Archive for the Consumer Behavior Category

Relationship Marketing – Company and Marketing Perspective

Posted in Consumer Behavior, CRM, eMarketing, Management, Marketing Mix (New Concepts) with tags , , , , , , , , , on December 19, 2011 by Consultant
We are living in the high tech times. Technology and changing economy have changed the rules the way a business is done. Business organizations have to tune in to various markets and know the customers well. The successful companies are those who have been able to anticipate the customer need and innovate future products leveraging on technology. In a global as well as local scenario, customer holds the key to the growth of business and organizations. No wonder that when you open your mail box or your email, you are always flooded with marketing communication from all possible companies trying to build a relationship with you. Take a look at the cards in your wallet and you must be holding quite a few membership cards that make you feel privileged and keeping bringing rewards and prompting you to extend your relationship with them.

Relationship Marketing has never been more important for the Organizations as it has been now. In the field where competition is intense and life cycle of products and services is very small, customer relationship has emerged to be one of the key drivers to contribute a large chunk of sales revenue. When we talk of relationship marketing, we are not referring to customer service. Customer service refers to the quality of service on a transactional mode. By Relationship Marketing, we are referring to the level of Relationship that exists between the customer and the company.

In terms of Relationship, there can be several ways of defining or measuring the quality of relationship with the Customer. Understanding of the depth of relationship and qualifying can help the Company in improving its reach to the markets as well as work towards increasing the depth of the relationship with the customer. In the first instance, we have a happy customer who has bought the product or a service and found it satisfactory.

When the Company reaches out to communicate with him and anticipate his future needs, he can be converted to a faithful customer. A faithful customer may be a repeat customer who does continues to buy the product from the company on repeat basis without making an effort to look at alternatives. However, at this stage the customer can be influenced and be vulnerable to competition as well as price sensitivity. Relationship marketing by the Company can help convert this customer from a faithful customer to a loyal customer. A loyal customer is one who has made an informed decision to go with the particular Company, is happy with the product, is loyal to the brand and is likely to advocate the same brand to friends and family because he believes in the Product as well as the Company and values the relationship. Apart from customer service, there are several marketing programmes and loyalty programmes besides brand advertising that the Companies carry out to build the relationship with the customer.

Relationship marketing gets translated and implemented through the marketing strategies, promotional programs as well as through marketing communication programs. When implemented as a part of marketing strategy, the relationship is normally focussed on leveraging the brands and products of the Company with the customer. Besides the marketing activities, the Companies implement internal and external corporate communications too keeping in view the Customers.

Marketing strategies are required to define the relationship marketing strategies for each of the product or service category taking into account the geographies, the customer profile as well as the overall RM objective of the Company. The RM strategy in case of a product company would be different from that of a service company and the element of communication design strategy would need to be different for a product from that of a service. In case of a product, the Customer is likely to respond in terms of brand, tangible and quantifiable performance of the product and the satisfaction derived from post sales service. In case of service, however, there is no tangible product and the customer’s expectations are different when it comes to service that is mainly concentrated around his perceptions and experience.

Therefore understanding the concept of Relationship marketing, the difference between RM and Customer Service as well as the ways and means of implementing or achieving RM objectives through effective marketing strategies is important for all the marketing managers and students who are going to be the drivers to defining, planning, detailing and implementing marketing strategies. An effective Marketing Manager should be able to effectively design marketing policies and strategies that are aligned with the Company’s RM objective and help build the relationship between the Company and Customer, Partners as well as the intermediaries who are critical to one’s business.


Organizations and Types of Relationships

Posted in Consumer Behavior, CRM, eMarketing, Management with tags , , , , , , , , on December 19, 2011 by Consultant
Organizations today live in highly dynamic environments. Essentially the existence and growth of the business is dependent upon several external and internal factors such as highly segmented geographical markets, aggressive competition and shorter life cycle. These and many more factors exert a lot of pressure on the Organizations to innovate both in terms of its product offering as well as in its organizational development and ways of conducting business. Revenue and profits do form the primary basis of its business transactions. However in the long term growth perspective Organizations have got to be able to manage both external and internal relationships on the basis of the values and culture on which it is founded.

