanted his payday and to get the boat off his inventory.

So, who here was thinking about the customer and the customer experience?  No one!  I hope this was a one off, but I fear the industry is slipping back into some bad habits from the good old days.  If we don’t provide good experiences for these first-time boat buyers, they will leave boating with a bad taste and instead of many years of prosperity, the current prosperity will be short lived.  Unfortunately, this first-time boat buyers experience with one manufacture and one dealer color his perception of the whole industry.  He said to me, “When I leave the dealership that day I felt that I was dealing with a shady used car dealer.”

I am sure if this dealer gets him his boat by Memorial Day, these bad memories will fade as great new memories with family are made.  Of course, much of that will depend on this dealer being there to support this first-time boat buyer throughout his first year of ownership.

On a more positive note, I bought my first boat this winter too.  It is a one-year old luxury pontoon boat.  It is being delivered tomorrow.  And, next week the salesman will spend 90 minutes with me on the water acclimating me to the boat.  The boat manufacturer and engine manufacturer have both transferred the remaining warranty to me at no cost.  Or, at least no cost I saw.  I bought a premium brand from a top Top 100 dealer too.  And, I am delighted and looking forward to creating memories with my kids and grandkids–#12 is on the way in June.

I still have many friends in the marine industry.  I know we can do better than we did for my friend.  And, we must do better to ensure a bright and prosperous future for the boating industry.  Let’s make the customer our top priority!

Dr. Thomas J. Dammrich, DBA
Email: thomas.dammrich@gmba.blue or info@gmba.blue
Mobile:+1 847 274 5167
Website: www.gmba.blue


Disclaimer: Global Marine Business Advisors and its associated website www.gmba.blue are not registered legal entities. GMBA is a network of independent marine industry advisors. In all articles the opinions expressed are those of the author and does not necessarily reflect those of GMBA

Understanding consumer behaviour basics is an essential element in the development of customer relations management (Huju J, Dammrich T, 2021) PART 1/3

Part 3/3

Kindly read Part 2 from last week before continuing with part 3

Some General Notes

Today’s consumer behaviour research recognises that without thorough knowledge about the consumers’ behaviour, marketing cannot be successful. From a producer’s point of view, marketing can be deemed successful if it results in a positive decision of the consumer.  In a company’s marketing plan, consumers have to be segmented according to the demographic and psychographic aspects.  The marketer needs to define consumer segmentation according to various variables. The variables contain e.g. similar product needs, the size of the segment and accessibility to the segment. The demographic segments would contain age, gender, family structure, income, ethnicity and geography. The psychographic aspects consist of things like personality and taste.

The rapid globalization has brought big changes especially in the behaviour of the urban middle class. In general terms, the number of internationally operating marketers has grown exponentially. Their challenge is to apply their international marketing into local circumstances.  In many cases this has proven to be challenging.  Environmental issues such as re-cycling and sustainability have become a major topic.  By purchasing environmentally friendly products a consumer wants to make a statement.  Some companies or products are boycotted because of varying values.  There are critics who divide the postmodern consumer in those being critical and creative and those who are passive and entertainment-seeking.

Key findings

Individual purchase can add value to a consumer’s life and value-based thinking is important. Consumers can get committed to products or brands through their own values or needs and also through effective loyalty programs. Beliefs and intentions form a consumer’s attitude and the consistency between the elements is important. The role of personality cannot be underestimated. In drafting the marketing plans the issues of personality variables are crucial. There is ample evidence that groups have an influence on an individual’s buying behaviour. Cultures and sub-cultures are considered to be the most important single factor in understanding consumer behaviour. One has to note though that having certain cultural background does not necessarily mean unified behavioural patterns.

The buying process is affected by a multitude of stimuli. Mood, time, senses, available information and whole process, which can be rather complex play an important role. The provided information (=communication) plays a vital role in the attempt of affecting the consumer.

