Consumer behaviour is a matter of fundamental interest in nowadays business environment. It helps companies get an idea about the preferences that the present and potential customers may have, as well as about their acquisition patterns. In addition, it helps them understand through what means it might be possible to influence these preferences and patterns. One particular customer who is considered to be extremely interesting for most of the companies trying to sell something out there, is represented by the person who has a financial power which allows him to acquire high-end goods. In other words, we are speaking about people who buy Mercedes cars, Rolex watches, Louis Vuitton bags and diamond rings.
Creating the profile of such a customer is not difficult, although influencing his tastes and preferences might be a task more difficult to accomplish than one could believe. Regardless if we are talking about men or women, the high-end gods consumers live in urban locations, have high and very high annual incomes, they usually have superior studies and a fast rhythm life. They are usually kept very busy by their jobs and businesses. They buy high end goods not only because they can afford goods of superior quality, but also in order to demonstrate their social status. Such is the case with cars for example. Furthermore, the client who has the ability to buy high-ticket goods is updated with the latest technology trends and does a considerable amount of shopping online.
In order to buy from online stores, there are three conditions that one must fulfil. He must have the “ability, willingness and readiness to buy before a direct sale can be consummated” (Wunderman, 2005). The ability is no longer a problem for anyone who wishes to buy merchandise online. All you need is a card and an internet connection. The willingness exists as well, as online shopping comes with a lot of advantages, the most important one being the fact that you save time and effort and you also get the acquired item delivered to your door.
The readiness however could be influenced by the expectations that one might have from the acquired item and the financial impact upon one’s income that the acquisition has (Wunderman, 2005). Supposedly, the readiness would decrease together with the increase of the price. Nevertheless, the fact that Mercedes has been a leader in online car purchase may be a proof that people are comfortable buying even cars over the internet. Personally I would not be very comfortable buying an ML 500 Mercedes over the Internet. This is not because I would not trust the quality of the product. The sale point does not influence the quality of the sold product, at least not when it comes to brands that can not risk ruining their names and losing credibility (and Mercedes is one of them). My reluctance towards buying my car online does not come from the potential lack of information. Online sales portals usually provide customers with all the necessary information and photos of the item from all the possible angles in order to make the experience as pleasant as possible. In addition, one who wants to invest in a Mercedes already knows what the desired attributes of the car are. However, the pleasure of touching the car and its various pieces, looking at the engine, taking the car for a drive, talking to the salesman are important steps in the acquisition of a high class car, steps which can not be replaced by any photo or text that I may find online.
As far as online acquisition of high -end goods is concerned, one my speak about watches and jewels. From this point-of-view the sites Rolex and DeBeers come in mind. Diamond jewellery and exquisite watches can be bought online from the brand websites which provide you with all the necessary information. The DeBeers site however is better organized and gives you an increased feeling of interaction as well.
b. It is not only the individuals who act as buyers, but the organizations as well. Even if an organization acts as an unique entity when acquiring something, it is important to underline that the possible consequences of that particular acquisition will affect more than one individual.
From this point-of-view, it is worth adding that the process of decision-making (which is at the basis of any acquisition act) is an extremely difficult one.
Usually, the process of decision -making involves a team. The reasons for doing so are obvious, the more the experts involved, the better the chances of success. It is not only the manager who knows what the best interests of the organization are, but also the people who are in positions which allow them to predict how the taken choice will affect various layers of the company’s future functioning.
The basis for any process of decision making is represented by information. When information comes from more reliable and relevant sources, there are more chances for the company to make a better choice. This is how the team work is justified under these circumstances.
Within any typical organization, flow of the information needed in the decision-making process is influenced by the gatekeepers- the people who link the organization with the outside environment” (Lau, 2003). The gatekeepers have a fundamental importance from this point-of-view because they contribute to a more efficient selection of the information which is to be used as relevant for the organization’s functioning.
Another point of crucial importance in the process of decision-making is represented by the selection of the most relevant gatekeepers. And here one can speak about the persons who constantly communicate with parties which are essential to the functioning of the company. These parties are represented by the suppliers, for example. “Buyers trust be enhanced if buyers perceive suppliers to be trusting of the buyers and if buyers perceive the suppliers to be highly committed to the relationship” (Tao, 2005).