Share Holders

Gone are the days when share holders were a community content with the returns they received from the Company and went along with whatever the Managements thought good. Managements today are seen becoming increasingly answerable to the share holders.

Recently we have seen several cases where CEOs of the Companies having been voted out by the share holders for not falling in line with the thought process of the Organization and the share holders. We saw major changes in Hewlett Packard wherein the shareholders took the call to change the management and the strategic approach of the Company to business.

Organizations today exist in a situation which demands that they extend products and services as well as keep investing into building products and technology for tomorrow. If the business needs to exist and grow there is no option but to invest into the future. Therefore the shareholders take the centre stage when it comes to approval of and financing the Organisational business and growth plans. Shareholders today are aggressive demanding that the Organization walk the talk when it comes to the bottom line as well as in terms of its culture. Brands like IBM, HP and GE etc are more vulnerable to the stake holders as well as to the public as an Organization. These and other Corporate are using internet, Multimedia and websites to speak to the investors and extend the relationship with the share holders and investors. Internet platform allows the corporate open up relationship with the share holder community on an interactive basis thus giving the Company the control on how to manage the relationship as well as build investor confidence.

For Companies that are looking for investments to fuel their growth engines, there exists a need to demonstrate and cultivate the right corporate image and capability besides the past performance figures which alone will not help attract investors. Companies are therefore engage in Public relations as well as corporate communications to reach out to the prospective investor public as well as institutions to build the right kind of corporate image. Image building and relationship building become the long term strategy of the corporate communications of the Organization.

Social Responsibility

In the recent times the social responsibility and attitude of the Companies towards their responsibilities is becoming more and more visible and public. NGOs and specific interest groups are taking the lead in keeping track of and benchmarking social responsibility performance of the Corporate thus making them accountable. The brand image of the Organization is definitely affected by the way it is managing its social responsibility with the community, investors as well as policy makers being active participants as watchdogs.

Organizations have had to engage with the communities by way of participative activities as well as using communication strategies and by maintaining and managing relationship to be able to get across the right perspective as well as the right information. The recent example of GAP having had to withdraw from sourcing clothing from Indian Companies and suppliers who engaged child labour in the production lines is an ideal example which showcased the power of the community and the stake holders forcing the Company to take immediate action and use its relationship to project the right image for itself. The recent oil spill of BP in the west coast is another ideal case for study of how BP manages the relationship with the Govt, with its share holders, with the affected communities as well as manage its social responsibility.

Relationship Marketing and CRM

Posted in Consumer Behavior, CRM, eMarketing, Management on December 19, 2011 by Consultant
Relationship Marketing is being spoken of as one key Business Philosophies of the progressive Organizations who are Customer Oriented or Customer Centric. Companies have realized that to be successful on the long term trajectory of successful business, they need to be closer to the market, get under he skin of the Customer, anticipate his needs and engineer products and services to satisfy the customer and engage his loyalty.

As competition is increasing, product innovation is definitely one of the key important elements that the Organizations need to depend upon to steer themselves ahead in the market. Along with the technical leadership the companies necessarily need to know how to reach out to the Customer.

Engaging the Customer, Understanding the Customer and building relationship has become the need of the day.

No wonder that every individual today is bombarded with calls, emails, personal visits, mailers and all sorts of marketing communications from different companies trying to vie for your attention. From the Credit card Company, bankers to the shopping mall as well as the local restaurant you frequent try to engage you into a relationship that goes beyond a single transaction.

One of the outcomes of the evolution of Relationship Marketing has been the birth of CRM solutions. Besides CRM we have also seen the birth of new departments and disciplines in Organizations namely Customer Service Department as well as Key Account Management. It is very easy for students to equate RM with CRM and that both are one and the same.

Relationship Management forms part of the vision and business ethics that the Company envisages to imbibe as its core value system. When an Organization chooses to build its business blocks around Relationship Management, the Organization is marrying its Profit Making goal with Customer Relationship to build a synergy by which all the divisions as well as the functions of the Organization look at their function and business through the RM lens. This helps build a strong customer orientation and culture of Customer Sensitivity across the Organization at all levels, branches and functions. In any Organization several of its departments are involved with the external customers. Starting with Marketing, Sales, Distribution to After Sales Service, Quality as well as Finance Departments are involved with Customers and their orientation towards the Customer interaction is fashioned by the RM outlook of the Organization.

