Customer Behaviour and Decision Making

Customer Behavior & Decision Making | Report 1

M.Sc in Marketing Management

Customer Behaviour & Decision Making

R e p o r t

SPYROS LANGKOS ID: 100285557

Tutor: Mrs. Aggeliki Kotsolaki

Athens, January 2014


This report concentrates on providing a balanced

view about the benefits and drawbacks of

approaching customers as group segments or as

individual consumers, by providing academic

underpinning from reputable sources & personal

critique.

Source: Google images – Keyword: Consumer culture

“...Our DNA is as a consumer company - for that individual customer who's

voting thumbs up or thumbs down. That's who we think about. And we think

that our job is to take responsibility for the complete user experience. And if

it's not up to par, it's our fault, plain and simply. “

Steve Jobs


1. Table of Contents

1. Contents..................................................................................3

2. Acknowledgements................................................................4

3. Introduction.............................................................................5

4. Postmodern Social Reality ....................................................7

5. Consumer culture...................................................................9

6. Segmentation, targeting & positioning..............................11

7. Branding................................................................................14

8. Globalisation of Culture.......................................................16

9. Current Marketing Implications...........................................18

10. Conclusions..........................................................................21

11. Appendix...............................................................................23

12. Bibliography.........................................................................25


2. Acknowledgements

The development and the implementation of this report was made possible by

the appreciation of my family and friends, who constantly helped me and

offered their support.

I also want to thank Andreas - the Mediterranean College Librarian, who was

always eager to help me find my references, in times which I was facing some

difficulties.

Most of all, I would like to thank, our module leader Mrs. Aggeliki Kotsolaki for

her continuous guidance, so that I can bring closure to our assignment work.

Still, I would like to thank my business supervisor at work, Mrs. Markaki

Anastacia, Marketing Director at iNFODATA,, for her patience towards my

academic needs and her guidance towards the English Culture.

Without the help of these people, my research could not have taken place.

Therefore I thank you all again for your contributions to my effort, by stating

that you have my appreciation and respect.

“ Facing the New World ”

Source: Bureau of Labour Statistics, Photo: Reuters – Getty Images


3. Introduction

The purpose of this paper is to investigate the role of multiple actors in the

customer behaviour and STP process, while observing the impact of key

areas, such as: culture, globalisation, current marketing trends,

postmodernism and brand affection. This study aims to contribute to the

understanding of complexity, regarding market segmentation. The paper

discusses the various problems that today’s marketer’s face and focuses on

the emerging challenges of the new marketing reality.

This paper mainly deals with the concepts and issues surrounding the matter

of consumption. Consumption is a complex social phenomenon, in which

people consume goods or services for reasons beyond their basic use.

A consumer society is one in which the entire society is organized around the

consumption and display of commodities, through which individuals gain

prestige and identity. Given the above context, globalization brings about

diverse trends, cultural differentiation and cultural hybridization (Pieterse,

1996).

The term “consumer culture” refers to cultures in which mass consumption

fuels the economy and shapes perceptions, values, desires, and personal

identity. Consumers do not make their decisions in a blank moment.

Their purchases are highly influenced by cultural, social and psychological

factors. Therefore, a customer’s want has to be identified and his expectations

must be matched with the other economic and social factors.

The world is moving and changing at a pace that is both positive and negative

in a way. Britain is an exceptional example of this ongoing situation. London is

now more diverse than any city that has ever existed. Altogether, more than

300 languages are spoken by the people of London, and the city has at least

50 non-indigenous communities with populations of 10,000 or more.

(www.statistics.gov.uk)

http://www.statistics.gov.uk/


People are changing from time to time, so do their tastes and preferences.

Marketers are always concerned about cultural shifts and keen to discover

new products or services that consumers may want. Understanding the

ingredients and drivers of global consumer culture is the key to gaining insight

regarding consumer behavior. In a diversified country like UK, culture not only

influences consumer behavior but also reflects it. Marketing strategies are

unlikely to change cultural values, but marketing does influence culture.

Companies nowadays, have powerful technologies for understanding and

interacting with customers, yet most still depend on mass media marketing to

drive impersonal transactions. In this paper we analyze mass customization

and one-to-one marketing. That means making brands subservient to long-

term customer relationships. To compete, companies must shift from pushing

individual products to building long-term customer relationships

In this paper, we consider the way organizations determine the segments in

which they need to concentrate their commercial efforts. This process is

referred to as market segmentation. The method by which whole markets are

subdivided into different segments is referred to as the STP process. STP

refers to the three activities that should be undertaken if segmentation is to be

successful, these are segmentation, targeting, and positioning.

