Consumer Behavior and Marketing Communication

“Consumer behavior is the actions and the decision processes of people who purchase goods
and services for personal consumption” – according to Engel, Blackwell, and Mansard,
Consumer buying behavior refers to the study of customers and how they behave while
deciding to buy a product that satisfies their needs. It is a study of the actions of the
consumers that drive them to buy and use certain products.

The study of consumer buying behavior is most important for marketers as they can
understand the expectation of the consumers. It helps to understand what makes a
consumer buy a product. It is important to assess the kind of products liked by consumers
so that they can release it to the market. Marketers can understand the likes and dislikes of
consumers and design base their marketing efforts based on the findings.

Importance of Consumer Behavior

Understanding consumer behavior is essential for a company to find success for its current
products as well as new product launches. Every consumer has a different thought process
and attitude towards buying a particular product. If a company fails to understand the
reaction of a consumer towards a product, there are high chances of product failure.

Due to the changing fashion, technology, trends, living style, disposable income, and similar
other factors, consumer behavior also changes. A marketer has to understand the factors
that are changing so that the marketing efforts can be aligned accordingly.

What is the importance of consumer buying behavior? 

1. Consumer Differentiation:

In marketing, consumer differentiation is a way to distinguish a consumer from several

other consumers. This helps to make a target group of consumers with the same or similar
behavior.
Though you have a targeted customer demographic in your business, you can still have
variations between individual customers. Each group of consumers are different and their
needs and wants differ from other groups.  When a marketer is knowledgeable about the
differentiation of each group of consumers, he can design separate marketing programs.

Consumer differentiation will help to tailor your strategies to the needs of varying
customer groups. When consumer differentiation is done, you can expand the width and
breadth of your services. You will be able to effectively serve a wider group of people.

2. Retention of Consumers:

“Consumer behavior is of most importance to marketers in business studies as the main

aim is to create and retain customers,” says Professor Theodore Levitt (Kumar, 2004). 
 Consumer behavior is not just important to attract new customers, but it is very important
to retain existing customers as well. When a customer is happy about a particular product,
he/she will repeat the purchase. Therefore, marketing the product should be done in such a
way that it will convince customers to buy the product again and again.
Thus, it is very evident that creating customers and retaining them is very important. This
can be done only by understanding and paying attention towards the consumer’s buying
behavior.

3. Design Relevant Marketing Program:

Understanding consumer behavior allows you to create effective marketing campaigns.

Each campaign can speak specifically to a separate group of consumers based on their
behavior.
For example, while targeting the kid's market, you may have to look out for venues such as
TV ads, school programs, and blogs targeting young mothers. You will need to take
different messaging approaches for different consumer groups. 
A study of consumer behavior enables marketers to understand what motivates consumers
to make purchases. Furthermore, the same motive can be utilized in advertising media to
stir the desire to make a purchase. Moreover, marketers should take decisions regarding
the brand logo, coupons, packing, and gifts on the basis of consumer behavior. 

4. Predicting Market Trend:

Consumer behavior analysis will be the first to indicate a shift in market trends. For
example, the recent trend of consumers is toward environment-friendliness
and healthy food.  This changing market trend was observed by many brands
including McDonalds.  Based on consumer behavior, McDonald’s brought healthy food
options. 
By conducting a consumer behavior study, a company saves a lot of resources that might
otherwise be allocated to produce a product that will not be sold in the market. For
example, in summer a brand will not waste its resources producing a product that will not
sell in summer. Based on consumer behavior the company decides on a production strategy
which will save on warehouse costs and marketing costs.

5. Competition:

One of the most important reasons to study consumer behavior is to find out answers to
some of the questions:

 Is the customer buying from your competitor?

 Why is a consumer buying from your competitor?
 What features attract a consumer to your competitor's products?
 What gaps are your consumers identifying in your products when compared to your
competitors? 
Studying consumer behavior facilitates understanding and facing competition. Based on
consumers’ expectations, your brand can offer competitive advantages. 

6. Innovate New Products:

We all know some of the big names such as New Coke, Crystal Pepsi, Colgate Kitchen
Entrées, Earring Magic Ken Doll, and Wheaties Dunk-a-Balls Cereal. Can you see the
similarities in these products? Yes, they all failed!!

The sad truth is that most new products and new ideas end up in failure. There is an
estimate of new product failures – they range from 33% to 90% based on the kind of
industry.

Companies consistently strive hard to improve the success rate of their new products or
new ideas. One of the most important ways is to conduct a sound and thoughtful consumer
behavior study. 

