Definition of The Global Consumer Behavior and on-Line Buying Behavior

Introduction

Firms that choose not to understand their customers’ purchasing behavior often lose out. An excellently engineered product may fail just because the customer does not identify himself or herself with it. It is therefore imperative that the firm understands the structural changes taking place in its market and also the long-term impact of these changes on its product and other elements of the marketing mix. The firm must also understand the buyer’s purchasing behavior. Specifically, it must understand how the buyer decides in favor of one brand or product, what motivates him or her to select an alternative, and who influences him or her to buy the brand or product.

The marketer needs to focus on the “how” and “why” of the total experience consumers have with products and services. Unfortunately, most marketers tend to look at only a few aspects of experience and build the complete strategy around it. For example, one of the leading electrical appliances company crafted its strategy around customers’ experience at the dealer outlet. Hence the strategy was on developing dealer outlets, enhancing dealer productivity, and loyalty. It failed to understand other dimensions like service, price-performance relationship, and esteem values of the brand which are as important in the consumer’s mental space and hence influences his/her attitude towards the brand. Likewise, one of the dotcom companies failed to understand that the consumer valued security of transactions over all other dimensions of web-based transactions. Hence marketers need to focus on discovering the ‘why’ of an experience. They also need to understand that large samples based survey is no guarantee of having discovered the “truth”. Quantity of data does not guarantee quality. What is needed is a deep understanding of consumer behavior. Without such an understanding, marketers cannot accurately anticipate consumer responses to product designs, features and marketing ideas.

The Global Consumer Market

Seamless Global Society

The internet has today reduced the gap between different societies. This gap, which was on account of physical distance, information and knowledge, has now become redundant. Today we are seeing the emergence of a global society and universal values. One such universal value relates to the concept of time. It is no more perceived as infinite. And hence time is an indicator of opportunity. An organization’s competitiveness is greatly determined by its ability to respond within a given time frame., determined by market forces and not by its own competencies. The Hindu concept of time, which is eternal and continuing, seems to lose its meaning in this era of information superhighways. Another impact of the Net revolution is the new concept of value. More and more customers have and will come to expect global products and services at local prices. In other words organizations cost structures will have to be globally competitive. Only then will customers get their value for money. Thus, the mere fact that an organization is offering a premium quality product will not be a sufficient reason to motivate customers to buy it. Developments in telecommunications will further contribute to the emergence of these universal concepts, which will affect the customer’s definition of time and value. Mobile telephony has altered the concepts of space, time and location.

Basis for Competitive Advantage

The net is also likely to change the concept of nation state. It is not that these states will not exist but their role will change. The governments of these countries will continue to play a role in maintaining their cultural diversity and sovereignty. They will co-operate with other societies like security, taxation, censorship, and ownership. One of the direct outcomes of this seamless global society, therefore, will be the culture of openness and transparency.

These technological changes are going to lead to significant shifts in competitive leadership. Future market leaders will use computers to create new businesses, change existing ones and even restructure many of today’s long established marketing practices.

The basis for their sustainable competitive advantage will be knowledge management. In the ongoing war for competitive advantage, information technology has become the ultimate weapon. Hence creation, dissemination and protection of knowledge in the organization is perhaps going to be the most crucial armour for competitive survival.

Business at the Speed of Thought

Today the internet give very little time to individuals and organizations to react and respond. We have to learn to conduct our business operations at the speed of the human mind. It should be possible for us to offer products and services even as these are conceived in the customer’s mind. This obviously means that conventional marketing management will no longer deliver.

We are already seeing the emergence of online help, which in many cases, has made conventional forms of service redundant. Interactive technologies are already eliminating several roles in the marketing of products and services. Fro example, it is perceived that there will be no role for a service center of a consumer durable firm in the 21st Century if its competitor markets a totally reliable product and, in the extreme case of failure, provides online assistance through its own website or service portal created by a group of service engineers. The product life cycles will be far shorter. Products are further standardized, and hence, the opportunities to differentiate will also no longer exist.

From the conventional generic tangible values of performance and reliability, the marketers focus will have to be on tangible and intangible values. Unfortunately the globalisation of products and markets will provide very little scope for differentiation in regard to these specific product or corporate values. The differentiator, therefore, will be the ability of the marketer to creatively customize them for the buyer. Interactive technologies will come to the marketers rescue. The key issues in these technologies will pertain to continuously updating the customer database and proactively creating research based product solutions and, in turn, moving the customer up the technology path.. The marketing challenge lies in enabling customers overcome their resistance to change. It will be the organisation’s ability to competitively pre-empt others and build volumes that will make it a market leader.