Source: www.contentmarketinginstitute.com (Access12/01/2014)

http://www.contentmarketinginstitute.com/


4. Postmodern Social Reality

Evolution of the English society

The supremacy of Western thinking has been challenged throughout the

twentieth century and especially with the decline of colonial empires.

Postmodern thinkers, also point the fragmentation of experience and the

compression of time and space as defining features of the late twentieth

century. Most of UK was once dominated by heavy industry, where people

were miners, shipbuilders or mill workers and the basis of social life was for

these men and women, their relationship with the process of production.

Their personal, collective and cultural identities were rooted in the locality

around the workplace and in the values of the industry for which they worked.

The last thirty years have seen a radical shift in the nature of this relationship.

The land which used to house the factories and mines has now been

developed for out-of-town shopping areas such as the Metro Centre.

To a significant extent, they have become tourists in our own cultures.

Sunday no longer means a trip to church or chapel, but rather a visit to the

cathedrals of consumerism. Shopping malls have become major sites of

leisure activity, the pilgrimage is enough even without the act of buying.

Englishmen, no longer conform to the traditions of the old occupational

cultures and instead choose a lifestyle. This term, not in itself a new one, was

taken by the advertising and designer culture of the 1980s to stand for the

individuality and self-expression that was the cornerstone of the free market

revolution of that decade. (Stuart Sim, 2001)

Source: Google images – Keyword: Globalazation


Keep Calm & Consume mentality

The era of mass consumption, with its emphasis on conformity and similarity,

has been replaced by an apparently endless choice and variety of consumer

goods aimed at specific market segments. Those who participate are not just

fashion victims, but actively wish to join in and actively desire the

opportunities for self-expression and display which are provided by the

choices of the shopping malls. Power has now come to be seen as the

capacity to spend in order to find expression for an aspiration lifestyle.

(O’Shaughnessy J, 2002)

Advertising is of particular interest to postmodernists since many ads are

regarded as masterpieces of condensed nuance, parodies of the mightier

melodramas of cinema and soap opera. For postmodernism, marketing

equalizes everything in the service of consumption. (Venkatesh A. 1999).

In the postmodern world the basic dogma is: I shop therefore I am. However

we need to reflect on the question of what happens to those who cannot shop

and are therefore excluded from the basis of social identity.

Source: Google images – Keyword: United Kingdom flag


5. Consumer Culture

Historical Development

Just a few centuries ago before the Industrial Revolution consumption

patterns were very different from those that exist today. People had limited

time and other sources to spare for shopping for goods, particularly those

produced far from home with the exception of a very few elite who had long

enjoyed higher consumption standards. Then the Industrial Revolution

drastically transformed production. Production levels in England soared

significantly. In the early 19th century about two-thirds of the increased output

was sold to other countries around the world. However, growth through

expansion into foreign markets had its limits that required the rise in the

domestic consumption. English patterns of consumption were changing and

leading to a growing middle class and working class, allowing these classes to

become consuming classes. Workers would no longer prefer to work just to

earn their traditional weekly income and stop to enjoy more leisure; rather

they would prefer longer hours to earn and spend more. The former attitude

was not compatible with mass production and mass consumption (Goodwin,

Nelson, Ackerman and Weisskopf, 2008).


The concept of Consumption

Consumption is a social and cultural process involving cultural signs and

symbols beyond an economic, utilitarian process (Bocock, 2005).

Within consumer society, objects are used fast and disposed wastefully.

Recently this rapid use and disposal has been largely associated with the

corruption of values and thus often carries a negative meaning. (Penpece,

2006). Baudrillard (1998) argues that the consumer society needs its objects

in order to exist, and in a way, consumer society needs to destroy its objects.

Baudrillard (1998) believes consumption is merely an intermediate term

between production and destruction. Goodwin, Nelson, Ackerman and

Weisskopf (2008), explains how consumer society can only make sense in its

social context:

“The modern consumer is not an isolated individual making purchases in a vacuum.