With the help of consumer behavior analysis, Nike realized that most of its target audience
is not professional athletes, but many of them were striving to be more like them. So at the
2012 Olympics in London, Nike introduced a campaign to encourage athletics called  ‘Find
Your Greatness'. It aimed to promote the aspirations of being an athlete, not just with
high-performing athletes but wanted to include all people regardless of their physical
capability. The campaign was well planned and was data-driven, of course, carefully
analyzed before taking any action. This message inspired many consumers and had
enormous appeal to target consumers.
  
7. Stay Relevant in the Market

When the world is changing as rapidly as it is happening today, the biggest challenge we all
face is staying relevant to our target market. And do you know what the main reason
behind the rapid changes is? It is the ever-changing behavior of our customers.
Today’s consumers have greater choices and opportunities, which means they can easily
switch to a company that offers better products and services.  
“The pre-eminent skill required to shift ahead in the twenty-first century is the ability to see
and seize.” -Adamson and Steckel, authors of Shift Ahead.
Losing relevance will only cost the company its market share. Haven’t we seen Sony
Walkman failing to stay relevant in the digital music era, and the taxi industry doom with
no preparedness to battle the UBER uprise!!

8. Improve Customer Service

Consumers require different levels of customer service, and understanding the differences
within your customer base will help you provide the most appropriate service for
individual needs.
For example, if you own an electronics store, high school or college students who buy a new
laptop are more likely to understand the features they’re looking for than a person buying
his first computer. With the first demographic, your service goal will be to provide
information about the latest trends in technology, while with the second demographic,
you’ll need to spend more time educating the customer, finding out what his specific needs
are, and even teaching him how to use the features of his new electronic device.
The primary idea of a marketing mix was introduced by Neil Borden in 1953 while
describing the recipe that was needed to make a successful marketing campaign. The idea
was then given the 4 P’s in 1960 by E. Jerome McCarthy.

Marketing Mix is a combination of elements used in the sale of a specific product. The
marketing elements that affect a products performance are seen in four distinct functions,
also called the Four Ps of marketing. They include product, price, place (of distribution),
and promotion. All these functions are considered in the process of planning a marketing
strategy. Any one may be enhanced, deducted, or changed to some degree, depending on
the market scenario, in order to create a strategy necessary to sell a product.

A brief description of each of the aspects of the marketing mix is explained

below.

Product
The physical product/service offered to the consumer. Product decisions include aspects
such as function, appearance, aesthetics, post sale service, product warranty, etc.

Promotion
Promotion decisions are those related to telling or communicating to the target customer
what the product has to offer. The duty involves luring a customer in for the sale and then
finally completing the required sale. Promotions teams have a responsibility to selling to a
new customer and increase the use of the product to encourage more sales.

Since these costs often over shoot the products price, a break even analysis must be
conducted when making promotion decisions. The promotions team decides to which kind
of customers the product needs to be sold. This is also significant in the planning of the
product cost and the type of promotion that would go into the promotion of the products.
Promotion include advertising, public relations, media types, etc.

Place
This deals with the location or the place where the product is expected to be sold. The
product has to reach the consumers through a series of distributors and retailers. It is
associated with the distribution channels which all serve as the means for getting the
product to the customers who pick it off a shelf or pay for it otherwise. The distribution
system performs all the transactional, logistical, and facilitating functions between middle
men and retailer which brings them the best deals and the most effective profit.
Distribution decisions include market coverage, channel member selection, logistics, and
levels of service.

Price
Pricing decisions should take into account to account for profit margins and competitors.
Keeping up with competitor pricing and treatment of the product in the market brings in a
great deal of strategy to the products life cycle. Pricing includes along with the marked list
price, the discounts, financing, and more options such as leasing.

The following section will deal with describing the effect of the various aspects and sections
of the Marketing Mix with association with R&D(Research and Development), Brand
Portfolio, Sales force and Market Research.

 Link between Marketing Mix and Consumer Behaviour

The psychological processes that a consumer goes through to recognize his needs and
finding ways to fill the gaps formed by these needs, making decisions about a purchase (eg.,
whether or not to pay for a product and, if they are then, which brand do they want to buy
and where), process information, planning and implementation of these plans (eg., by
engaging in comparison or window shopping or actually paying for a product).

It is often necessary to understand the customer and his/her regional and cultural
influences. Chances of an Indian or a Chinese bargaining at a retail store are higher than
that of an American customer. This affects the pricing and the promotion done for the
product. Often, the advertisements and the promotion strategy are re-used in different
parts of the world on account of the type of customer. This make a difference on spends
and proper consumer behaviour can often bring the difference between a successful and an
unsuccessful campaign.

Decision making by customers include the availability of the product in the region and
information that helps him/her make the required decision pertaining to the purchase of
the product.

Let us use a few examples to explain the link between the marketing mix and
consumer behaviour.