CRM on the other hand can best be described as an enabler of RM in any Organization. CRM involves process including software and hardware components that automates and helps manage customer engagement. While RM works at a strategy level, CRM helps implement the Strategy. The success of CRM as a concept is widely seen due to the aggressive marketing of CRM solutions by the IT companies who have developed the CRM packages. This has helped the Multi National Organizations to implement standardized process of Customer management on large scale across geographies and markets.

Besides Software driven Packages, there are several services and schemes that are available locally that are tailor made to suit particular industry. In a market place where every company is vying for space in the minds of the customer what helps the company gain that customer loyalty is the RM outlook that comes across via the CRM channel.

Meaning and Scope of Marketing Research

Posted in Brand Managment, Consumer Behavior, Management, Marketing Mix (New Concepts) with tags , , , on December 10, 2011 by Consultant
According to American Marketing Association, “Marketing Research is the function that links the consumer, customer and public to the marketer through information-information used to identify and define marketing opportunities and problems, generate, refine and evaluate marketing actions; monitor marketing performance; and improve understanding of marketing as a process.” 

Marketing Research is systematic problem analysis, model building and fact finding for the purpose of important decision making and control in the marketing of goods and services.

Marketing Research is a well-planned, systematic process which implies that it needs planning at all the stages. It uses scientific method. It is an objective process as it attempts to provide accurate authentic information. Marketing Research is sometimes defined as the application of scientific method in the solution of marketing problems.

Marketing Research plays a very significant role in identifying the needs of customers and meeting them in best possible way. The main task of Marketing Research is systematic gathering and analysis of information.

Before we proceed further, it is essential to clarify the relationship and difference between Marketing Research and Marketing Information System (MIS). Whatever information are generated by Marketing Research from internal sources, external sources, marketing intelligence agencies-consist the part of MIS.

MIS is a set of formalized procedures for generating, analyzing, storing and distributing information to marketing decision makers on an ongoing basis.

  1. While Marketing Research is done with a specific purpose in mind with information being generated when it is conducted, MIS information is generated continuously.
  2. MIS is continuous entity while Marketing Research is a ad-hoc system.
  3. While in Marketing Research information is for specific purpose, so it is not rigid; in MIS information is more rigid and structured.

Marketing Research is essential for strategic market planning and decision making. It helps a firm in identifying what are the market opportunities and constraints, in developing and implementing market strategies, and in evaluating the effectiveness of marketing plans.

Marketing Research is a growing and widely used business activity as the sellers need to know more about their final consumers but are generally widely separated from those consumers. Marketing Research is a necessary link between marketing decision makers and the markets in which they operate.

Marketing Research includes various important principles for generating information which is useful to managers. These principles relate to the timeliness and importance of data, the significance of defining objectives cautiously and clearly, and the need to avoid conducting research to support decisions already made.

Marketing Research is of use to the following:-
  1. Producers
    1. To know about his product potential in the market vis-à-vis the total product;
    2. New Products;
    3. Various brands;
    4. Pricing;
    5. Market Structures and selection of product strategy, etc.
  2. Business and GovernmentMarketing Research helps businesses and government in focusing attention on the complex nature of problems faced by them. For example:
    1. Determination of Gross National Product; Price indices, and per capita income;
    2. Expenditure levels and budgeting;
    3. Agricultural Pricing;
    4. The economic policies of Government; and
    5. Operational and planning problems of business and industry.
  3. Market Research AgenciesMarketing Research is being used extensively by professionals to help conducting various studies in Marketing Research. Most prominent agencies being:-
    1. Linta India Ltd;
    2. British Market Research Bureau (BMRB);
    3. Hindustan Thompson Associate Ltd;
    5. MARG

Analyzing Business Markets and Business Buying Behaviour

Posted in Consumer Behavior, CRM, eMarketing, Management, Marketing Mix (New Concepts) on December 4, 2011 by Consultant
A market consists of two parts consumer market and business market. Companies manufacture products for consumer market but business market is equally large and strong. Typical business markets consist of manufacturing plants, machinery, industrial equipments, etc. Companies need to study and analyze factors affecting business markets and business buying behaviour.

