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.
- 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.
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.
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 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 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.
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.
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.
Read more next week as we publish part 2/3