The denim and jeans industry which include some internationally recognised brands
including Levi’s, Lee and Pepe understand that within their target range, we include the
young crowd. Commonly people up to 30 years of age. They, therefore make sure that the
campaigns and marketing include a specific intention to pull these customers in. The ads
therefore include several young people in harsh surroundings.

KFC and McDonalds have learnt that people tend to eat more in bright coloured
surroundings. Therefore, all their outlets usually have bright colours across the walls.
These are only very simple examples of consumer behaviour. Understanding the
performance or the process of aligning the 4 P’s as per our customer’s needs is huge in
scope and profitable in practice.

 Link between Marketing Mix and Market Research

Market Research is the process of gathering data or info in order to better understand the
aspects which would affect the performance of a product on the market. We have to
understand if a particular move or step is worth the risk. Incorrect or inadequate market
research often leads to poor performance due a poor understanding.

Most companies are founded on the principle of profitability. Goods or services they
provide should aim to be something that the customer needs and the company can benefit
from. That is where market research plays it hand at making a decision. Doing that
research accurately will determine if your business will flourish or fall flat on its face.

The research conducted around a single product includes analysis of the customer during
the purchase phase, the reaction to a specific advertisement, the positioning of the product
on the shelves of the stores they appear in, the comfort of the customer with the product
etc.

In a business strategic sense, they are used to collate Market Information (data about
competitors and the supply and demand situation), Segmentation (understanding what
kinds of customers appeal to what kind of customer reacts to a specific form of promotion
based on common criteria), Market Trends (the fluctuation of the market), Risk Analysis,
Competitor Analysis etc.

Each and everyone of these activities brings the product manufacturer/service provider
with the info he/she needs to process and successfully sell the product. This changes the
manner in which the product is sold. The price, the positioning, the promotion and the
product itself depends on this research.

 Link between Marketing Mix and R&D

Research and Development in a company often implies the need or the drive to improve the
product and allow for a better replacement to make its way into the market. The idea
behind research and development is to maximise the benefits that the consumer gets out of
the product. The idea behind research and development is to improve the products and
possibly charge a premium on the improved product which will increase profitability and
allow the company to re-invest in research for a better product or a better variant of the
same.

The benefits from research are manifold. They include better products and hence a more
loyal customer and possibly new ones. A company which thrives on research like a
Pharmaceutical company is normally not considered the best kind of investment for a
player in the stock market. This is because of unusual and over the top spending patterns
for research which doesn’t necessarily return the investment made.

Research and development is also to keep one step ahead of the competitor. To remain at
or reach to the top of the table, a company must constantly come out with a product that’s
just better than the competitor’s product.

Pricing is always a major aspect to consider while working the specifics in research. The
price of a product depends on the amount of research that goes into its development. The
premium charged on a product comes from patents that protect it against duplication.
Patents however, are only offered for a temporary period. Post that, the product is open to
duplication. In this case, the price drops to a minimum, usually to push for maximum sales
and to allow a return from plain sales.

In promotion , the results of research are often touted in the ads about the same. This
comes from Surf Excel and Bournvita ads which talk about extra acting chemicals and
extra nutrients respectively to make it a better choice than competitor products.

 Link between Marketing Mix and Sales Force

The sales team that drives the amount of revenue coming into the company involves the
final point of contact with the customer. This is the point where all the promotions and
pricing bring the customer to the final decision making stage. The best salesman is who
gets the sale done and the papers signed.

It is assumed at times that a large sales force implies the sale of more products. This is not
true. A sales force means training. The training involves teaching your sales force selling
the product and the nuances associated to the product.

This leads to an automatic rise in the spends of the company and very easily reflects on the
prices of the products.

The size of a sales force depends on the reach of the product in terms of distribution. The
type of product also as a major say in the strength of the sales force. Pharmaceuticals have
lesser sales force as they cover doctors in mostly urban and sub-urban areas. FMCG sends
their sales force all across the country and the world to maximise sales.

 Link between Marketing Mix and Brand Portfolio

The brand portfolio is a system used to categorise the products into high-earners, dead-
beats and break-evens. The brand portfolio is created for both analysis of the past and
application in the future. The portfolio will contain details about the product that helps the
company make decisions about the products future. These include the promotional
activities that the product will go through, the price at which we make it available to the
customer, the positioning of the product and the condition of the products complete
development.
The price of a high-earning luxury item can be increased and the smaller items which lose
you money will be the losers which will be either pushed back from promotion or pulled
out altogether.

The idea behind a brand portfolio is to keep a check or an eye on the products
performances.

Application of Key Learnings to Reckitt Benckiser in the liquid antiseptic division

Reckitt Benckiser’s liquid antiseptic is the very popular Dettol. Dettol has been a strong
contender in the liquid antiseptic industry. It has ruled the roost in the industry for several
years and still holds solid ground.