The rapid globalization has brought many new challenges to marketers. Consumer segmentation needs to take local circumstances into account.  Additionally, new consumer segments with individual needs and habits keep popping up.  To follow up this rapid development marketers need to engage highly developed and large databases and knowledge of the methods to effectively use them.

  1. The Real Life

A boat dealer in a coastal city in western Finland has just sold a new aluminium boat to a new customer.  A very typical boat in this country.  5,1 m in length, center console and with a 50 hp outboard engine.  With some goodies, like a plotter and a trailer the package price totalled 25.300 €.

This customer has a summer house, one of some 30.000 summer houses in the archipelago of the area.  He needs 45 minutes to get to the summer house from the boat club in the city where he has a berth. He works in an IT company, has a wife and a 13-yearold son.  The recently bought boat is his second boat.  When the boat leaves the dealer’s premises, the dealer would typically know the customer’s name and address (and that for warranty purposes) and maybe has an idea where the boat will be used.

Now this dealership has a clever owner who knows marketing.  He wants to turn his two sales guys into sherlockholmes-types with some basic instincts for knowledge gathering. He does not equip the sales guys with a magnifying glass, pipe and macintosh but simply with a laptop and a smartphone.  In the winter months in this country the traffic in the boat showrooms is really not all that high so there is ample time for research.

So, the guys get to work. They search the Internet, Facebook, Instagram, LinkedIn, TikTok and all other available social media. They also look into Google Search and other search engines.  Within a couple of hours, the guys know where the customer works, that he plays golf, is member of a Rotary Club and also know the island where he has his summer house.

This information is publicly available but because of the EU General Data Protection Regulation they have be careful how this information is stored and used.

So, come early spring the guys set up a half-a-day presentation in the boat club. They bring 3 boats of various types. The boat club gets a small compensation.  A few people show up but the seed is already planted because the “jetty parliament” as we call it, has already discussed this new boat. This is one of the social groups the original customer belongs to.  The boat owner in this case will also be an opinion leader.  As a result, the dealer gets a few good leads.

The same is repeated at his golf club. This time just when the season starts, the three boats are trailered to the club for an afternoon. The club again gets a small compensation, maybe the dealer sponsors coffee and advertises the event so the club gets more traffic in their restaurant. Golfers are often boaters in this country too so they can get motivated when seeing the boats in their other social group. Also, the learning process of this product has started.

This all leads to, that the dealer is invited one Tuesday evening to talk about boating in the original customer’s Rotary Club. The Rotary Clubs always have someone to talk about various themes.  He may again sponsor a few drinks but the club members are being subjected to attitudes through the marketing messages and the commitment process can also slowly start.

For Christmas the original boat buyer, his wife and his son will get floating key rings.  Not a big thing but this is carefully stored in their memories. 

These are just a couple of everyday life examples on how the psychological processes work and how we need to be able to penetrate into the surroundings of the potential customers.  The extra work for any boat dealer may feel like too much in the beginning.  At the end of the day this can turn into routine and through that increase the input-output result by order of magnitude.

And come the boat show time the promising leads will visit you and more deals are to be expected.

Authors:
Dr Jouko Huju DBA, GMBA Finland
Dr Thomas Dammrich DBA, GMBA USA

<Part 2


Disclaimer: Global Marine Business Advisors and its associated website www.gmba.blue are not registered legal entities. GMBA is a network of independent marine industry advisors. In all articles the opinions expressed are those of the author and does not necessarily reflect those of GMBA

 

Understanding consumer behaviour basics is an essential element in the development of customer relations management (Huju J, Dammrich T, 2021) PART 2/3

Part 2/3

Kindly read Part 1 from last week before continuing with part 2

Other Factors

In addition to the four psychological processes there is quite a number of other issues that can found in the studied literature.  These issues are of major importance when the final buying process is being formed within an individual.

Values

Values are usually quite general in their nature and they apply to many situations. Consumer behaviour is often value guided because the consumer believes that a particular purchase will add certain values in his/her life.  As a matter of fact, many studies today support the major importance of a value-based label.