Virtual enterprise

The above changes, which have already made their presence felt emphatically in the global scene, have led to the creation of virtual enterprises. We have already seen the emergence of an era of Digital Darwinism. Amazon.com, Yahoo! Hotmail and Rediff.com, Indiatimes. com, like many others, are facilitators in the creation of a virtual enterprise. In this era of virtual reality , size and location of an enterprise will have very little or no role to play.

Customer: Co-producer of products and services

Another dimension of the new millennium, which we can see emerging today, is that the customer will be a co- producer of products and services. No longer will it be the responsibility of the manufacturer to produce the product in its finality as the customer may demand. The producer will take the product upto a certain level in the value chain and then leave it for the buyer to customize it to his/ her requirement. A classical case is that of the Asian Paints facility that lets the buyer have his choice of shade customized through the company’ outlets, de-ploying interactive technologies. Similar interactive technologies like the ATM have made the customer a co-producer of products and services.

Customer: A Warehouse of Information

In the internet age, the customer has access to huge bank of information from various national and global resources. The challenge for the marketer will be how to use this information for developing the marketing mix. In business –to-business marketing, the challenge will be one of integrating organizational operations to the customer’s environment.e.g. an engineering company will have to tailor its design, engineering and operations to suit the changing requirements of the customer. Hence the era of standardization is today replaced by mass customization.

The death of Business and consumer marketing

The differentiation between business and consumer marketing, urban and rural marketing, and domestic and global marketing will get more blurred. This will also be the case with product and services marketing. The physical differentiation between the product and service will cease to exist mainly because of the standardization in manufacturing technologies. Hence, organizations will have to learn from the marketing practices of winning organizations, irrespective of the nature of their products and markets.

The role of Distribution Channels The Conventional dealer and distributor will no longer viable. The intermediary’s role will no more be that of physical delivery, sharing risks and investment in stock movements. Rather, it will be service and customization of the offer that will make an intermediary succeed.

The poor as a market segment

Globalization has widened the gap between the rich and the poor. Today poor nations are making an all out effort to bridge the gap. Not only so, poor people all over the world are now a large segment. No marketer can afford to ignore it. So, whether it is customization of products/ services, or price reduction or enhancing accessibility, firms will have to come out with creative solutions for this segment. We have to keep in mind that the focus here is on the poor customers who may be located in urban or rural areas. Incidentally, this segment offers a much more attractive opportunity than just the rich.

Environment Protection

The biggest challenge for the new millennium marketer is protection of the environment. So whether it is in product development, use or disposal, the marketer will have to make a conscious effort to protect and maintain the environment. This has led to the development of eco friendly hotels, watches, food products and packaging material, etc.

Diversity and Convergence Coexist

Markets are diverse. This diversity is not just based on the demographic & geographical location of the consumers, but also on their response to changes especially to technological changes. While diverse markets are a reality, convergence of needs is also a fact. Given the spread of internet and satellite television, it is not uncommon to see consumers all over the world demanding same products and services.

Thus, the new millennium demands a paradigm shift from marketers to customers who are treated as a resource that has an access to global sources of information and purchase. In this environment, customer’s total experience with the brand and the organization will be the differentiator between winners and losers. This total experience is more than just product related. It is based on the organizations culture and systems and hence reflects organizational quality.

Buyer – an Enigma

Although it is important for the firm to understand the buyer and accordingly evolve its marketing strategy, the buyer or consumer continues to be an enigma-sometimes responding the way the marketer wants and on other occasions just refusing to buy the product from the same marketer. For this reason, the buyers’ mind has been termed as a black box. The marketer provides stimuli but he is uncertain of the buyer’s response. The stimulus is a combination of product, brand name, color, style, packaging, intangible services, merchandizing, shelf display, advertising, distribution, publicity and so forth.

Nothing better illustrates this enigmatic buyer than the failure of a herbal anti-cold balm launched by Warner Hindustan some time back. Though the balm market has grown significantly and Vicks Vaporub had been dominating the anti-cold rub segment for more than two decades now, Warner failed. Was it is the brand name? Did the customer see no significant difference between Vicks and Warner? This has remained an enigma.

Further, today’s customer is being greatly influenced by the media especially electronic. Technological developments in the field of information, biotechnology and genetics, and intensive competitions in all products and services are also impacting consumer choices. Consider, for example, the case of consumers who shop on the Internet for books from US-based Amazon.com, music from Sony, banking from HDFC Bank India, airline services from Jet Airways, or order roses from India to be delivered to loved ones in the US on Valentine’s day through 1-800 flowers. com. Clearly the Internet has today impacted the customer learning and shopping behavior. Multiple television channels are also shaping the customer’s values. The customer is aware, more than ever before, of the rights and choices available to him/her.