Dettol enjoyed over 80% of the market share in its antiseptic form. The soap and the liquid
soap formats however, had just about 15% of the industry. The soap and liquid soap
formats did not enjoy the same success that the antiseptic did.

The demand for Dettol rose from about Rs. 105 billion in 1999 to Rs. 160 billion in 2009.
The demand forecast graph for Dettol over the past 10 years can be seen below.

 Consumer Behaviour Study of Dettol

A consumer behaviour study to understand the success of Dettol as an antiseptic brand was
conducted to understand the reasons for the popularity of the brand.

The study revealed that 85% of the respondents knew about Dettol i.e. they were aware
that the product existed. 72% of the respondents used it as a preferred antiseptic. 72% also
continue using Dettol because of Brand Loyalty and 56% are open to using other Dettol
products.

Dettol and Reckitt Benckiser have never had to worry about the competition so far. The
users mostly preferred Dettol to other products.

The figure below refers shows the analysis, study and the results of the research conducted.

 Pricing Strategies surrounding Dettol

The Dettol variants have always been competitively priced with the market. The Soap
variant was priced at Rs. 16/75mg and Rs.26/125mg. This was priced against the similar
Savlon product which was priced at Rs.16 and Rs.24.5 respectively for the two package
varieties. Both of the products however, are far higher than the alternate Medimix which
was Rs.12 and Rs.17 for the two variants.

At this point, a manager would wonder whether or not the right idea would be to work
towards the price. Dettol can charge a minor premium on the product price because it
holds a certain edge over the existing products. However, Savlon is catching on fast
considering its an antiseptic which doesn’t hurt as much. The manager therefore, tries to
make the best of the current scenario and ensure that the competition wouldn’t eat into its
market share.

In liquid soap, Dettol was exactly the same as the Fem variant which both sold as
Rs.55/250ml. The market share of the liquid soap for Dettol is very low. A change in the
price might even help the return to the market and allow Dettol to take the product ahead.

The Shaving Cream division sees Dettol lying between the Old Spice’s Rs.37.50/70g and
Rs.24.50/30g and Palmolive’s Rs.36/70g and Rs. 19.50/30g.

 Market Research and Research and Development of Dettol

Reckitt Benckiser and Dettol say ‘Good health begins with hygiene’. The Dettol variants
were restricted to products which represent hygiene and banked on the very reliable name
of Dettol to push the hygiene factor across to the customer. Dettol was broken down into
the Antibacterial Soap, Liquid Handwash, Shaving Cream and Band-Aid. The marketing
team at Dettol looked into what could be done to maximise the reach of the Dettol brand
and where it could be used conversely to decide what kind of variant would be required
and what type of product is needed for the next step. The products all promote killing
germs, freshness and absolute cleanliness and purity. Dettol has performed extensive
research on the expansion plans of their major brand. The Dettol brand took the reach of
Dettol to go as far as possible. The reach of Dettol moved from homes and hospitals to
hotels, theatres, railways, educational institutes, saloons, school events.

 Trend Analysis of Dettol between 2000 and 2004

The trend analysis has shows sales numbers on a high. The numbers have constantly been
increasing over the past several years. In 2000, the sales numbers were close to 48000. In
2001, the numbers went up to 55000. Uptil 2003 following this, the number remained
largely stagnant and then moved to dip slightly below 54000. However, the year 2004 was a
fantastic attack on the market and shot up numbers in a single year in 2004 to 63000.

We can tell from the demand forecast table that the demand made for the hygiene industry
products kept going up. The demand kept going up. Sales number increasing means we
need to bump up the sales force. Ideally, the need for a greater sales force comes from the
need for more retailers. The more the retailers, means that the reach of the product has
increased and there are more people who are willing to buy and to sell. A sales force
involves training. The need for greater performance is what keeps a company going. To
maximise sales, they have to increase sales force. To increase sales force, they have to spend
more money on the hiring, training and keeping the sales force. This automatically leads to
greater spending in the event that the product might not do well, thus bringing up the costs
of the product.
SWOT Analysis of the Reckitt Benckiser Dettol industry
Below we have a brief SWOT analysis of the industry.

Strengths:

 High market share of antiseptic liquid

 Brand loyalty
 Most trusted Brand
 High quality at affordable prices

Weaknesses:

 Poor marketing strategies for Dettol Shaving Cream & Dettol Talc
 Burning sensation of Antiseptic liquid

Opportunities:

 Dettol Water Purifier due to increase in epidemics

 Opportunity to capture the shaving cream segment

 
Threats:

 Competitive Pricing
 Attractive Packaging of competitor products
 Good Advertisements by competitors

Reference-

https://www.clootrack.com/knowledge_base/what-is-consumer-behavior

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