Commitment

Consumers react to marketing messages in different ways. A consumer’s relation (=commitment) to a product reflects their values and needs. It also reflects needs and wishes.  A deeper commitment leads to involvement.

What do we mean by involvement?  Very often involvement refers to the amount money, time, thought, energy and other resources consumers use before purchasing a product.  It is one of the fundamental concepts used to clarify the consumers’ buying process. Low cost, low involvement products are likely to be familiar to the purchaser, involve a single use and involve little risk.  High cost, high involvement products, on the other hand, tend to be durable products involving significant perceived risk and price plays an important role in determining deal valuation, continued search and purchase intent.

Some consumer information search frameworks model pre-purchase search and ongoing search, the latter being the primary subject of their study.  Involvement in the purchase was a primary determinant of pre-purchase search.  Learning about a product to make a better purchase decision is considered the consumer’s primary motive for search.  The outcomes of pre-purchase search were increased product and market knowledge, better purchase decisions and increased satisfaction with the purchase outcome.  Encouraging search to the point of preparedness to purchase is desirable if the goal is to sell more product.

Finally, the link between the needs/values and the marketing message then determine a consumer’s attention (=commitment).  Relationship marketing (RM) can be used to create or increase commitment.  The discussion of commitment and loyalty of consumers added new words in the marketing vocabulary like partnerships, alliances and key accounts. Joining various loyalty programs offered by sellers (airline miles for example), consumers volunteer in the transaction of their personal behaviour data and remaining loyal is strongly dependent on continued satisfaction.

Attitudes

Attitude is a lasting, general evaluation of people, objects, advertisements or issues. This means a basic need to evaluate things either positively or negatively.  Attitudes consist of elements like beliefs, intentions or affects.  An important element in the creation process of an attitude is the consistency between these elements.  Changing attitudes can be challenging especially if the marketer does not understand how attitudes are formed and changed.

Personality

There is a clear difference in the Western and Eastern ways of how the consumers feel about themselves.  The Eastern “me” stresses the importance of the social group behind the individual identity whereas in the Western culture it is more a “just me” concept; individuality is stressed. The “self” is a concept which reflects a consumer’s attitude towards him/herself. Each consumer’s personality has several selves and each of these selves use different approaches in their behaviour as consumers.  The sex identity is one of the strongest.  This is followed by the conception of body. The personality variables play a crucial part when consumer analysis is carried out and the marketing conclusions drawn from them.

Group Influence and Opinion Leadership

Most humans belong (or want to belong) to one or several social groups. In these groups they wish to be accepted by others and this has an impact on their purchase behaviour. People within these groups have an influence on the other members depending on their social power.  These powers may include powers like information, expert, legitimate or coercive powers. The opinions of the individuals with special powers will influence others.  There is a danger that when being a member of a group one starts to lose their own identity. Word-of -mouth communication about products plays an important role within the groups. Social media can be a powerful influence on individuals and it is important that sellers understand the use of social media and influencers to shape consumer behaviour.

One non-stop customer experience model was developed to recognize the impacts of the internet and social media on the purchase journey and compare it to a traditional conceptualization of the purchase funnel.  The Accenture model suggests that evaluation continues after purchase and during use as consumers are on a continuous, non-stop decision journey, which is shown below.

Comparison of Traditional and Contemporary Purchase Journey

One’s family is the strongest of the reference groups but all groups have a certain influence on an individual’s consuming behaviour. Within the groups there are always opinion leaders to whom the message must be tailored and aimed at.  In the family context there seems to be a unified view that women, in many cases, have become the main decision maker and that marketers are now creating specified campaigns targeted to women only. In the recent years, teenagers are seen to have a growing impact on the purchase decisions of the of the family.

