Branding and Consumer Behavior

An impulse trigger formed by well informed marketers allows consumers to quickly refer to their memory and make the purchase decision. This behavior comes almost naturally in our everyday purchases due to certain set of rules predetermined in the consumer mindset. This occurs when a brand has created strong brand resonance amongst its target niche. The Consumer Based Brand Equity (CBBE) model from Strategic Brand Management by (Keller, 2003) suggests that for a brand to reach the Brand Loyalty stage it has to at least have some salience and points of parity to be able to compete in the market place however, it is essential that a brand distinguishes itself from the competition by having unique points of difference to be able to perform above and beyond the various choices available to the consumer in today's competitive market. This model illustrates and stresses the important of being the preferred brand in the mindset of the consumer since branding has played the key role in an environment which is saturated with hundreds of choices from a product or service stand point.

Consumers actively want to associate themselves with certain brands and this makes a large influence on their buying behavior. The impulse customers may not care about brands as much unless influenced by other variable however, generally a planned purchase decision can be significantly influenced by different brands. Marketers create a lifestyle with these brands which triggers the consumer buying behavior.

In these instances the prediction of behavior becomes more important since for marketers to really understand the consumer and achieve specific results the study of consumer behavior becomes vital in every organization. This could be done in different forms of quantitative research such as surveys or qualitative research such as detailed interviews or focus groups. These research techniques allow marketers to understand consumer and compete in the market place.

Technology in Consumer Behavior

Due to the significant advancements in technology the consumers have become savvier with various tools available for extensive research before making purchasing decisions. These tools allow consumers to go on the web and do price comparisons and quickly find the cheapest possible deal or in other situations find the best possible value compared to the cost. However, these tools have also allowed marketers to indulge with customers and allow an interactive space such as the web as a communication medium. Marketers can now use the ability of sound and visual elements to create mood and settings that fit best with their target audience. Marketers are able to allow consumers to interact and create a custom preference based on each individual customer. This allows both parties to make the most out of the buying decision and buying trigger. This allows a two way communication between the parties.

Memory and Time

Planned purchases are very similar to impulse purchasing since they both may recall memory and make a buying decision. However, planned purchases may have a longer research cycle before they are made while an impulse may take just a few minutes before the product or service is purchased. This may be due to the fact that sometimes planned purchases require a much higher investment than an impulse buy. A consumer will probably not spend the same time for purchasing a chocolate bar as purchasing a motor vehicle or a big screen TV.

Income and Consumer Behavior

Income plays a significant role in consumer buying behavior. One could safely assume that an individual with higher disposable income may spend a lot more than an individual with a tighter budget. Generally consumers that have a specific budget may be more involved in larger scale research before buying. Consumers with higher disposable income may have less risk versus someone with a smaller income may have to compromise before making a buying decision. The impulse trigger from marketers may directly target a certain income group due to its positive response towards that particular product or service. Consumers actively refer to memory and research either the long term memory generally in large investments or short term memory for impulse purchases. A favorable image about a product or service may be the key decision factor for a purchase decision if it's not entirely a necessity.

Cultural Influences on Purchasing Behavior: Collectivists vs. Individualists

The Theory

The notion of collectivists and individualists often arise when considering cultural influences in purchasing behavior. For example, a person who is in a store to purchase a beverage in the presence of others, whether they are strangers, family, or friends, is faced with a decision. The buyer, whom would normally purchase a low-priced drink, may or may not opt for the more prestigious and expensive beverage; determined exclusively by the fact that the purchase is being observed by the witnesses. The dilemma is whether the consumer should buy the fancier drink to appear as one who is not thrifty for the sake of status, or not. To further explore this phenomenon, we will explore the theory of collectivists and individualists relative to impulse and planned purchases.

Collectivists and Individualists

As the name suggests, collectivists are people who view themselves as an important part of a collective such as family, friends, colleagues, and so forth. People from more collectivist areas, such as Asia, tend to be motivated by the norms of their collective as well as prioritizing the collective's goals. These individuals also take pride in being recognized as part of their collective.

Individualists are those who view themselves apart from collectives because they wish to be unique. They desire distinctiveness from others while striving to meet their own personal needs, preferences, and goals. Geographically, Americans are likely individualists who place more emphasis on brands that set them part as individuals.

Impulse versus Planned Purchases

People from a collectivist culture will be more satisfied with an impulse purchase in the presence of another person of significance as opposed to the same purchase made when they are alone. People from an individualist culture, however, have no difference in their levels of satisfaction on impulse purchases when bought in the presence of an important other; compared to when they are alone when purchasing.