Rather, we are all participants in a contemporary phenomenon that has been

variously called a consumerist culture and a consumer society. To say that some

people have consumerist values or attitudes means that they always want to

consume more, and that they find meaning and satisfaction in life, to a large extent,

through the purchase of new consumer goods.”

The ideology of consumerism is not limited to those who can actually afford

goods, but surrounds those who can dream about them, who can have

access to that dream-world. Bocock defines consumerism as: an active

ideology in which the meaning of life is to be found in buying things and

prepackaged experiences that spread through modern capitalism.

This ideology of consumerism serves both to legitimate capitalism in the daily

lives and everyday practices of many people in global world and motivate

people to become consumers in fantasy as well as in reality. (Bocock, 2005).


6. Segmentation, Targeting & Positioning

Market Segmentation Process

The intricacies involved in market segmentation are said to make it an

exacting activity. Griffith and Pol (1994) argue this point on the basis of

multiple product applications, greater customer variability, and problems

associated with the identification of the key differences between groups of

customers. There are two main approaches to segmenting markets:

The first adopts the view that the market is considered to consist of customers

which are essentially the same, so the task is to identify groups which share

particular differences. This is referred to as the breakdown method.

The second approach considers a market to consist of customers that are all

different, so here the task is to find similarities. This is known as the build-up

method. The breakdown approach is perhaps the most established and well

recognized and is the main method used for segmenting consumer markets.

The build-up approach seeks to move from the individual level where all

customers are different, to a more general level of analysis based on the

identification of similarities (Freytag and Clarke, 2001). The build-up method is

customer oriented as it seeks to determine common customer needs. The aim

of both methods is to identify segments in the market where identifiable

differences exist between segments (segment heterogeneity) and similarities

exist between members within each segment (member homogeneity).

Source: Google images – Keyword: target your customers


Philip Kotler suggests that, to be effective and useful to your business, a

market segment must have certain characteristics. It must be:

Measurable. You need to know its size, key characteristics,

purchasing power, and preferences.

Substantial. The segment of interest must be large enough to be

profitably served by you.

Accessible. There is no point in segmenting if you know in advance

that there is no practical way to access a segment’s members.

Differentiable. Segments must respond differently to different

marketing programs. Kotler gives the example of married and

unmarried women’s response to perfumes. If there is no difference in

their responses, then there is no effective segmentation.

Actionable. There must be a practical and cost-effective way to attract

and serve customers in the segment.

Positioning

In the "Note on Marketing Strategy" (HBS No. 598-051), positioning is defined

as the marketer's effort to identify a unique selling proposition for the product.

It is arranging for a product to occupy a clear, distinctive, and attractive

position relative to competing products in the minds of target consumers.

In finding a desirable positioning, the firm has to consider, for each potential

segment, how it would approach serving that group of customers and how it

would want to be perceived by those customers. The answers should be

based on a thorough understanding of the customer, the competitive

environment and the conditions of the market in which it operates.


Targeting the Market

A market can be defined as ‘a group of individuals and organizations that

have a need or potential need in common that can be satisfied through a

specific service offering and have the ability to pay for it. The targeting

process is flexible and indeed can be highly creative if a firm puts

considerable effort into the process. It is feasible for a firm to focus on quite a

broad market or a narrow one offering a few core services or the firm can

target a number of segments with a attempt to offer a differentiated service for

each which would entail developing a separate marketing mix for each

segment. (Miklos Sawary 2005, HBS ).


7. Branding

The concept of brand has spread far beyond consumer marketing where it

originated, to enter into management (corporate branding), welfare, politics

and the construction of local identities (Olins, 2003; Van Ham, 2001).

Like the factory in times of Fordism they present an exemplary embodiment of

the prevailing logic of capital (Lash, 2002: 142). This logic consists in an

extended recourse to forms of unpaid immaterial labour as a source of surplus

value. This way, brands can be understood as a capitalist response to the

condition of post-modernity, marked by an intensified mediatization of the

social identity and community. (Adam Arvidsson, 2005).