Culture

Culture may well be the most important single factor in understanding consumer behaviour. Culture is the combined memory of any society. Culture is a combination of lots of commonly shared factors like traditions and norms. The members of a culture usually share the values and exercise the same practices. Cultures usually also share the same values of life. The importance of understanding cultures in terms of consumer behaviour has created a new notion of consumer society. Cultures are divided into subcultures like nations, religions, races or geographical areas and when these subcultures grow large enough, they have an impact on marketing planning and initiatives. In this context it is important to discuss social classes as well. Again here, classes seem to share similar values, beliefs and more importantly, behaviour. Social classes tend to share preferences in many areas like clothes or TV-programs.  Actually, the preferential behaviour can be noted in most areas of human life. Even within a culture, differences can be substantial and that one should not overstate the similarities of a culture.

The Buying Process

It is important to note that the decision-making process is complicated and it is influenced by many factors that can be either internal or external. The process starts from the identification of a problem.  This is followed by the information search and evaluation of alternatives. This is followed by the final choice and the assessment of the purchase.

A modern consumer searches information about products before the final decision.   Mood, time pressure and the actual situation at hand are decisive factors. The whole experience of shopping plays a vital part in this play. Elements of entertainment and expertise are communication tools used by retailers in the process.  Consumer satisfaction is afterwards measured by factors like warranty and how the purchased product actually met with the original expectations.  A clearly identified disposal plan or re-cycling plan also has an impact on the modern consumer. The process can be quite complex.  A consumer may already be evaluating choices while the actual search is still going on.  Without knowing how this process works it is very hard for marketers to target or create their message. There are some alternative views too. Buying is a choice between mental accounts where the time of earned income is the decisive factor. Spending the present income is most likely.

Economics of Information theory suggests that expected benefit is a strong determinant of the amount of search undertaken by the consumer.  Reducing the cost of search reduces the cost of the product in the mental accounts referred to above.

Authors:
Dr Jouko Huju DBA, GMBA Finland
Dr Thomas Dammrich DBA, GMBA USA

<Part 1

Part 3>


Disclaimer: Global Marine Business Advisors and its associated website www.gmba.blue are not registered legal entities. GMBA is a network of independent marine industry advisors. In all articles the opinions expressed are those of the author and does not necessarily reflect those of GMBA

Understanding consumer behaviour basics is an essential element in the development of customer relations management (Huju J, Dammrich T, 2021) PART 1/3

Authors:
Dr Jouko Huju DBA, GMBA Finland
Dr Thomas Dammrich DBA, GMBA USA

Proper customer relations management is not just a list of names, e-mails, phone numbers or Christmas cards. Understanding the behavioural thinking process is of paramount importance in refining the personal approach to your customers.  In this paper we will look into the basic theories of consumer behaviour and also make an attempt to discuss the findings in practical surroundings. And all this from the sales and marketing point of view only.

We fully understand that some may consider the contents of this paper to be very theoretical and perhaps not an easy read.  We will do our best to also make it practical and close with examples in simple imaginary cases.  Bear with us as we work to get your thinking process going.  The pandemic, caused by the Covid-19 virus, resulted in a surprising change in how the boat buyers or the customers for any recreational activity behave.  This is an exceptional phase that will only last for a year or two. The basic behavioural rules, developed over several decades, however, still apply.

It is worthwhile noting some of the key words: motivation, perception, learning, memory, commitment, attitude, values, personality, group influence, opinion leadership and culture.

Let’s get started.

  1. The Theory

For decades, how consumers make decisions has been a central question of marketing and consumer behaviour research.

The consumer decision process is a journey, also referred to as the purchase journey. It is a sequence of events that customers go through to learn about purchase and interact with products.  The consumer decision process, or purchase journey, has been conceptualized as a purchase funnel. Consumers move in a linear manner through the stages of the purchase funnel.  Until recently, these purchase funnel concepts concluded with the purchase of the product, but more contemporary conceptualizations view the purchase journey not as linear at all, and include post-purchase evaluation, product advocacy and continuous evaluation due to the rise of social media and customer reviews.  All of the actions taken during the purchase journey are consumer behaviours.