Buying from suppliers which are trusted by people who buy from the organization has been demonstrated to be efficient from this point-of-view and is an observation that might make things easier within the decision -making process. The important variable to be taken into consideration at this point is represented by trust. Trust helps reduce uncertainty.
Uncertainty is always associated with change and any decision has the power to change things. Change management is therefore important and must be connected with the process of decision -making. Organizational decisions are important because they might bring about changes within and these changes must be dealt with at all levels. Any acquisition might affect the future functioning of the organization because of its financial consequences (sometimes the consequences are to be found also at psychological level).
In order to increase the chances of a making a decision which will prove be to as efficacious and efficient as possible for the organization which took it, it is important to base it on expertise (hence the necessity for team work and the existence of gatekeepers in crucial positions) and on scientific data. This is why already existing models and management tools come in handy when one needs to make calculi regarding its future investments.
c. Ethnicity, religion, culture and race are elements which played a fundamental importance upon the behaviour of people as customers. All the choices that people make are influenced by their attitudes. Attitudes are influenced by values and beliefs. Obviously values and beliefs are a cultural product and the cultural background of people has a tremendous importance in defining who they are.
Nevertheless, marketing having technology at its basis has succeeded in crossing these cultural barriers. It is time to speak about the latest business trend, a trend which is nevertheless imposed by the business environment and its development, the trend called Customer Relationship Management. The main conception of CRM is that the best approach to the relationship that an organization has with its customers involves creating a life long relationship which is based on trust and mutual advantages.
According to the principles of CRM: ” new customers are expensive to capture, lost customers rarely come back and one should spend their major efforts on excellent customers or groups of customers ” (PHS Management Training). The advantage of making your customers loyal is to be found in the constant profits that com from constant acquisitions. A customer who is loyal to a brand is also more likely to buy other products manufactured under the same time, as he or she has trust in the brand’s characteristics.
In addition, loyal customers who are satisfied by the organization’s products and services are likely to become advocates for the organization, letting everybody know about their favourable experience. Should they happen to be opinion leaders, it is all the better for the brand. Since it has been demonstrated that customers who have not had a pleasurable experience tell the others about it and there are small chances for them to come back, the logical conclusion is that it is wiser to invest in the relationship with the customers who are happy with what you give them.
This conclusion is also supported by the fact that it is far more expensive to gain new customers than to make a satisfied customer come back. This is why it is worth investing in the development of the relationships with the already existing valuable clients from this point-of-view, it would be a right time to bring into discussion the concept of empowerment. Well chosen representatives of the organization can be given the power to establish and negotiate relationships of commitment with the customers. The organization must nevertheless keep in mind the fact that the relationship must be mutually advantageous. Consequently, a constant development of the products and services must be taken into consideration as well as a continuously adapted client management scheme.
The target clients must be thoroughly segmented and each of the needs must be addressed in a specific mode. Demographic data is important but is not relevant if taken into consideration alone. Geographic locations, attitudes, etc. also need to be taken into consideration. Just as Cobb says, a company will “need to apply an array of effective marketing mechanisms to deliver the right offer to the right customer at the right time at the right cost.” In order to fulfil this obviously difficult task, an organization may need to take into consideration aspects such as risk, client profitability and communication.
Communication has proved to be essential in establishing and maintaining relationships. It is with its help that an organization may become aware of the changes which occur in the customers’ preferences. Feedback helps the company come up with future strategies. At the same time, communication helps the organization keep an eye upon the surrounding environment (competitors included).
d. Cadillac is one of the companies which has had an important history as far as marketing to its customers is concerned. The company became famous for one of the choices that it made in time of crisis. Just as Berkowitz says, the “company managed to save itself by choosing to sell to the Afro-American population.”