In a business market, organizations buy goods and services for production of goods and services. In terms of overall value business market is bigger than the consumer market. There are many characteristic which set business market apart from consumer markets. Business buyer base is smaller in comparison to consumer market. Consumer-supplier relationship is much stronger in a business market owing to few players in the field. Customer and supplier are very dependent on each for survival. For example, if car companies falter then tyre companies will suffer. So companies not only have to monitor business market but also pay attention to end consumer market. Buying for the business is a responsibility of purchase department which adheres to company rules and regulations. The buying decision is influenced by many players ranging from

technical experts to the finance department. This means that sales people have to do multiple visits and present information to different departments. In business market there is no distribution channel, thereby reducing overhead cost.

From the above discussion it is clear that the business market functions differently from consumer markets. Buying decision especially is more complex owing to many players. If buying decision is a re-purchase than purchasing department would place the order with an old supplier. Companies keep a list of approved vendors from which they choose as per purchase requirement. If buying decision is a modification from previous order in terms of specifications, amount, price, etc. than companies’ looks to have a discussion with suppliers. Purchase department may look to other suppliers for a modification order. If the buying decision is a new product or service than a lengthy process is followed with discussion and meeting between representatives from various departments.

Business buying behaviour is influenced by economical, company, individual and interpersonal factors. Economical factors like regulatory changes, technology changes, competition, fiscal policy and monetary policy influence buying behaviour. Business buyers are active in tracking and analyzing economical factors. Company level factors also play a major role is deciding buying behaviour. Sales people have to pay importance in understanding how purchase department is organized and players in the department. More professional are joining purchasing department making buying decision scientifically driven to align with larger organizational goals. As inventory management is crucial, companies’ prefer long term relation with suppliers. Many individuals from different departments are part of buying decision and it is important for sales people to understand personality traits of as many participants as possible. Geographical factor also influences buying behaviour as culture varies from country to country. Sales people should be acquainted with different cultures.

Actual buying process can be understood from products’ perspective. If the product has less perceived value and cost than business buyer ask for the lowest prices and offer high volume order. Suppliers in turn offer standardize products at low prices. If the product has a high value and low cost business buyer look for additional service or attributes with low price. If the product has high value and cost than the business buyer look for branded product with an established reputation. Price is not a constraint for high value products. To which suppliers put forward strategic long term alliance to accommodate technology changes.

Buying process consists of following steps – purchase needs, requirement description, product specification, floating intent of purchase, selecting a supplier; confirm delivery modules and timely review of purchase.

Government and institutional buying differ from industrial buying because here products and services providers are offered for free or fee to a large audience. Such a buying process requires a great deal of paperwork and transparent bidding system.

It is clear from observing the above points that in business buying and consumer buying. Business suppliers have to adapt to changes and employ a different marketing strategy.

Analyzing Consumer’s Buying Behaviour

Posted in B2B, Consumer Behavior, CRM, eMarketing, Management, Search Engine Optimization on December 4, 2011 by Consultant
The core function of the marketing department is to understand and satisfy consumer need, wants and desire. Consumer behaviour captures all the aspect of purchase, utility and disposal of products and services. In groups and organization are considered within the framework of consumer. Failing to understand consumer behaviour is the recipe for disaster as some companies have found it the hard way. For example, Wal-Mart launched operations in Latin-America with store design replicating that of US markets. However, Latin America consumer differs to US consumer in every aspect. Wal-Mart suffered consequences and failed to create impact.

Social, cultural, individual and emotional forces play a big part in defining consumer buying behaviour. Cultural, sub-culture and social class play an important is finalizing consumer behaviour. For example, consumer growing up in US is exposed to individualism, freedom, achievement, choice, etc. On sub-culture level influence of religion, race, geographic location and ethnicity define consumer behaviour. Social class consists of consumer with the same level of income, education, taste, feeling of superiority and inferiority. Over time consumer can move from one social level to another.