Consumer behaviour research has been given a significant attention in the past years. In the ever-intensifying global competition for the consumers’ attention, the knowledge of how consumers reach the final purchase decision is of vital importance.  The changes brought by globalisation and rapidly changing markets makes consumer behaviour studies challenging and difficult. Although the world is shrinking in terms of marketing and the already existing global buying habits, a vast variety of local and regional trends remain.

The original idea behind consumer behaviour research is to find out “how the world is   influenced by the action of marketers”.  The original assumption is that marketers need to understand consumer behaviour in order to be successful in their actions.

One has to remember though, that consumer behaviour has implications other than marketing:

  • public policy formation
  • social marketing
  • turning people into better consumers

It is generally understood and recognized that consumer behaviour research has evolved from the discipline of marketing. The new schools in marketing started shifting their thinking from the process of marketing itself to better understanding the needs and behaviour of those who finally purchase the products, meaning the end users, the customers.  The differences between classical and adaptive marketing and their relation to customer behaviour have been widely discussed. Consumer behaviour studies used both social science and general behavioural sciences in the new approach. Brand loyalty, opinion leadership and the importance of demographics from the social sciences and attitude research, motivation and organisational behaviour from the behavioural sciences have combined in theory and practice.

“In this paper, it is our aim to address the problem of understanding consumer behaviour on a macro-level and its impacts on marketing through an  overview of the content of the discipline”

This paper will explore consumer behaviour on a general level attempting to establish an understanding of the overall content of the study field. It does not try to establish regional differences.  It concentrates on the marketing and sales implication of consumer behaviour. Using Occam’s Razor, i.e. cutting all but the essential is our aim.

General Definitions

There are numerous ways of defining what the words consumer behaviour actually stand for. One of the shortest and to-the-point definitions is: “consumer behaviour is the study of when, why, how, where and what people do or do not buy products.  It is a process of activities people engage in when searching for, selecting, purchasing, using, evaluating and disposing of products and services so as to satisfy their needs and desires”.

In all definitions the message is the same; how does a consumer make up his/her mind in favour of one product or service.

International Context

Modern consumer behaviour research is based on global marketing but with a great number of local spices that need to be taken into account. The rapid growth of the globalisation process has been going on since the 1980’s but the real acceleration happened with the introduction of the Internet.  This started in the latter part of the 1990’s. The basics discussed in this paper can, to a great extent be adapted in many parts of the world.  The issues are the same, the study methods are same. The real challenge is to draw local conclusions and implement correct measures.

The Study Field of Consumer Behaviour

The study field analyses the process happening before and during the final decision and also afterwards. We must note that in addition to individuals (Business to Consumer or B2C) the notion of “consumer” can also mean organisations and groups (Business to Business or B2B). Consumers are segmented according to a large number of dimensions and marketing activities are designed to affect the consumer’s choices.

There are two distinctive paradigms often connected to consumer behaviour research; positivism and interpretivism. Positivism is connected to being structured and functional.  It further enhances the technological aspects and rationality. It is also Western and male culture oriented.  Interpretivism emphasizes the complexity of the consumer’s environment, takes an opposite view on technology, is more subjective and believes that consumers are unique in their decisions. There seems to be change going on from the prevailing positivistic paradigm to interpretivism. Consumer behavioural science has to be considered as very multidisciplinary spanning various fields of psychology, sociology, anthropology and also touching history and economics.

Psychological Processes in Consumer Behaviour

Behaviour consists of four major psychological processes that have an impact on how the consumers actually behave.

These processes are;

  • Motivation
  • Perception
  • Learning
  • Memory

Motivation

Motivation is described as; “a process that causes people to behave as they do”. It is a driver to satisfy a certain need. Needs can be based on functionality, experiences or emotions. Reaching a certain goal by buying a certain product or service is a motivation. There are 3 major theories on motivation in this context; Freud, Maslow and Herzberg. In the Freudian way of thinking a consumer cannot totally comprehend his/her motivations. Thus, the motivation driver is unconscious. In Maslow’s theory the needs are conceptualized in a hierarchy starting from the most basic and pressing ones and ending with those that are more self-fulfilling.  Frederick Herzberg talks about things that are dissatisfying and things that are satisfying. In his view a purchase cannot happen unless the satisfying elements overcome the dissatisfying ones.