This statement is very interesting to analyze since it is obvious that the main criterion chosen for the segmentation of the target population was in this case ethnicity. Discussing this issue from the perspective of Customer Relationship Management, it can be said that the company took into consideration an important cultural element when addressing a new target public. Although it is known that it is cheaper to invest in the relationships with the already existing clients, there are times of crisis when a decision such as the one taken by Cadillac can prove to be wise. And wise it was, since it brought the company the desired amount of profit.
In order to benefit from an efficient Customer Relationship Marketing experience, a company must be in the possession of all the technologies which allow it to monitor the behaviour of the clients. Since Cadillac chose at some point to focus on the Americans of African origin, it was important for them to know how to address this particular target. The ethnic variable is important under these circumstances because it plays a great influence upon the construction of a social identity. Such a factor could not have been ignored in the context in which Cadillac could not afford a new failure.
It is known that life in the African-American communities is sometimes led according to rules and principles which are not too often to be found in the other communities. They can very well influence the acquisition behaviour of people, regardless of the type of item (from commodity goods to high-end luxury products).
Apparently, the already existing attributes of the Cadillac brand, as well as the already existing groups of clients are not enough in order to allow the company to maintain the desired profits quota. This is how one can explain the declared intention of the company to expand its range of customers. Such is the case of the campaign that Cadillac launched during the summer of 2007, under the name of “Life. Liberty. And the Pursuit.”
The purpose of the campaign is to reignite America’s love affair with the brand” (Webwire). Reading between the lines, one can see that the interest for this particular car brand has diminished. In order to refresh the attention and the interest among the already existing clients, but also among prospects, the company has come up with a communication and marketing campaign. This campaign has the purpose to attract attention upon the brand and hopefully increase sales as well.
Since being product-centric has not proved to be beneficial for the company from long-term perspective, it is safe to say that it is a good an idea to consider becoming customer centric. Even if the new campaign is meant to draw the attention to the characteristics of the brand, to its most important attributes, the company must also understand that it has to keep an eye on the profitability margins of its customers. And it can do this through a perhaps more personalised campaign which also aims at obtaining relevant feedback about the Cadillac actions and products, allowing it to better understand the changes in the preferences, attitudes and desires of its current clients.
The importance of subcultures when it comes to the acquisition behaviour is no longer a secret. People carry their cultural background with them, regardless of the places where they go. It is a part of their identity. Therefore, kit is safe to say that is influences the way they think and the way they act. There are three main consumer subcultures which can be found in the United States of America. These are the Hispanics, the Asian and the African.
It is also interesting to know who and what buys within these subcultures. Who does not buy and the reasons for doing so. There are differences in the acquisition behaviour of these subcultures because the things that we buy reflect who we are. Thus, it could be said that a cultural difference will also be visible in the shopping lists.
Let us take for example the case of the Hispanic-Americans. “Their purchasing power has influenced the marketplace” (Heise). The demographic data can explain the situation here. As Hispanic families are usually formed from a large number of members, it is likely that the family will eat more. In order to eat more, one needs to buy more.
It is known for food to have an important part in the Hispanic culture. Fresh food is especially sought by the members of this particular consumer subculture. This means that the sales of fresh fruit and vegetables, as well as the sales of fresh bread and fresh meat will also be influenced by the preferences of this group. Their holidays and other religious or social events which involve ceremonial eating will also influence the patterns of the acquisition behaviour.
Another market segment which is influenced by the consumption habits of the Hispanics is represented by the dairy industry. Just as Heise (2002) says, ” growing ethnic diversity, particularly an increase of Hispanics, may decrease per capita consumption of dairy products by U.S. consumers.” third aspect that could be taken into consideration when discussing the consumer behaviour of the Hispanic subculture is represented by the manner in which their incomes influence their daily life. It could be stated that the major part of the immigrant families do not have high annual incomes. This is often because of the fact that they do not always the superior education that would otherwise allow them to. As a consequence, this particular subculture is not one of the important segments of people who buy high -end products.
Another subculture that is present in the United States and which influences the market is represented by the Asians. The number of Asians living in the U.S.A. is important enough to play a part in the way in which companies come up with new products and marketing strategies.
From this point-of-view, it is interesting to acknowledge the product areas which most benefit from the preferences of the members of this subculture.