Today the Indian customer is at a crossroad-should he/she enjoy the pleasure (arising out of such an act) of buying a consumer durable, service, a holiday or an automobile or defer the experience? Today the customer is demanding more value for the price that he/she pays. Social structures like family, role models, and peer groups are under pressure largely because of the change created by media, technology and competition. As shown in figure, these change drivers are today impacting the customer’s awareness, values, social structures and even individual customer personality.

Internet User Profile

Indian consumers also have the opportunity to seek out goods and services beyond their local, regional, and national boundaries. This universal access has had a positive impact on the quality of life of some population segments. Typically, an Indian Internet user is young, educated, generally a professional, urban (mostly metro resident), who accesses the Internet either at office/cyber cafés/educational institution. Males use the Internet more than females.

Irrespective of sex, the Internet user generally uses the Net for accessing information. Information products like newspapers and magazines from different countries including India are already on the web. Although most of them are free at the moment, information sellers like the Mumbai-based Centre for Monitoring Indian Economy (CMIE) are running websites which surfers can access for data on the Indian economy. Indian advertising agencies having Websites that open up their detailed information bases and full range of services to paid subscribers are pointing to the future.

E-buying is relatively much less. The International Finance Centre (IFC) reported that Indians bought ` 93 million (about $2.2m) worth of goods and services over the Net in 1999. This was one sixth of the value of purchases made over the Net by Chinese Internet Users ($13m) in 1999.

How the Internet is influencing Consumer Behavior

The Net has virtually become a household name in India. This can be attributed to the growth of the private ISP market in the country, offering the cyber voyage at more and more competitive prices. Internet in India is now one of the most vital mediums for information, entertainment and communication and the sole means for electronic commerce.

A closer look at the Internet user profile shows that 41 per cent are large business firms who use the Net for their operations. Corporate India has realized the significance of e-commerce and the Net and has made it a part of its strategic planning exercise. Time and cost savings because of the disintermediation process further motivated large firms to embrace the Internet. SME (Small and Medium firms) accounted for 19 per cent of the user base, while the household segment accounted for 18 per cent. Education/research institutions and the government accounted for 10 per cent and 12 percent respectively.

As we had mentioned earlier, access to, rather than ownership of, the communication tool is important. It is not surprising to note that Internet usage is not just restricted to a single individual in a household or business. More than one family member in the Indian house-hold has used the Net for different needs. Research shows that the top Internet user is an adult son/daughter or male head of the family, thus adding up to 42 per cent of Net users in the age group of 15-24 years, 31 per cent in the 25-34 years age group, and the rest above 35 years, with a clear bias in favour of the male bread winner. Cyber cafés are most popular among the younger age groups of 16-20 years. 98 per cent of the times the Net is used for email; 93 per cent users use it for Web browsing, 59 per cent also engage in online chat and 55 per cent use it for information and data transfer. Only 6.5 per cent of net users engage in e-commerce.

A direct implication of the above changes in consumer lifestyles has been that customer expectations from suppliers have gone up significantly. Today the customer’s decision-making parameters are significantly different from those in earlier decades. Though an average Indian customer continues to be price sensitive, he is increasingly moving away from just low-priced product to quality products and services at the lowest prices. In other words, the Internet has created awareness among the Indian consumers about global quality and performance parameters that they can get an affordable price. The fact that an average consumer can buy a newly published book within a week directly from Amazon.com, or a holiday from the best-known tour operator on his (customer’s) term through the Net has put pressure on the Indian industry. Industry had to take another look at its costs, distribution models, and even input-output ratios.

Competition further aggravated the scenario for most Indian companies, especially the older generation firms. One of the sectors where this change was visible was the banking sector where new generation banks like HDFC and ICICI snatched the lead from nationalized banks, including the State Bank of India. HDFC Bank’s leadership today is principally because it redefined banking paradigms for Indian consumers. It was the first to offer Net banking and several other services on the Net. This made banking convenient for the customer. The customer did not have to visit the bank but could do his/her transactions on the Net. Likewise there were developments o the industrial products and commodities front.

Disintermediation is now emerging fast in the Indian market. Time and location seem to no longer define customer choices, especially in metros and major urban centers. This is increasingly true for the younger customer group, which, as we saw earlier, is the major Internet user. Also, the younger generation of consumers is less brands loyal, they are shopping for value and it is in this context that the Internet has come as a big boon. There is another interesting paradigm that is shaping the Indian market. Increasingly, information and ownership of products and services is no more concentrated at the top end of the Indian market.

The Internet has made it possible for all market segments to have access to the same information and provide equal opportunity to all to buy products and services. Facilities like online chats have increasingly created customer communities which have, in a way, become pressure groups. A company can no more hide poor performance or complaints in one market from its customers in another. It is in this context that the Internet is a great leveler and facilitator that build relationships between buyers and sellers.