Perception

Perception is an approximation of reality. It is the process during which the consumers make their final decision based on a number of sensations.  The sensations include physical things like sights, sounds, smells and tastes. Companies often use perceptual maps in order to discover the individual customer’s perception. Another good example of a stimulus is touching. Touching increases a purchase intention. The perception process is not necessarily only created by physical sensations.   The consumer’s relation to the surrounding world or his/her mental state (=feelings) also play a vital role.

The perceptual process starts from a number of stimuli. It could be described as a filter which takes the consumer through an information process that then leads to perception.  The sensory tools (receptors, attention, interpretation and response) then finally turn sensation into meaning and perception.

Learning

Experiences cause permanent changes in behaviour. Learning is an ever-on-going process that can be either deliberately or incidentally caused by a multitude of stimuli.  What then causes behavioural learning? Some theories suggest that external events are the main cause for this.  The two main approaches are called Classical Conditioning and Operant Conditioning. The concept of cognitive learning is also used.  In this concept, people themselves solve problems using existing information.  In Classical Conditioning two different stimuli finally produce the same response.  In Operant Conditioning the consumer learns to behave in a way that produces positive outcomes and avoid the negative ones.  Human behaviour is believed to be a learning process through experiences.

In the purchase journey, search for information is a primary way that consumers learn about the product.

Memory

Whatever a person experiences during his/her lifetime will be stored in either the long-term memory or the short-term memory.   The long-term memory can be described as the place where thoughts and experiences will be stored for a longer or even permanent time.  Then again with the short-term memory it is the other way around. Memory encoding is the process by which various things get stored din these memories.  Finally, the process of releasing the memories is called retrieval. The important issues from the marketer’s point of view are the quality of information stored, the way it is processed and if the presence of other information interferes with their information during the activation process.  There is a third memory class called sensory memory. The messages that we receive from our senses normally only last for a few seconds. Some memories are harder to retrieve than others.  This may be caused by e.g. lower priority.

Part 2 >


Disclaimer: Global Marine Business Advisors and its associated website www.gmba.blue are not registered legal entities. GMBA is a network of independent marine industry advisors. In all articles the opinions expressed are those of the author and does not necessarily reflect those of GMBA

Dr Thom Dammrich of GMBA USA talks about the year boat shows stopped

The first consumer boat show in the world was held over 110 years ago in New York City. The New York National Boat Show was held in 1918 during the Spanish Flu pandemic, a pandemic to which the current COVID-19 pandemic is often compared. The demise of boat shows has been predicted for decades. They are too expensive. There are too many of them. The ROI is not sufficient. They will be replaced by the internet. I am sure you have heard these things said, and maybe even said them yourself!

Dr Thom Dammrich of GMBA USA talks about the year boat shows stoppedYet, boat shows have persisted, grown in size and importance, remain the primary marketing channel for new boats and the largest line item in most dealer and manufacturer marketing budgets. Until 2020! Beginning in March of 2020, government response to the global pandemic has caused nearly every boat show in the world to be cancelled. There have been a few that have been held (Genoa, Interboot at Lake Constance, and Helsinki In Water come to mind), but they are the exception. And, though a smaller Ft. Lauderdale is planned to go ahead in October, 2020, with extraordinary safety protocols, most boats shows will likely remain shuttered through June or July of 2021 or until a COVID-19 vaccine is widely available to the public.