Source: Hugo Boss Investors Handbook,

Available at www.hugoboss.com (Accessed 13/01/2014)

http://www.hugoboss.com/


Brand management

In consumer marketing, brands often provide the primary points of

differentiation between competitive offerings, and as such they can be critical

to the success of companies. Therefore it is important, that the management

of brands is approached strategically. However, the lack of an effective

dialogue between functions that are disparate in philosophy and do not have a

common and compatible use of terminology may be a barrier to strategic

management within organizations. ( Wood L., 2000)

Brand equity

An attempt to define the relationship between customers and brands

produced the term ``brand equity'' in the marketing literature. The concept of

brand equity has highlighted the importance of having a long-term focus within

brand management. Although there have been significant moves by

companies to be strategic in the way that brands are managed, a lack of

common terminology and philosophy within and between disciplines persists

and may hinder communication. Brand equity, like the concepts of brand and

added value has proliferated into multiple meanings. The concept is to be

defined, both in terms, of the relationship between customer and brand

(consumer-oriented definitions), or as something that accrues to the brand

owner (company-oriented definitions). (Wood L., 2000)

Source: Google images – Keyword: Brand Architecture

Available: http://brandconnectix.com

http://brandconnectix.com/


8. Globalisation of Culture

Definition of Culture

Culture, as Williams pointed out in 1958, “is one of the two or three most

complicated words in the English language”. The complications arise because

the concept has evolved differently in different European languages and in

different disciplines. The word derives from the Latin “colere”, which had

various meanings, including to cultivate, protect, inhabit and honor with

worship. Williams noted that some of these meanings dropped away although

they remain linked through derived nouns such as cult, for honor with worship

and colony for inhabit. The Latin noun cultura evolved and its main meaning

was cultivation in the sense of husbandry. Much later after it passed into

English early in 15th century, it came also to include cultivation of the mind.

(Harvey and Stensaker, 2008).

Source: Google images – Keyword: Western Lifestyle. (Accessed 13/01/2014)


The Borderless Global Culture

Global Culture is a complex and abstract construct that consists of various

implicit and explicit elements (Groeschl and Doherty, 2000), that makes it

difficult for academics across disciplines to agree on a common description.

Over 200 descriptions of culture have been found; however, the most broadly

known and used definition in marketing literature is the one specified

systematically by Taylor in 1881, who defined culture as a "complex whole

which includes knowledge, beliefs, arts, morals and law, customs and any

other capabilities and habits acquired by man as a member of society"

(Lindridge and Dibb, 2003).

Each individual gets exposed a large number of thoughts, values, norms, and

cultures and thus learns to differentiate between the good and the bad ones,

thereby choosing a certain belief system that keeps on changing with more

and more experience (Kim, Lee, Kim and Hunter 2004).

In the light of globalization consumers in almost every corner of the globe are

increasingly able to eat the same foods, listen to same music, wear the same

fashions, watch the same television programs and films, drive the same cars,

dine in the same restaurants and stay in the same hotels (Ger and Belk,

1996). The rise of a global culture doesn't mean that consumers share the

same tastes or values. Rather, people in different nations, often with

conflicting viewpoints, participate in a shared conversation, drawing upon

shared symbols. Global culture, is eclectic, timeless, technical, universal and

cut-off from the past; unlike national cultures which were particular and time

bound (Smith, 1990).


9. Current Marketing Implications

The New Marketing Era

The new marketing era means not only revising so far used paradigms or

developing new approaches to the relationship between a company and a

consumer, but also emergence of challenges unknown in the traditional mass-

marketing world. Although nowadays marketing seems to be on the threshold

of the new era, numerous challenges have already appeared.

(Wielki J , 2002)

Source: Research about Content Marketing in UK, Direct marketing Association

Available: http://www.dma.org.uk , (Accessed13/01/2013)

It seems that in the case of most companies, the basic problem is that

although they have used various new marketing tools and techniques, haven’t

redesigned their marketing processes, in order to adapt them to the new

conditions. Since these processes are adjusted to the mass marketing reality

it srequire implementing to them to deep changes, otherwise companies will

fail to exploit numerous opportunities offered by the electronic environment.

http://www.dma.org.uk/


Integrating Marketing Strategies

As we explore the dynamics of customerization, it is important to understand

that customerization, mass customization, and personalization and even

standardization will exist side-by-side. Customerization is not a strategy that

replaces traditional mass marketing, but rather it offers additional competitive

options in developing an overall marketing strategy. The challenge facing the

firm is, therefore, how to design and manage a customerization process along

with mass-produced products and services. In some sense, this process is

easier for companies that were built from the ground up as e-businesses

(e.g., Amazon.com or the new Internet bank Wingspan) as compared to well-

established companies with considerable investments in legacy systems and

processes (e.g., General Motors). (Wind J, 2001).

