UIB Consumer Behavior, Market Research and Advertisement

Consumer behavior Companies today operate in an increasingly competitive environment. They treat customers like royalty to buy their goods/services To understand customer companies must understand their behavior when buying things.

Consumer behavior model Personal Characteristic Age, gender, ethnic, education, lifestyle, knowledge, values Environmental characteristic Social, cultural/community, political, technological Market stimuli Price, brand, variety, promotion, product quality, customization Buyer’s decision Buy / not What, where, when, how EC systems Logistic support Technical support Customer Service Payments, delivery, security Web design FAQ’s, call centers, s Decision- making process Independent uncontrollable variables dependent variables Vendor controlled intervening variables

Consumer behavior Online consumer are divided into 2 types :  Individual consumer  Organizational buyers, they do the most shopping in terms of dollar volume of sales Now, let’s discuss the model……

Independent variables Personal, refer to demographics, internal individual factors and behavioral characteristic Major demographics factor : gender, age, marital status, education, ethnic, occupation and household income From these variables we know what people buy and why they do not buy back

Independent variables….. Reasons why people do not buy online : – 51%, shipping charges – Quality of products, 44% From there it’s divided again : – 32%, items return – 24%, credit card safety – 23%, can not ask questions – 16%, download time – 15%, delivery time – 10%, prefer off-line – 1,9%, unfavorable experience

Independent variables Environmental  Social, people buying behavior are influenced by family, friends, coworkers and trends  Cultural/community, different culture different buying behavior  Other, government regulations, legals, situational factors back

Vendor intervening variables These variables are controlled by vendor completely, pricing, promo, branding, customer service, tech support

Dependent variables To buy or not to buy? What to buy? Where, when and how much? These questions are very dependent to independent and intervening variables back

Decision making process Before we move on there are 5 major roles in this situation :  Initiator, suggest or think of buying this product  Influencer, they make advice when buying products  Decider  Buyer  User back

Decision making process Generic model:  Need recognition  Information search  Evaluation of alternatives  Purchase & delivery  Post purchase There are several models too, but basically all the models are based on this generic model

One-to-one marketing The greatest benefits of EC is its ability to match products and services with individual customer via personalization/customization The concept : – Customer exposed to marketing exposure (4P’s) – Customer make a purchase – Transaction data is collected – Data analyzed – Marketing exposure updated based on the analyzed data – Customer exposed to new marketing

One-to-one marketing Personalization refers to the matching of services, products and advertising content to individuals (User profile) Strategy used to compile user profiles :  Direct info from customer  Cookies  Previous purchase patterns  Marketing research

One-to-one marketing Collaborative filtering, a method that uses consumer data to infer customer interest in other products/services Some variations :  Rule based filtering.  Content based filtering  Activity based filtering Filtering may cause certain privacy issues

One-to-one marketing Customer loyalty is very important because it takes 3 or 8 times more effort to attain new customer than keep existing ones. There are 6 levels of loyalty : – The first 3 levels identified as loyalists, emotionally attached, do not have intention to switch vendors – The last 3 levels however, not so loyal because lifestyle change, new needs, dissatisfied etc. EC make loyalty levels down cos of the ease to switch vendors

E-trust Trust in business is a must In EC trust is also important because transactions is not done face-to-face Ec transactions holds many risks The EC trust model exhibit 4.5………… Brand names also increased trust in EC

Market Research The goal : – Find info & knowledge about connections between consumer, products, marketing and marketers The aim : – Discover opportunities – Establish marketing plans – Understand the purchasing process – Evaluate marketing performance On the web the objective is to turn browsers into buyers MR can be conducted via offline or online MR must be conducted based on groups or segmentation on the society

Market Research Market segmentation, divides the market into groups that holds potential for marketing. Marketers can look into these segmentation and then tailored their marketing efforts to suit these groups So, what are marketers looking for in this research? – Online buying behavior – Purchase pattern for each segmentation – Factors encouraging online purchase – Buyers or browsers? – Navigation behavior – Web design – Do they need help? – trends

Market Research Online methods – Usually to draw customer to fill research questionnaire, web site offers free games, prizes or free software Online Focus Groups Direct consumer communication Customer scenarios Tracking customers movements Transaction logs, generates a clickstream data Cookies, web bugs and spyware

Market Research Clickstream data analysis – What goods the customer looked – What goods the customer purchased – What goods the customer examined but didn’t purchase – What customer bought in conjunction – Which ads is effective and not – Are the catalog to crowded – Are there any certain product is hard to find – Are product descriptions adequate – Etc.

Market Research Limitations :  Accuracy of response  Loss of respondent (technical problems)  Ethics and legality  Truly representative samples  anonymity

Web Advertising Internet introduce a whole new way of advertising Beside cost reduction, online ad is truly beoming one-on-one advertising because :  Two way communication  s  Specific targets

Web Advertising Mass AdDirect Mail AdInteractive Ad Desired outcomeVolume salesTargeted reach, more sales, customer data Volume sales, CRM, customer feedback Consumer activitisPassive Active Leading productsFood, personal care products, beer, autos, camera, computer Credit card, travel, autos, appliances A lot of things Market strategyHigh volume productsTargeted goods to segments Targeted individual or groups Nerve centersAdvertiser companiesPostal, warehouseCyberspace Preferred mediaTV, newspaper, magzMailing listBanners, s Preffered techTVDatabaseServers, web Worst outcomeChannel surfingTrash binLog off

Web Advertising Why?  TV viewers are turning more into web  Internet can be very specific  Instant feedback  Faster reach Other reasons :  Cost  Richness of format  Personlization  Timeliness  Location basis  Digital branding

Web Advertising The methods :  Banners, usually around 5 to 6.25 inch in length, 0.5 to 1 inch in width, and hotlink to its owners website and static  Keyword banner  Random banner  Benefits : direct link, customization, forced view, multimedia  Limitation : cost, limited information, unnoticeable sometimes

Big Quiz next week Read and study chapter 4!  The consumer behavior model!  Personalization  EC loyalty  Market research  Web advertising! home