Shows that are being held are reporting attendance of about 30% to 60% of pre-pandemic levels. And they are also reporting strong sales for boat manufacturers and dealers. That is not surprising. Research we did during my tenure at NMMA showed that only 15-20% of boat show attendees came to the show with intent to buy at the show. Most came looking for parts and accessories or to learn about boats and boating. Only 5% purchased a boat at the show. Why the other 10-15% who come with intent to buy and leave without purchasing is a topic for another day.

How often have we heard from exhibitors that they had a strong day or a strong show despite bad weather or sporting events that kept many people away? The serious buyers always came, rain or shine, and that appears to be true for shows operating during the pandemic.

Shows cancelled at the last minute, or inappropriate actions by show producers more interested in profits than the success of their customers will be damaged by their response to the pandemic. But my expectation is that consumer boat shows will return as important as ever. Not all of them, certainly, but those that have earned the trust of the industry and produce results for the industry will endure.

But, for twelve months at least, there are almost no boat shows. Fortunately, this comes at a time when consumer demand for boats is the strongest in forty years! Reports for my Global Marine Business Advisors (GMBA) (www.gmba.blue) colleagues around the world indicate that boat sales are very strong, dealers are running low or out of inventory, and manufacturers cannot keep up with demand for new boats. Order backlogs stretching through mid-2021 are common among manufacturers. People throughout the world are turning to the outdoors and recreational boating for relief from Zoom calls, being encouraged to stay at home and physically distance, and relief from many other activities, from youth sports to dining out, that have been all but eliminated.

In response, some large manufacturers and dealer organizations have turned to digital boat shows and report success in doing so. Not surprisingly, digital boat shows provide much more data on attendees (first time vs repeat buyers, interests, etc.) and their purchase journey. Dealers are so busy keeping up with demand, they have not missed shows. So, what will dealers and manufacturers do with all the money they are not spending on boat shows? Are they investing in other marketing channels, particularly digital marketing? Or are they too busy to learn new ways of marketing and will just let those dollars drop to the bottom line, making a great year even better!

Smart operators are not sitting still. Manufacturer digital boats shows are meeting with success for them and their dealers. Others are investing those boat show dollars on improving websites and learning how to effectively deploy digital marketing and social media to gain visibility for their business and their products. And, continuing to invest in their international partnerships so important to export sales.

Boat show attendance and boats sales had been in a long-term decline from the heydays of the 1980’s, but in 2020 boat sales will likely surpass sales seen just prior to the Global Financial Crisis and without boat shows! Now is the time to prepare for the post pandemic future. And yes, there will be one!

Those who use this time without boat shows to learn how to maximize other marketing channels, enhance their digital presence, understand the consumer journey and how to impact consumers’ decisions along their path to purchase will be best prepared as life and the boating industry return to normal. Expect manufacturers who are learning quickly how to do digital boat shows, to continue doing them in conjunction with face to face boat shows. Digital shows will not replace the face to face version, but digital boat shows are likely to become an important complement to live boat shows.  The hybrid boat show, both live and digital, is likely to continue to evolve to reach more consumers and keep their sales teams busy during shows while providing more and more actionable data to those who do them.

Show producers will not be successful offering digital versions of shows. Manufacturers and dealers will be more successful by integrating their digital presence with their live presence as boat shows come back online. And, those who are not using this time to learn and experiment with a stronger digital strategy stand to lose ground to competitors who are.

And while manufacturers struggle to keep up with domestic demand for new product, be sure to maintain your export presence and support your international dealers even if you cannot travel to be with them.  The pandemic will cause many long-term changes in behavior, from work from home to other consumer behaviors.  Let us hope the new focus on connecting with the outdoors and re-awakening to spending quality time with family and friends outdoors, and on the water, persists long-term. If marine companies use the money not being spent on boat shows to get good at digital marketing, and improving customer relationships and engagement, maybe we can keep the current momentum going. We have been there before. We can be there again!


Disclaimer: Global Marine Business Advisors and its associated website www.gmba.blue are not registered legal entities. GMBA is a network of independent marine industry advisors. In all articles the opinions expressed are those of the author and does not necessarily reflect those of GMBA

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