Researches concluded in the past have demonstrated that the preference of Asian-Americans for the use of the internet. An overwhelming 90% of the people who were part of the Diversity Business study (Diversity Business, 2007) declared that they make an often use on the internet connection.
Not only do they enjoy spending their time online, but they also use the Internet as a means for shopping. “Asian Indians and Chinese spend the most hours on the Internet” and the online spending has been increasing, especially in the area of books and various apparels” (Diversity Business, 2007).
The fact that young people spend so much time on the internet can help companies come up with the profile of the future buyer that these children will grow up to be. Therefore, it is of great importance to create and maintain relationships with this particular target.
Another consumption area that is relevant for the buyers which are part of the Asian-American subculture s represented by the media. It has been proved that Asians living in America show a great preference for ethnic TV channels, which they tend to watch most. As far as ethnic media is concerned, the most popular form is represented by print. It is worth underlining at this point that the advertising that the American companies choose to make in these newspapers and magazines is best to be written in the language of the target audience.
A third consumer subculture currently living in the United States and playing an important part for the economy of the country is represented by the African-Americans.
It is important to mention that the members of this subculture are often part of poor families. Most of the times, the lack of education is an important factor in causing their social status. Another problem may be at times represented by the fact that not all of them can speak fluent English.
Since education is one of the main elements which influences the acquisition of a job, and thus, the acquisition of a social status. Since the financial power of the African-Americans is reduced, so will their purchasing power. This will be reflected in their poor presence on the lists of the target audience for high end goods. Nevertheless, they will represent a target for schools and for institutes teaching English. In addition, they will also be a target of the brands selling entertainment devices, such as DVDs, CDs belonging to certain areas of music and film.
The terms “high context” and “low context” are used in order to illustrate that differences which exist between societies from a cultural point-of-view. The term “high context” is used when referring to social groups inside which interactions and connections have been lasting for years. Since interaction allows people to know each other profoundly especially when it lasts for a considerable period of time, in societies characterised by the existence of high end cultures it is more likely for more things to be stated in a manner which is not explicit. This is possible because the degree of mutual knowing is high enough to allow a decoding of the message in this particular manner.
On the other hand, the term of “low context” refers to those societies in which people manifest the tendency to create numerous connections which, for various reason last for only a short period of time. Since this type of relationships do not allow a profound knowing and understanding of the other, it is most often necessary for patterns of cultural behaviour as well as other norms and beliefs to be presented and communicated in an explicit manner (Communicating across cultures).
Consumer behaviour is one of the aspects which can be better understood when connected with of concepts of high and low context. since relationships in high context groups are solid, it is difficult to enter this communication space if you are from the outside. On the contrary it is with a greater easiness that one manages to enter the space characterised by a low context (Communicating across cultures).
This has important consequences for the management and marketing teams working in order for the companies to function successfully. When analyzing the consumption patterns of people who are members of various subcultures, it is important to understand the degree to which the subculture under discussion is either a high context or a low context one.
An important aspect to be taken into consideration under these circumstances is represented by the attitude that organizations must show in their relationship with their clients based on their belonging to various cultures and/or subcultures.
It has been shown that Asian-Americans for example show a clear preference for fresh food and they read a lot of ethnic press. This means that they have an impact upon the economy of the country, influencing certain areas of production. Understanding their preferences is helpful as companies may come to an efficacious way of maintaining the relationships with people who are part of these social groups.
In addition, having an understanding of the preferences manifested by a certain social category, means that one has the possibility to understand the motivation behind the preference, and thus, the basis of a certain consumer behaviour. Understanding its basis means also being able to predict further changes. In addition, it presents companies with the opportunity of coming up with new products and services that might be interesting for the current clients (thus, contributing to the maintaining of a long-term relationship).
Furthermore, it may help an organization understand how it can influence the tastes of the targeted group. It is known for example, that a very large part of the category represented by African-Americans do not have access to well paid jobs because they are unable to speak fluent English.
Organizations offering various programs which allow adults to learn English and which adapts to the specific needs of these individuals might have a greater success than the schools offering a standard educational programme.