Culture alone cannot define consumer behaviour; social forces also play an important role. Social forces consist of family, friends, peer groups, status and role in society. Groups which have direct or indirect influence on consumer are referred to as reference groups. Primary groups consist of friends, family and peers with whom consumer has direct contact for considerable time. Secondary groups are association where interaction is at formal level and time devoted is less.

Consumer buying behaviour is influenced by individual’s own personality traits. These personality traits do not remain the same but change with the life cycle. The choice of occupation and corresponding income level also play part in determining consumer behaviour. A doctor and software engineer both would have different buying pattern in apparel, food automobile etc. Consumers from similar background, occupation and income levels may show a different lifestyle pattern.

An individual buying behaviour is influenced by motivation, perception, learning, beliefs and attitude. These factors affect consumer at a psychological level and determine her overall buying behaviour. Maslow’s hierarchy, Herzberg Theory and Freud Theory try and explain people different motivational level in undertaking a buying decision. Perception is what consumer understands about a product through their senses. Marketers have to pay attention to consumer’s perception about a brand rather than true offering of the product. Learning comes from experience; consumer may respond to stimuli and purchase a product. A favorable purchase will generate positive experience resulting in pleasant learning. Belief is the pre-conceived notion a consumer has towards a brand. It is kind of influence a brand exerts on consumer. For example, there is a strong belief product coming through German engineering are quality products. Companies may take advantage of this belief and route their production through Germany.

Companies need to think beyond buying behaviour and analyze the actual buying process. Complex buying behaviour requires high involvement of buyers, as it is infrequent in nature, expensive, and they are significant differences among the available choice e.g. automobile. Grocery buying is referred to as habitual buying, which requires less involvement as few differences among brands, frequent and inexpensive. Buying process involves purchase need, decision makers, information search, alternatives evaluation, purchase decision and post purchase behaviour. Companies try hard to understand consumer experience and expectation at every stage of buying process. Marketers need to figure the right combinations which will initiate purchase need e.g. marketing programs. Companies should ensure consumer have readily available information to take the decision e.g. internet, friends. Consumers evaluate alternatives based on their brand perception and belief. Companies need to work hard to develop products, which match this perception and belief every time. Final purchase decision is taken looking other’s perception of the brand. Post purchase if expectations meet actual performance consumer is satisfied and more likely to repurchase or recommend the brand to others.

Consumer markets are defined by various geographical, social and cultural factors. Furthermore, consumer behaviour is influenced by psychological, personality, reference groups and demographic reasons. Finally actual buying process involves complex process and cycle. Companies have to keep a tab on all three factors in formulating strategy.

Small Businesses Moving Aggressively to Online Marketing

Posted in Consumer Behavior, CRM, eMarketing with tags , , , on December 4, 2011 by Consultant

Small and midsize companies (SMBs) continue to move marketing dollars to digital channels, according to BIA/Kelsey, which now forecasts digital spending among US SMBs to reach $16.6 billion annually by 2015—roughly 70% of total SMB marketing budgets.

By 2015 SMBs are expected to allocate only 30% of their marketing budgets to traditional advertising (down from 52% in 2010).

The remaining 70% will be allocated to digital (mobile, social, online directories, display, and digital outdoor), performance-based commerce (pay-per-click, deals, and couponing), and customer retention solutions (email, reputation and presence management, websites, social marketing, and calendaring/appointment-setting):


SMB spending on traditional advertising will be essentially flat during the forecast period (down to a 0.6% compound annual growth rate (CAGR) from $11.8 billion in 2010, to $12.1 billion in 2015.



Overall, US SMB spending on media, marketing and business solutions will grow from $22.4 billion in 2010, to $40.2 billion in 2015, at 12% CAGR.



  • Spending on performance-based commerce and transaction platforms, from $1.7 billion in 2010, to $4.6 billion in 2015 (21.5% CAGR).
  • Spending on customer retention business solutions will grow from $3.5 billion in 2010, to $6.9 billion in 2015 (14.6% CAGR).

About the data: BIA/Kelsey’s US SMB Spending Forecast is derived from the firm’s US Local Media Annual Forecast and its proprietary Local Commerce Monitor study, which tracks the advertising and marketing spending habits of SMBs.