B2B (Planned) vs B2C (Impulse)

Comparison

B2C customers often make purchases which can either be a planned purchase or a purchase based on impulse behavior. A B2C purchase is always made by an individual who is looking for the best price and will do so by researching the product and alternatives from the competition. However these customers may sometimes skip the researching phase and react to B2C tactics such as promotional campaigns, and discount coupons, impulsively purchasing these products. On the other hand, B2B buyers will never make purchases on impulse behavior but instead a planned purchase. B2C buyers purchase products for personal benefits while B2B buyers solely focus on product that benefits the company. The B2B benefits could be cost savings, profit increasing or time saving. The decision to purchase through B2B is always done by a group of buyers also known as purchasing agents who must consult with the company executives to approve of the transaction so the decision process takes longer and goes through more channels when completing a purchase. The business buying process can typically be summarized into several steps such as problem recognition, determining product specifications, finding qualified suppliers, requesting and evaluating proposals, selecting an order process and conducting performance evaluation. (Harrison-Walker, Neely, 2004) Because a B2B purchase can determine whether the business succeeds or fails, B2B buyers spend more time making a purchase than a B2C buyer would and must have a clear rationale on why they made their choice.

B2B vs B2C Values

Branding plays an important role in both B2B and B2C markets. In B2C, if the company is a familiar and strong brand to the customer, the customer is most likely to remain loyal to the company, purchase the product and pay a higher price because of the trust factor. Similar to B2C, branding plays an important part in building relationships with B2B consumers in respect to quality and pricing of the product. However branding in B2B is much more complex such as maintaining personal interactions between buyers and sellers, both companies performing to their expected obligations of their contracts, and the given track record the company builds with the customer over the years. Public relations also play a role in B2B relationships, more so than the traditional advertising because of the credibility and trust that can be gained. Outsider perspective may appraise one of the two companies, thus justifying the decision to working with the other. Personal business relationships, excellent performance and company reputation is a part of the branding that B2B companies use to strengthen their working relationships. (Spark, 2006)

So while the consumer is more interested in obtaining status and desire through branding, business buyers are motivated by making money, saving money and increasing productivity.

Cognitive Dissonance

Definition

Cognitive dissonance is a feeling of post purchase psychological tension or anxiety which comes from holding two conflicting thoughts in the mind at the same time. It is caused by inconsistency among one's belief, attitude or actions that an individual subconsciously attempts to eliminate by modifying his or her beliefs. Impulse purchase is defined as a novelty or escape purchase that breaks the normal buying pattern. When people make impulse purchases, they are likely to experience cognitive dissonance at some point in time in order to make sure whether their expectations are satisfied or dissatisfied.

One feels cognitive dissonance with impulse buying when the amount of conflict involved depends on the initial evaluations of the alternatives, since the purchase was hurried and unplanned, and because they may not have considered other choices which might have been better than the one that they chose. The suddenness of the purchase precludes thoughtful information search and careful deliberation.

Relativity to Impulse and Planned Purchases

Impulse purchase occurs especially when people feel like there is something in it for them like cost saving when a sale going on, when there is free shipping included and when there are seasonal and holiday promotions going on. People do not plan to buy such items in these situations to save some money, over some missed promotional opportunities and then experience cognitive dissonance or regret of buying after.

During the planned purchase, one intends to make the purchase even before reaching the store. The risk associated with buying is minimized by planning a purchase. Planning helps build confidence and assures that one has made the best, safest and informed decision in his/her purchase by taking time to examine available options. Planning eliminates uncertainty and risks by gathering information and by talking to friends or relatives. Although post purchase regret may still be experienced with a planned or searched purchase, the focus is on minimizing it by thoughtful search and deliberating in advance.

Culture: Culture is the set of basic value, perception, wants and behaviors learned by a member of society from family and other institution. Culture is the most basic cause of a person's wants and behavior. Every group or society has a cultural influence on buying behavior may vary greatly from country to country, or even neighborhood to neighborhood.

For example, when business representative of a US community trying to market itself to Taiwan learned a hard cultural lesson. Seeking more foreign trade, they arrived in Taiwan bearing gifts of green baseball caps. It turned out that the trip was scheduled a month before Taiwan elections, and that green was the color of the political opposition party. Worse yet, that according to Taiwan culture, a man wears green to signify that his wife has been unfaithful.

Marketers are always trying to spot cultural shifts in order to discover new product that might be wanted. For example, the shift toward informality has resulted more demand for casual clothing and simpler home furnishing.

Subculture: Each culture contains smaller subcultures. Subculture is a group of people with shared value system based on common life experiences and situations. Subcultures include nationalities, religions, racial groups, and geographic regions. For example of important subcultures include Hispanic, African American, Asian and Mature consumers.