While technology makes the implementation of customerization easier and

cheaper, the accompanying strategic and organizational decisions are

actually more complex and more expensive. Using database technologies,

travelocity. com maintains customer profiles using information provided by the

members themselves about the particular destinations and trips of interest to

them. Whenever the fares change for any of the selected destinations or trips,

travelocity.com sends out a customized e-mail (about 2 million per week) with

this information. Seybold and Marshak (1999) indicate that customers

welcome this type of customized email promotion, which is one of the most

successfulprograms at travelocity.com. Data mining is also critical in helping a

company identify the customer segments most receptive to customerization.


Knowledge Exchange with Customers

A key challenge for customerization to work effectively, is the recognition of

needs to exchange information and knowledge between companies and

customers. This requires the company to “open up” some of its internal

processes and structures to its customers. It also requires customers to be

willing to share their attitudes, preferences, and purchase patterns with the

company on an ongoing basis. (Rangaswamy A., 2001)

Source: Digital Marketing Research – company factbook.

Available: http://www.eclipse.net.uk/ (Accessed 4/01/2014)

http://www.eclipse.net.uk/


10. Conclusions

It seems that for the time being opinions that marketing has already entered

the new era are obviously mature. Although it can be commonly observed

that, relatively low number of marketers perceive specificity of the new

medium and the whole opportunities it provides, while the majority of them

follows stereotypical mass marketing approaches. Instead of utilization of

these new tools and techniques, for building long-term relationships with

customers, which is undoubtedly difficult and arduous process, they prefer to

use them for interruptive marketing, by bombarding clients more heavily

(Onlinre & Ofline). This is very short-sighted policy and undoubtedly this is

not the right way to achieve success in the new reality, e-reality.

Only those of them, who will understand peculiarity of the new business

environment and redesign their marketing process can succeed. (Janusz

Wielki, 2002)

Source: Using Segmentation to Create “Winning” Brand Strategies. Available:

http://www.prophet.com/downloads/webcasts/Segmentation.pdf (Accessed 9/01//2014).

http://www.prophet.com/downloads/webcasts/Segmentation.pdf


Cultivating Customers

Not long ago, companies looking to get a message out to a large population

had only one real option: blanket a huge swath of customers simultaneously,

mostly using one-way mass communication. Information about customers

consisted primarily of aggregate sales statistics augmented by marketing

research data. There was little, if any, direct communication between

individual customers and the firm. Today, companies have a host of options at

their disposal, making such mass marketing far too crude.

The exhibit “Building Relationships” shows where many companies are

headed, and all must inevitably go if they hope to remain competitive.

The key distinction between a traditional and a customer-cultivating company

is that one is organized to push products and brands whereas the other is

designed to serve customers and customer segments. This strategy may be

more challenging for firms whose distribution channels own or control

customer information, as is the case for many packaged-goods companies.

But more and more firms now have access to the rich data they need to make

a customer-cultivating strategy work. (Gaurav Bhalla, 2009).

S o u rce : G o og l e i m age s – K ey wor d : M c Don a l d s i n S aud i A r a b i a


11. Appendices

A] NEW INTERACTIVE MARKETING MODEL

Source: Janusz Wielki, Marketing in eWorld Era: Opportunities, Challenges

and Dilemmas, 15th Bled Electronic Commerce Conference, eReality:

Constructing the eEconomy, Bled, Slovenia, June 17 - 19, 2002.

(Accessed 10/01/2014)

B] CUSTOMER VALUE SEGMENTATION

Source: Andrew Pierce, Prophet Senior Partner. Using Segmentation to

Create “Winning” Brand Strategies. October 18, 2005. (Accessed

9/01//2014). http://www.prophet.com/downloads/webcasts/Segmentation.pdf

http://www.prophet.com/downloads/webcasts/Segmentation.pdf


C] Transforming Cultures – world population per consumption level

Source: Worldwatch Institute, 2010. www.worldwatch.org

(Accessed 6/01/2014)

D] VALS FRAMEWORK

Source: University of Minnesota Duluth. VALS Framework

http://www.d.umn.edu/~rvaidyan/mktg4731/VALSFramework2002-09.pdf

(Accessed 8/01/2014)

http://www.worldwatch.org/

http://www.d.umn.edu/~rvaidyan/mktg4731/VALSFramework2002-09.pdf


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