It may be stated that cultural subcultures living in the United States of America represent cultural categories characterised by the presence of high context. This means that that, the communication acts which take place inside it will be better understood. In addition, there will be numerous interactions and cross-cutting ties. There will be strong perception and behaviour differences as far as insiders and outsiders are concerned. Knowledge is to be obtained in a relational manner, through the contact with the others. At the same time, decisions are to be made depending on the will of a central authority and also under the influence of face-to-face relationships (Communicating across cultures).
This means that establishing and maintaining close relationships with the people who are part of the African, Asian and Hispanic subcultures is a fact which must not be neglected. Gatekeepers are fundamental from this point-of-view. The role of the gatekeepers is to establish contact with people who are in positions of power within these groups, regardless if they are in a central position of power or just leaders of opinion. The benefits that a company might obtain from a trust-based relationship with these people are more than numerous.
These benefits refer to the strong influence that these people have inside their communities. Such an influence is impossible to gain through advertising or Public Relations or other expensive marketing and management techniques. Since the relationships that these people establish with the members of their community are based on strong trust and that decisions (the acquisition related ones included) are often a result of the face-to-face encounters with others, it is needless to say how much a company can gain. This gain is not only to be found at financial level, but also from the point-of-view of a long-term strategic resource.
2007). Annual Asian-American Consumer Behaviour Study reveals Key Findings in Retail, Automobile, Insurance and Telecom Industries. Retrieved November 26, 2007 from the Diversity Business Web site: http://www.diversitybusiness.com/news/supplierdiversity/45200672.asp
Berkowitz, J. (2007). Cadillac Flunks History. Again. Retrieved November 25, 2007 from the All about cars Web site: http://www.thetruthaboutcars.com/editorials/cadillac-flunks-history-again/
2006).Cadillac introduces new ” Life. Liberty. And the Pursuit.” Marketing Campaign. Retrieved from the Webwire Web site: http://www.webwire.com/ViewPressRel.asp?aId=17489
Cobb, Russ (2007). Want value from your acquisition? Try a customer-centric approach. Retrieved Novemeber 25, 2007 from the SAS Web site: http://www.sas.com/news/feature/fsi/jun04fsi.html
CRM Training- Customer Relationship management Consultant. PHS Management Training. Retrieved November 24, 2007 from PHS Management Training Web site: http://www.training-management.info/CRM.htm
Force field analysis, Decision making. Retrieved November 25, 2007 from Mind Tools Web site:
Heise, D. (2002). Hispanic-American Influence on the U.S. Food Industry. Retrieved November 25, 2007 from the USDA Web site: http://www.nal.usda.gov/outreach/HFood.html
High context vs. Low Context. Retrieved November 25, 2007 from the Communication across cultures Web site: http://www.culture-at-work.com/highlow.html
2005). Internet-enabled lead generation. Retrieved November 25, 2007 from Patent Storm Web site: http://www.patentstorm.us/patents/6868389-description.html
Lau, G.T., Razzaque M.A., Ong a. (2003). Gatekeeping in organizational purchasing: an empirical investigation. The Journal of Business and Industrial Marketing, vol.18, 82-103
Perner, L. Consumer Behaviour: The psychology of marketing. Retrieved November 26, 2007 from the Web site: http://www.consumerpsychologist.com/
Tao Gao, Sirgy M.J., Monroe, M.B. (2005). Reducing buyer decision-making uncertainty in organizational purchasing: can supplier trust, commitment and dependence help. The Journal of Business research, Vol. 58, 397-405 www.debeers.com www.rolex.com www.mercedes.com
b. Survey concerning organizational decision -making and purchasing
Is decision-making always the result of a team choice?
Is a lot of research done before the organization makes a purchase?
It depends on the purchase
Do gate keepers play an important role in the process of decision -making?
It depends on the importance of the decision
Are management tools used for a better decision making process?
It depends on the importance of the decision
Is decision-making always associated with change?
It depends on the decision
Do relationship-building approaches help reduce uncertainty in the decision-making process?
d. Chart showing the customer in the position of managing customer interactions
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