1. Hispanic consumers: Americans of Cuban, Mexican, Central American, South American and Puerto Rican descent, ought more than $425 billion worth of goods and services each year. Hispanics have long been a target of food, beverages, and household care products. Most marketer now produce products tailored to the Hispanic market and promote them using Spanish language and media.
2. African American consumers: Although more price conscious than other segments, African American consumers are also strongly motivated by quality and selection. African American consumers place more importance on brand names, are more bran loyal and do less shopping around. In recent years, many companies have developed special products and services, packing and appeals to meet the needs of these consumers. A wide variety of magazines, television channels, and other media now target this consumer segment.
3. Asian American consumers: Asian American consumer is the fastest growing and most affluent U.S. demographic segment, now number more than 10 million, with a disposable income of $229 billion annually. Until recently, packaged good firms, automobile companies, retailers, and fast food chains have legged in this consumer segment. Wal-mart for example, in one Seattle store, where the Asian American consumer represent over 13 percent, they stocks a large selection of CDs and videos of Asian artist, Asian favored health and beauty products, and children's learning video that feature multiple language tracks.
4. Mature Consumers: As the U.S population ages, mature consumers are becoming a very attractive market. Now 75 million strong, the 50 and older population will swell to 115 million in the next 25 years. Mature consumer re better off financially and have more spare time than are younger consumer groups, and because of that they are an ideal market for exotic travel, restaurant and high-tech home entertainment. Their desire to look as young as they feel also make more mature consumers good candidates for cosmetics and personal care products, health foods, fitness product, and other items that combat the effect of aging.

Social Class

Almost every society has some form of social class structure. Social classes are society's relatively permanent and ordered divisions whose members share similar values, interest, and behaviors. Social class is not determined by single factor, but is measure as combination of occupation, income, education, wealth, and other variables. Social classes show distinct product and brand preferences in areas such as clothing, home, furnishing, leisure activity, and automobiles.

Social Factor

A consumer's behavior also is influenced by social factors, such as the consumer's groups, family, and social roles and status.

Groups: A consumer's behavior is influenced by many small groups. A group can be defined as two or more people who interact to accomplish individual or mutual goals. Groups that have direct influence and to which a person belongs are called membership groups. In contrast, reference groups serve as direct or indirect points of comparison or reference in forming a consumer's attitudes or behavior.

Manufactures of products and brands subjected to strong group influence must figure out how to reach opinion leaders. Opinion leaders are persons within reference group who, because of special skills, knowledge, personality, or other characteristics, exerts influence on others. In other case, marketers may use buzz marketing by enlisting or even creating opinion leaders to spread the word about their brands.

Family: Family member can strongly influence consumer's behavior. Husband- wife involvement varies widely by product category and by stage in the buying process. In the United States, the wife traditionally has been the main purchasing agent for the family, especially in the areas of food, household products, and clothing.

Children may also have strong influence on family buying decision. For example children as young as age six may influence on the family car purchase decision. “By six, they know the names of cars,” says an industry analyst. Chevrolet recognizes this influence in marketing its Chevy Venture minivan.

Roles and status: The consumer's position in each group can be defined in terms of both role and status. A role consists of the activities people expected to perform according to persons around them. Each role carries a status reflecting the general esteem given to it by society. People often choose products that show their status in society.

Personal Factor

A consumer's decision also are influenced by personal characteristics such as the consumer's age and life cycle stage, occupation, economic situation, lifestyle, personality and self concept:

1. Age and life cycle stage: People change the goods and services they buy over their lifetimes. Taste in food. Clothes, furniture, and recreation are often age related. Buying is also shaped by the stage of family life cycle. Traditional family life cycle stages include young singles and married couples with children. Sony recently overhauled its marketing approach in order to target products services to consumers based on their life stages.
2. Occupation: A consumer's occupation affects the goods and services bought. Blue collar workers tend to buy more rugged work clothes, whereas executives buy more business suits.
3. Economic situation: A consumer's economic situation will affect product choice. If economic indicator point to recession, marketers can take steps to redesign, reposition, and reprice their products closely.
4. Lifestyle: People coming from the same subculture, social class, and occupation may have quite different lifestyles. Lifestyle is a consumer's pattern of living as expressed in his or her psychographics. It involves consumer's activities, interest and opinions. When used carefully, the lifestyle concept can help the marketer changing consumer values and how they affect buying behavior.
5. Personality and self concept: Each consumer's distinct personality influences his or her buying behavior. Personality refers to the unique psychological characteristics that lead to relatively consistent and lasting response to one's own environment. For example, coffee marketer have discovered that heavy coffee drinker tend to be high on sociability. Thus Starbucks and other coffee houses create environments in which people can relax and socialize over a cup of steaming coffee.

Psychological Factor

A consumer's buying choices are further influenced by four major psychological factors:

1. Motivation: A need becomes a motive when it is aroused to a sufficient level of intensity. A motive is a need that is sufficiently pressing to direct the person to seek satisfaction.
2. Perception: A motivated person is ready to act. How the person acts is influenced by his or her perception of the situation. Perception is the process by which people select, organize, and interpret information to form meaningful picture of the world.
3. Learning: When people act, they learn. Learning describes change in individual's behavior arising from experience.
4. Beliefs and Attitudes: Through doing and learning, people acquire beliefs and attitudes. A belief is a descriptive thought that a person has about something. Marketers are interested in the beliefs that people formulate about specific products and services, because these beliefs make up product and brand images that affect buying behavior.

Attitude describes a person's relatively consistent evaluations, feelings and tendencies toward an object or idea. Attitudes put people into a frame of mind liking or disliking things, or moving toward or away from them.